25 November 2014

UK Payments Council to be stripped of powers as govt seeks 'fresh start'

23 July 2012  |  9310 views  |  6 London - Big Ben

Following last year's bungled and abandoned attempt to scrap cheques, the bank-run UK Payments Council is set to be stripped of its powers by the government.

Funded by its member banks, the self-regulatory Payments Council was established in 2007 to set the strategy for UK payments. In 2009 it ran into trouble after members voted to ditch cheques within nine years in a move greeted with howls of protest from charities and other interest groups.

Eventually, under pressure from the Treasury Select Committee and government, the Council capitulated but this was not enough to escape further scrutiny and a consultation has now been published outlining plans for a new body called the Payments Strategy Board (PSB).

Taking over responsibility for UK payments strategy, the PSB would be overseen by the new Financial Conduct Authority (FCA) and end the current self-regulatory regime.

Funded through an FCA levy, it would be composed of industry representatives, people from outside the business such as consumer bodies and independent directors. The government says that, if reformed, the Council could still have a role as the body through which banks respond to recommendations from the new PSB.

Arguing for the new set up, the consultation argues that it would deliver a "fresh start", making the industry more responsive to users' demands while improving transparency and still ensuring that banks are responsible for projects.

However, while the preferred Treasury option, the PSB is just one of three possible plans in the consultation - a significantly altered Payments Council could keep its powers or a brand new regulator established.

Mark Hoban, Financial Secretary to the Treasury, says: "We need a payments system that responds to the needs of customers and is not just run for the banks. Today's package of measures is another step by the Government to make sure that the financial sector provides an effective and competitive service to the real economy."

Payments Council chief Adrian Kamellard welcomed the consultation and insisted that steps have already been taken to improve the organisation's operation, adding that "whatever the consultation outcome, the Payments Council is already uniquely placed to listen and respond to the needs of customers and businesses who rely on payments in their everyday lives."

You can read the full consultation here. Interested parties have until 10 October to respond:» Download the document now 430.5 kb (PDF File)

Comments: (6)

Nick Collin - Collin Consulting Ltd - London | 23 July, 2012, 18:01

This is crazy!  The payments industry is the one part of UK banking which doesn't need to be fixed.  And the cheques incident wasn't even the Payment Council's fault.

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Jan-Olof Brunila - Swedbank - Stockholm | 24 July, 2012, 06:55

Dear Nick,

You are quite right that the payments part of banking is well working and does not need fixing. All the more reason for politicians to interfere and then claim the merits for the (already) well working payments sector!

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Nick Collin - Collin Consulting Ltd - London | 24 July, 2012, 12:16

'twas ever thus!

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John Bullard - IdenTrust Inc - London | 24 July, 2012, 15:02

Nick; I agree but it may not be as crazy as it first seems.......if one thinks of a payment as the movement of value from one digital identity (aka an account number) to another, and that invariably a payment is the final stage of a series of other "movements of information containing value" which take place (electronically) between different parties before the payment itself happens, then one could build on this one piece of the banking sector that does actually work/is trusted......and by doing so reinvent the relevance of the banker.... 

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Nick Collin - Collin Consulting Ltd - London | 24 July, 2012, 16:41

Hi John.  Yes, I see where you're coming from.  Banks in general have well and truly destroyed their reputation as trusted entities over the past few years, but if a fresh start was made with the still relatively trusted payments industry it could be the basis for that e-trust opportunity which we've talked about for so long (and you've actually realised with Identrust!).  I think you've inspired me to download the consultation document and respond :-)

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 24 July, 2012, 20:45

Kudos to this move. Hopefully, it frees some bandwidth within the Payments Council to start focusing on how to make e-payments more frictionless for payers and payees instead of trying to ram them down the public's throats just because they're cheaper for banks. A true sign of Payments Council's value-add would be when consumers reduce the use of checks by themselves because they have safer and more convenient alternative payment methods. With Barclays PingIt and similar products, that day is not far away.

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