The Payments Association (formerly The Emerging Payments Association [EPA]), UK Finance, the collective voice for the banking and finance industry, and global law firm Latham & Watkins, have launched the ‘UK Payments Regulation Review: Making sense of where to go now’.
This industry report explores the impact of regulation and outlines how industry, lawmakers and regulators can work together to strengthen and enhance the country’s payments infrastructure and regulatory and supervisory frameworks, following both Brexit and in light of the expanding digitalisation of the economy.
With commerce and day-to-day personal finance transactions increasingly moving online, regulatory priorities must continue to shift from financial stability to supporting market innovation. Similarly, technologies that were unthinkable around the turn of the millennium like digital identity frameworks and distributed ledger technology have entered mainstream conversations and are likely to have profound impacts for the sector.
The report identifies a number of opportunities that lawmakers, regulators and industry may wish to take advantage of. With payments as a foundational pillar of the financial services market and wider economy, as well as a creator of jobs and investment, the report outlines how the payments sector can drive change, in-part, through self-regulation and how its future should involve collaboration between market participants and regulatory stakeholders. It goes on to discuss how UK payment firms operate internationally, the importance of international market infrastructure access, including SEPA, and the need for regulations to continue to provide international parity to support, and reduce friction in, cross-border payments.
Reviewing everything from major socioeconomic trends to recent case law, the report outlines practical next steps.
Tony Craddock, director general at The Payments Association, comments, “It is an exciting and challenging time to be in the payments space. In a very short time, we have seen the explosive growth of the fintech industry, the arrival of distributed ledger technology like cryptocurrency and stablecoins and the UK leaving the EU while simultaneously adopting PSD2 regulations. This is a timely report that grapples with the major issues in the payments industry and produces ideas on how to create the next generation of regulations, and we are keen to see how the wider industry reacts to the proposals we make.”
Jana Mackintosh, UK Finance, says, “We believe that regulators and industry have an opportunity to think afresh about payments regulation and supervision. This industry report will help players in the sector to reflect on the digitalisation of payments and consolidate past learnings that can be drawn upon as the industry moves forward.
Brett Carr, senior associate fintech and payments, Latham & Watkins, adds, “We are proud to lend our firm’s legal expertise and deep fintech and payments experience to this report at such an important time for the sector. The UK and EU payments markets have experienced a prolonged period of regulatory change punctuated by implementation challenges, the impacts of Brexit, covid-19 and a shifting supervisory strategy of the regulators. With question marks remaining over the UK’s priorities for the regulation and development of the fintech sector, market participants will be anticipating how the regulatory environment is set to progress. This report presents a compelling case for greater cooperation between the industry, lawmakers and regulators, and calls for an evolution in approach that both enables and supports innovation.”