The Financial Secretary to the Treasury (Sajid Javid)
In March 2013 the Government published a consultation, “Opening up UK payments”, which set out the Government’s proposal to introduce a new, competition-focused, utility-style regulator for retail payment systems in the UK. This proposal reflected the Government’s concerns about the market for UK payment systems, in which strong network effects and vertically integrated ownership structures give rise to problems in three main areas: competition, innovation and delivery against end-user needs. The consultation presented a set of questions identifying the key issues on which the Government sought views. The consultation closed on 25 June.
The Government are publishing their response to the consultation today. The Government are introducing amendments to the Financial Services (Banking Reform) Bill to establish the new payment systems regulator as a separate body under the FCA. The payment systems regulator will have objectives to promote competition, innovation and the interests of end-users. The regulator will be able to oversee any payment system operating in the UK that is brought into scope by being designated by HM Treasury. Once a payment system is designated, the payment systems regulator will have a range of powers over its participants—operators, infrastructure providers and payment service providers that provide payment services using the system—in order to advance its objectives.
The payment systems regulator will have powers to make requirements regarding rules for the operation of designated systems, and to give directions to participants in such systems. It will also have specific powers to require direct and indirect access to designated systems, and to vary agreements relating to such systems, including fees, charges and terms and conditions. The payment systems regulator will also have enforcement powers to publish details of compliance failure, to impose financial penalties in respect of a compliance failure, and to require owners of payment systems to dispose of their interests in them, subject to HM Treasury approval. The regulator will also have concurrent Competition Act powers to enforce the Competition Act 1998 prohibitions against anti-competitive agreements and abuse of dominance, and to make market investigation references to the Competition and Markets Authority.
I am placing copies of this document in the Libraries of both Houses.