In a decisive move to slash red tape and drive economic growth, the UK government has announced the abolition of the Payment Systems Regulator (PSR), transferring its responsibilities to the Financial Conduct Authority (FCA). This consolidation is part of a wider deregulatory push aimed at reducing compliance burdens, fostering innovation, and making the UK’s financial sector more globally competitive.

What’s the rationale behind the move?

The rationale behind this reform lies in long-standing business frustration with the UK’s regulatory framework. 

A recent report from the National Audit Office (NAO) highlighted businesses’ concerns over the government’s fragmented approach to growth policy, with different departments failing to coordinate effectively on industrial strategy. The NAO noted that businesses have expressed frustration over “burdensome regulation,” high operational costs, and a lack of clear governmental direction – issues that mirror complaints about the PSR’s oversight. By merging the PSR into the FCA, the government aims to simplify compliance, particularly for smaller firms that struggle with the cost of navigating multiple regulatory bodies.

Prime Minister Keir Starmer emphasised the urgency of reform on Tuesday this week, stating that excessive regulation has hindered investment and innovation in the country. Reinforcing this point, Chancellor Rachel Reeves also highlighted the need to free businesses from regulatory constraints to stimulate economic recovery and drive growth. 

Regulators have been tasked with proposing reforms to support economic growth, ensuring a more agile and business-friendly landscape.

What’s next?

The PSR will maintain its statutory powers until legislation is passed. During this period, it will work with the FCA to ensure a seamless transition and maintain market stability.

However, while businesses welcome the move, critics warn of potential risks, including reduced oversight in financial markets. Yet, the government insists competition and innovation will remain priorities.

For communications and PR professionals, this shift presents opportunities to position businesses as proactive players in a newly deregulated landscape. Messaging should focus on how companies are leveraging these changes to drive innovation, reduce costs and enhance consumer experiences. As the government unveils further deregulatory measures, staying ahead of the narrative will be key. The UK’s regulatory framework is evolving – how businesses respond will shape their competitive edge.