Chris Hemsley's speech at the Westminster Business Forum - 23 January 2020


This is the text of the speech as drafted and may differ from the delivered version. This speech was delivered at the Westminster Business Forum: Payments, policy and regulation – infrastructure, innovation and end-user priorities, in London on 23 January 2020. 

Good morning, and thank you for inviting me to speak here today. I’m Chris Hemsley, the Managing Director of the Payment Systems Regulator.   

I am privileged to have been appointed to this post in an organisation that already has a successful five-year track record in a critical sector that underpins all of our day to day lives. But the payments sector is facing considerable challenges, now and in the very near future. I want to see the PSR play its full part in meeting those challenges.   

Now I have been in post for a little over 100 days – and it has certainly been a busy and interesting 100 days!  

I have used this time to listen to you - our stakeholders - on how you want to see the PSR play its role: what we should focus on; and how can be better at what we do.

You have not been slow to share views with me – including about what you want us to do differently.

Today I want to talk to you about how we are acting on that feedback across some of our key projects.  

Collaboration across regulators

First, you have told me that you want a coordinated and joined-up approach across the payments regulators. Now this is – in practice – something that has been happening – with close working between us, the FCA, Bank of England and, of course, government. But it is not perhaps always sufficiently visible and it is an area where we can always do more.

Indeed, only yesterday, the PSR board was discussing our forward workplan and the long-term challenges facing the sector, at a session where we benefited from the active participation of colleagues from both the FCA and Bank of England. 

We are also playing our part in coordinating the impacts of our regulation on the financial sector: the so-called Air Traffic Control problem of managing changes. We announced in July that the PSR was working with the FCA and PRA to improve coordination. For our part, we will continue to consult on our proposals, listen to what you have to say, and be prepared to change where the evidence supports that. This is exactly what we have done in the implementation of Confirmation of Payee for example.

PSR strategy

Some stakeholders also talked to me about getting more clarity about PSR’s role – and how it complements the work of the other regulators.   On this, we are now developing a clearer statement of our strategy, so that you can all have a better understanding of what we are seeking to achieve and how we are planning to achieve it.

This will take the form of a draft strategy statement which we will publish later this year. And, of course, we will be asking for your views so that we get it right.

Access to cash

When I took up my new role the PSR was grappling with the dilemma of what to do about cash.  And it is indeed a dilemma – one that you will all be familiar with:

  • Cash use has been declining – and continues to decline,
  • Meanwhile the infrastructure to deliver that cash has not fundamentally changed, and many of the costs of that infrastructure do not naturally fall as cash use declines, and
  • While many of us are comfortable with digital payments, or live in places that are well-served by free-to-use ATMs, this is not true of everyone.

Without action, there is a very real risk of a disorderly decline in cash, which could adversely affect consumers and businesses – particularly those who rely on cash.

Consistent with this, the PSR welcomed LINK’s commitment to protect the 2018 geographic footprint of ATMs, and we underpinned that commitment with a specific direction which we are in the process of reviewing.  That was a sensible step.  Most of us still get most of our cash from free-to-use ATMs (and prefer to do so).

But we need to be more creative about the solutions that will work for people and that meet the economy’s need for cash in the medium to long term.  The cash dilemma will not be solved by simply preserving the 2018 footprint of ATMs in aspic.

We recognised this and heard the call for stronger direction. That is why many of you will have already heard me talk about how we want to work together to develop a suitable longer-term framework for cash. 

We have taken that work forward – with the very welcome support of the industry.  This is a key priority for the PSR – and it is one where collaboration across regulators, government, industry and consumer groups is critical.  The focus of this new work is to develop practical long term sustainable cash access models.  That will allow us all to manage the cash transition in a way that works for consumers and the UK economy. 

The future may include key elements of today’s model, and I hope it will also have new innovative solutions. But one thing is clear – it will, at least, have to meet some minimum level of access to cash that is acceptable to consumers and wider society. We need to have open minds about how this could best be achieved – so that nobody is left behind as digital payments continue to grow.

We will make sure our work takes into account the bigger picture; joining up thinking on ATMs, cashback and depositing of cash; and joining up with the work that the Bank of England is taking forward on wholesale cash distribution.

And while we work towards a long-term model, we cannot stand still.  We have hosted a number of workshops, most recently to explore what our 2019 consumer research programme revealed about how best to meet the needs of consumers.  That led us to strongly support the principle of community engagement.  We have welcomed the work of LINK, UK Finance and others to secure greater involvement of local communities in the cash debate, and we want to see this become an enduring part of how consumers’ needs are understood and met.  

Indeed, it is worth reflecting on these industry initiatives, which include - 

  • LINK’s local engagement s