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Payment Systems Regulator - PSR Consultation

Response to the consultation

In general we are very supportive of the new framework for regulating UK payment systems. We are firmly of the view that if credit unions are to fulfil their internationally-proven potential then they will need to provide a wider and more convenient and accessible range of payment services and payment facilitation linked to loans and savings products. Online and mobile service delivery channels rely on straight-through automated processing and if credit unions are to attract an economically and demographically diverse membership base, as their sustainable development dictates, they must remain competitive. Online and mobile services are crucial in this and central to this is access to payment systems. Indeed, even more rudimentary savings and loans services rely heavily on effective access to payment systems if they are to be delivered efficiently and cost-effectively.

The current structure of payment systems, however, in terms of its ownership, governance, policy-making, access requirements and revenue models does not lend itself to open access for small payment providers such as credit unions and therefore puts credit unions at a distinct competitive disadvantage vis-a-vis the major high street banks and credit institutions. The many overlapping and interlinked questions of conflict of interest and barriers to competition are well developed in the consultation document and supporting documents.

We therefore strongly welcome the measures which are propose to address the concerns that the Government and various commissions and reports have rightly identified as a barrier to a competitive, diverse and ultimately safe and secure financial system. In general we agree that the proposed framework will represent a significant improvement on arrangements which are in place currently and should lead to more favourable conditions for credit unions to develop and thrive.

We are keen to play an active role in the development and evolution of the PSR’s framework and we are particularly keen to play a role in the proposed Forum for the development of Payments Strategy. We have submitted applications to be involved in this Forum and we hope that the PSR will closely consider the case for credit unions to be involved. Credit unions are well-supported by Government as part of a solution both to the proliferation of high-cost, alternative credit and as much-needed competition in financial services. It would be in keeping with other measures that government has taken to support the sector to facilitate our participation in the formulation of payments strategy.

We give thoughts below on each of the proposed interventions under the new framework. Once again, however, we reiterate our support for the general thrust of the proposals.

You can find the full response available to download on the right hand side.