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A new RTGS service for the United Kingdom: safeguarding stability, enabling innovation

Response to the consultation

The purpose of our response to this consultation is to express the strong support of the credit union sector to the proposals contained in the consultation around extending and opening access to RTGS.  In particular we are encouraged by the proposal to allow a class of non-bank payment institutions to be eligible for RTGS settlement accounts and for third party aggregator solutions to be able to provide technical connectivity to CHAPS.  These proposals will allow credit unions, in time, to both directly access RTGS settlement or to seek access through aggregator solutions. 

Credit unions are increasingly seeking access to payment systems in order to provide payment services to their members alongside their core savings and loans businesses.  This has evolved in various ways with the creation of prepaid card products, the provision of a current account service systems provided by the Co-operative Bank and a full agency banking relationship with one of the big four banks through our subsidiary, Cornerstone Mutual Services, under the Credit Union Expansion Project.  In all of these cases, the lack of competition and choice in the market for indirect access to payments infrastructure has led to limited or no choice in terms of payment access for credit unions.  This puts credit unions at a significant market disadvantage.  It is also problematic in that credit unions rely on institutions that may see themselves as competitors to provide access to payments systems. 

In this context, we are strongly supportive of the direction of travel in terms of access of the RTGS review as we are of the related initiatives from the Payment Systems Regulator and the Payments Strategy Forum, the latter of which our Chief Executive is a member.  We are confident that through greater provision of access, both direct and indirect, credit unions will be able to add to competition and choice in the provision of payment services and this will enhance systemic stability as well as improving economic and social outcomes in the market. 

Alongside this, we also support proposals to enhance interoperability and standardisation of messaging in line with the Payments Strategy Forum proposals which, again, we believe will be of assistance in encouraging innovative payment solutions and further enhancing credit union access options.