UK government confirms FCA will absorb PSR and gain open banking powers

The UK Treasury has laid out a comprehensive payments reform package that folds the Payment Systems Regulator into the FCA and gives the combined body explicit authority over open banking’s commercial future.

The package represents the most significant structural change to UK payments oversight in a decade. The PSR–FCA merger, long discussed, is now confirmed policy, consolidating supervision of payment systems, open banking and digital assets under one roof. The FCA will gain new powers to regulate open banking payments within commercial schemes, a move intended to resolve the long-running governance gap that has hampered the development of commercial models since the Capital Market Authority’s original open banking remedies.

Alongside the regulatory consolidation, the government confirmed it will bring stablecoins within the payment services regulatory perimeter, aligning with broader efforts to position the UK as a digital assets hub. Janine Hirt, chief executive of Innovate Finance, highlighted the UK’s opportunity to lead in open banking, digital assets and AI-driven finance, but the practical significance lies in the structural clarity: a single regulator with a mandate that spans traditional payments, open banking and digital assets.

For the industry, the immediate question is implementation timeline. The FCA will consult on its new open banking powers, but firms building on open banking infrastructure now have a clearer sense of where regulatory authority will sit.

Editorial note: This is the biggest UK payments governance story in years, directly affecting how open banking is regulated and commercialised.

Sources: Economic secretary announces new measures to boost the UK’s competitiveness — JD Supra | UK to bring stablecoins into payment services regulation — Linklaters | UK sets out new framework for future-ready payments ecosystem — IBS Intelligence | Reg Wrap — The Banker

EU publishes progress note on PSD3, signalling trilogue positioning

The Council of the EU has issued an ‘I’ Item Note on PSD3, marking a formal step in member states’ alignment ahead of trilogue negotiations with the European Parliament.

The note reflects the Council’s current position on the draft Payment Services Directive. ‘I’ Item Notes are informational records that capture the state of play without requiring ministerial discussion, but their publication signals that the Council presidency considers member state positions sufficiently developed to warrant formal documentation.

With the European Parliament having advanced its own position, the Council note is a procedural prerequisite for structured trilogue talks. For firms planning against PSD3 timelines, the note suggests negotiations are progressing, though the directive’s final shape remains subject to the usual compromises between Council and Parliament positions on contentious issues such as liability frameworks, strong customer authentication scope and open finance data-sharing obligations.

Editorial note: A procedural step, but a meaningful one for anyone tracking PSD3’s legislative timeline and likely implementation date.

Sources: Council issues ‘I’ Item Note on PSD3 — Global Regulation Tomorrow