The regulatory challenges ahead - speech by Hannah Nixon at the Westminster Business Forum

23/02/2017

Speech by Hannah Nixon, Managing Director of the PSR, at the Westminster Business Forum, on 21 February 2017 in London. 

This is the text of the speech as drafted and may differ from the delivered version.


Good morning.

It gives me great pleasure to be able to address you today, and I extend my thanks to the Westminster Business Forum for inviting me here.

The world of payments is clearly an exciting place to be right now. We’ve heard lots so far this morning about emerging trends – driven by changing technology, changing consumer expectations and regulation.

We’re seeing lots of new players coming into the market – tech companies, new retail banks, new payment service providers – and this competition is driving innovation. There’s clearly lots of innovation at the consumer end of the market – with wearables, apps and so forth - and, increasingly, in the core payment systems themselves – led in particular by the work of the Payment Strategy Forum.

As the PSR, with duties to promote competition and innovation in the interests of consumers, these are things we've been driving since our inception almost two years ago. So it’s good to see that our work is starting to pay off.

In the few minutes I have, I want to set out how the various initiatives we've undertaken – some of which we’ve heard a bit about already today - fit together, and then say something about what we will be focussing on going forward.

So what have we focused on to date?

Well, if we go back a couple of years, we spent a lot of time engaging with the whole payments community, from representatives of end consumers to fin techs to banks. The feedback we got led us to focus on three key areas:

  • We heard that difficulties in getting access to payment systems were getting in the way of retail banking competition and competition between PSPs more widely. That’s why we’ve focused heavily on opening up access to payment systems. It’s now quicker, easier and cheaper to connect directly to the interbank payment systems, there is more choice in ways to connect and by the end of this year we will have achieved a near doubling of the number of direct participants in FPS.
  • We heard real concerns about the fact that it’s the established banks that own and control payment systems. That’s why we carried out a market review into the ownership and competitiveness of the infrastructure that supports Bacs, FPS, and LINK.
  • We also heard concerns that the industry was slow to innovate where collaboration is needed. So while there’s lots of innovation at the consumer end, much less was happening in the behind the scenes plumbing. That’s why we set up the Payments Strategy Forum.

And on that note, I was really pleased to see the Forum launch its final strategy at the end of November 2016. We now have a potentially game changing strategy for payments that will drive real benefits for users and has the backing of the whole payments community.

All three of those things are basically about driving as much competition as possible into as many parts of the payments supply chain as possi