UK Payment Systems Regulator Appoints Interim MD, Payments Association Calls for Immediate Changes in Strategy

Last week, Chris Hemsley announced his exit as Managing Director of the Payment Systems Regulator (PSR). Replacing Hemsley is Interim Managing Director David Geale, who takes over today (June 10th).

The PSR said that Hemsley was leaving the agency to become a director with Fingleton, a strategic regulatory advisory firm.

Geale takes over from the Financial Conduct Authority (FCA), where he most recently was Director of Retail Banking. He has also been a non-executive director on the PSR Board since February 2020. A permanent MD will be appointed following the upcoming election.

Following the changes in the PSR’s executive leadership, the Payments Association called for a change of direction at the PSR that would address the “community’s concerns and areas that would benefit from immediate attention.”

The Payments Association stated that it has shared a private Briefing Paper with Geale to convince him that changes are needed in the direction of the agency.

The Association believes that the Faster Payments System (FPS) rule changes “raise serious concerns.” If implemented, the Association believes the risks and requirements to participate in UK payments will increase dramatically.

“The Payments Association proposes the PSR make changes to FPS that include postponing the implementation by 12 months until after the Pay.UK case management system is fully operational, dispute resolution mechanisms are tested and operational and the full rollout of Confirmation of Payee has been completed.

This is because despite being a regulated payment system operator, Pay.UK lacks certain functionalities present in other (global) schemes, such as exceptions handling, remediation, and a dispute resolution mechanism. With the absence of these key features, the feasibility of implementing the APP fraud reimbursement scheme through Pay.UK’s current framework by October 7th 2024 is uncertain.”

Tony Craddock, Director General of The Payments Association, said the leadership change creates an opportunity to “re-set” the relationship between the PSR and industry participants.

The Payments Association Head of Policy and Government Relations, Riccardo Tordera,  warned that if the current changes are implemented, they believe the prudential risk and requirements to participate in the UK payments market will increase significantly – and competition will be reduced.

“It will also result in an increase in cost and friction of real-time payments and a decrease in investment into the UK Fintech market due to higher risks of failure and lower profitability,” said Craddock.  “We welcome the appointment of David Geale, currently Director – Retail Banking and Payments Supervision at the FCA, to be the interim Managing Director of the PSR and are fully committed to collaborating with the regulator at this critical time in our history. Our shared aim is that we lead our market and consumers to a period of innovation and growth, and this is why we’re working proactively in helping the PSR with the main priorities regarding APP fraud and the payments infrastructure. We hope the PSR listen to our recommendations, allow all stakeholders more time to prepare and that this is the start for increased collaboration.”

The PSR has yet to respond to the requests emanating from the Payments Association.

Hemsley indicated his intent to leave the PSR last month following an uproar over fraud rules. It has been reported that new rules requiring firms to refund individuals impacted by fraud may actually encourage scams rather than mitigate them. The cost was anticipated to be so burdensome that Fintechs and other financial services would need to limit services or change applications while lessening functionality seen outside the UK.

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