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31 March 2015

Financial Times: New payments watchdog takes aim at high street banks

The Payment Systems Regulator, which launches on April 8, will open up access to the infrastructure underpinning financial transactions, from mobile payments to house purchases.

A new watchdog set up to regulate Britain’s £75tn a year payments industry plans to take control of the money transfer systems from the big high street banks.

The largest lenders, such as Lloyds, Royal Bank of Scotland, Barclays and HSBC, own and control the main systems, such as Faster Payments, which are used to make money transfers.

Hannah Nixon, managing director of the new watchdog, told the Financial Times that the regulator would ensure access unrestricted access to the systems.

Challenger banks and digital payment businesses such as PayPal currently have to pay expensive set-up costs to access the systems directly, or are charged to go through a large bank, creating an uneven playing field.

“We want to break open the control of payment systems, so it’s not just the big banks that control them who can use them,” Ms Nixon said.

“We need to make sure all those who use them or need access can have a real voice in the way these things are controlled — whether it’s a challenger bank, or a payment innovator.”

The regulator will work on allowing faster and fairer direct access to the systems and will require incumbent banks to subscribe to a code of conduct making the terms of gaining access clearer.

If the banks do not make changes to allow more open access, the regulator has the power to intervene, Ms Nixon said.

Full article on Financial Times (subscription required)

© Financial Times

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