Keynote speech by Mark Falcon, head of regulatory policy and strategy at the PSR, at the PayExpo 2015 Future of Payments Summit in London, 9 June 2015.
This is the text of the speech as drafted and may differ from the delivered version.
You can view the slides Mark used alongside his speech by clicking the download icon on the left.
Good morning, and thank you for inviting the Payment Systems Regulator – the PSR – to be at PayExpo. We are honoured to be here and I am really excited to be at this year's event.
Today I’d like to tell you about the PSR: what type of regulator we are, our objectives and how we’re starting to carry them out.
The new economic regulator for payment systems...
So, the PSR is the new independent economic regulator for UK payment systems. We’ve been building the PSR behind the scenes for the last year. We formally came into operation in April this year.
We’re also the first dedicated payments regulator in the world and we look with interest to see if other countries will follow.
So, we'd like to think that we will regulate the supply of oxygen to the payment systems - but what is economic regulation and what will it mean for payment systems?
Primary role is to promote competition…
The primary job of economic regulation is to promote competition, where this is possible. This does not mean competition for the sake of competition, but competition to drive lower prices, better service, greater innovation and sustainable investment.
This about safeguarding access to scarce resources, such as monopoly infrastructure, i.e. ensuring a level playing field between competitors. And we have the powers to do this, through directing the terms of access to payment systems or change of ownership of payment systems.
Where competition is not possible, the role of economic regulation is to be a proxy for competition. For example, by direct regulation of prices, retail or wholesale. This is the standard model in other utilities, such as energy, water or telecoms.
Either way, economic regulation is ultimately designed to protect consumers and promote economic growth.
Economic regulation must also be predictable and transparent, as this is what long-investment needs.
It’s also important to say what the PSR is not and our role versus other regulators.
Not a conduct regulator
First, we are not a conduct regulator, responsible for consumer product regulation and rooting out bad practice. Conduct regulation is of course critical, not just for protecting consumers, but for protecting competition: by ensuring that competition remains fair and honest, that bad firms and practices do not drive out good.
In the UK, the Financial Conduct Authority – the FCA – is the conduct regulator for payment services as part of its wider financial services regulation responsibility.
Or a financial stability regulator
The PSR is also not a financial stability – or prudential – regulator. This is the role of the Bank of England.
Payment systems certainly create systemic risk to the financial system, which is why all the largest retail and wholesale payment systems are regulated by the Bank of England. We also do not want to see payment systems falling over.
We recognise that having multiple regulators of payment systems risks confusion, which is