Shearman & Sterling LLP | FinReg | UK Future of Payments Review Report Published
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  • UK Future of Payments Review Report Published

    HM Treasury has published the Future of Payments Review report, setting out the Review's recommendations for HM Treasury, the regulators and industry that aim to improve the U.K.'s existing payments landscape for consumers. The report follows the July 2023 call for evidence. The main recommendation is for the government to develop a National Payments Vision and Strategy, which will provide high-level guidance on priorities and define guiding principles on safety, simplification, coordination, responsiveness, inclusivity and accountability.

    The Review makes several other recommendations, including:
    • Improving the use of bank transfer processes by amending the Open Banking pricing model so that firms are incentivized to provide consumer protection.
    • Accelerating reform of the Strong Customer Authentication requirements to pivot away from the detailed EU approach to the FCA’s outcome-based approach. This should increase consumer convenience and experience but still result in the risks being appropriately managed. The SCA rules govern the process by which payment service providers authenticate the identity of customers and provide for some exemptions.
    • HM Treasury and the FCA should regularly assess the impact of digital exclusion on financial exclusion.
    • Prioritizing the need for more consumer protection and clarity on liability for payments made via Open Banking. This should be undertaken by HM Treasury, the Joint Regulatory Oversight Committee and industry participants. A basic dispute resolution service covering purchase protections is required.
    • Developing an Open Banking alternative payment journey to give retailers a wider range of choices outside of the card schemes.
    • To help tackle fraud, the Payment Systems Regulator should review the costs and benefits of the new fraud and scam rules a year after implementation.
    • Reviewing the regulatory requirements applicable to FinTechs to ensure that they are appropriate and provide certainty.
    • HM Treasury and the regulators should take steps to direct closer alignment of regulatory activity and aim to reduce the regulatory initiatives impacting firms by ten percent.

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