The evolving regulatory landscape

By Alison Donnelly, director at FScom and Project Regulator lead

The regulatory landscape for payments is evolving, across all areas of the industry.

This is why it’s important that businesses are aware of what’s on the government agenda; what consultations are happening and which they should respond to, the impact this could have on them as well as any regulations are coming into force.

A key one on the agenda for 2023 is the Payment Services and Regulations Review. HM Treasury is calling for evidence and looking into how the UK’s payments regulatory regime should evolve to be better prepared for future innovations and challenges.

This could have a far-reaching impact on the industry; regulated payment service providers, as well as all stakeholders will want to make sure the regime is fit for purpose so that it builds confidence and allows competitive and innovative solutions to thrive. Most businesses in the industry would agree that there needs to be a balance between the two.

This consultation closes on 7 April.

Another is the consultation on introducing a regulatory regime for cryptoassets. Also run by the Treasury, the consultation sets out proposals for what a future regulatory regime may look like in the next phase of the government’s approach.

Crypto enthusiasts and detractors alike will be actively debating and commenting on these and future proposals as they determine the future for this sector.

Finally, regarding material change on the regulatory horizon, the Consumer Duty rules come into force in July 2023 for products open to sale or renewal and July 2024 for closed products and service.

Regulated financial services firms should be at an advanced stage of implementation by now, though it appears, from the FCA’s review, that too many are not sufficiently advanced.

The Consumer Duty represents a cultural shift for firms, and we know that cultural shifts take time. It’s vital that the leaders of payment service providers throw sufficient weight behind their firm’s efforts to implement, because the FCA is already asking selected firms for evidence of templates, policies, and reports.

For those starting now, it may not be possible to implement fully by the deadline; the next best thing is to show that the importance of Consumer Duty is now, understand it, tasks should be appropriately prioritised, and resource be made available to the various first line teams across the business to progress on the roadmap.