Pay.UK welcomes the opportunity created by the National Payments Vision, and the concomitant changes in the regulatory structure, to reform the organisational framework at the heart of UK payments. The UK urgently needs a new approach to payments to enable innovation and infrastructure enhancements to be delivered at pace and build on the effective day-to-day running of the existing systems.
The current framework, that has been in place for nine years, has delivered notable successes in driving up resilience and end-to-end risk management of the interbank payments ecosystem and has seen the UK become world leaders in tackling fraud. It has not, however, enabled the swift and efficient building of new infrastructure and related opportunities to improve payments, leading to the UK falling behind other countries. There are many reasons for this, including lack of consensus behind a clear vision and a prescriptive and overly engineered regulatory approach. Pay.UK, operating within this challenging environment, recognises that it did not get everything right and has learnt important lessons from this experience.
In our view, no change is not an option. The question to answer is how to learn from the challenges of the past to put in place the foundation for a successful future as quickly and efficiently as possible, and at minimal risk. Relitigating the past, or recreating past structures, will not drive us forwards. We continue to propose that the Authorities put in place a permanent mechanism to set and evolve a clear set of strategic outcomes for payments. We intend to contribute to this debate through our thought leadership, leveraging our expertise and global connections, and play our part in delivering the outcomes desired.
We propose a radical package of reforms to Pay.UK to embed the organisation further within the payments community, whilst providing safeguards for the public interest outcomes of financial stability, access, and competition in the market. These reforms would build the foundation necessary to drive forward UK payments and lead to a cultural change in how Pay.UK operates within the payments ecosystem. By building on our existing capabilities and working in partnership with industry, we can collectively implement these changes quickly, manage costs effectively and minimise risk – while preserving the industry’s prior investment in establishing Pay.UK as an effective risk manager with a robust three lines of defence.
Pay.UK proposes three reforms:
- We will change the composition of the Pay.UK Board, adding greater senior-level expertise from a diverse range of industry participants, over and above the recently increased industry representation.
- There is scope to create a subsidiary of Pay.UK (‘Change Co’) with an industry-led board and binding decision-making authority over strategic change for retail interbank payments, within the control framework of the current Pay.UK corporate structure. Embedding strategic change within Pay.UK’s group structure enables design and delivery of strategic change to reflect Pay.UK’s group-wide parameters and ensure that decisions reflect our public interest objectives. This subsidiary builds on the co-creation approach that we set out in our response to the National Payments Vision by creating a clear industry-led board to make these key design and delivery decisions. Pay.UK recognises that close partnership with all stakeholders is the best way to determine how to deliver the desired outcomes and to ensure that industry, including major participants, have the confidence to make the necessary investments. We also recognise the need for greater flexibility to adopt more innovative funding options to ensure fairness for all.
- We will embed a strong culture of working in partnership with industry and end users. We want a model where we co-create solutions with the industry and other stakeholders, leveraging the industry and other stakeholders’ skills. We will work both with existing participants and potential new participants that want to access payments in a different way. This will include greater use of secondments and a radical reshaping of how we engage, consult, and collaborate with our stakeholders, including reviewing how we work with our existing councils and committees.
Enhancing Pay.UK through these reforms would be a more cost effective, quicker, and lower risk approach than creating a new PSO, or splitting responsibilities across multiple organisations. It will preserve the investment already made by the industry and enable us all to work together to deliver world class payments in the UK as soon as possible.
Read our full proposal.
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