The payments regulator won in court in January and was abolished in April
Mastercard, Visa and Revolut challenged the PSR's power to cap card fees and lost. Three months later the Treasury confirmed the body would be folded into the FCA. Its powers survive. The question is whether the appetite does.
Every card payment carries fees that pass between banks and card networks. Britain has had a small regulator whose only job was payments, and it spent two years trying to push those fees down. The government is now closing it and moving the work into the much larger financial regulator.
Every legal power transfers across. What does not transfer is appetite — a body with one job behaves differently from one with twenty. The fee work will quietly slow, and nothing in the law will show it happening.
Britain’s payments regulator spent two years trying to force down the fees banks charge each other every time you tap a card. Mastercard, Visa and Revolut took it to court to stop them. On 15 January 2026 it won — the Administrative Court upheld the power it had relied on.
Three months later the government announced it would be abolished. On 21 April the Treasury confirmed the Payment Systems Regulator will be folded into the Financial Conduct Authority, and on 19 May the Financial Services and Markets Bill had its first reading in the House of Lords.
What actually moves
It is worth being precise, because the reflexive reading of this is deregulation and that is not what the Bill does.
The powers survive the move. On commencement the Financial Conduct Authority, the FCA, acquires the general direction power, the specific direction powers, the competition duty, the concurrent competition powers, and the mandatory reimbursement scheme for authorised push payment fraud — the rules that force banks to refund customers tricked into sending money to criminals. The Treasury has said it intends to keep the substance of the objectives, and the FCA remains responsible for competition, innovation and the interests of people who make payments.
The Financial Conduct Authority’s own framing has been that this is an evolution rather than a revolution. On the law, that is fair.
What does not move
An institution’s willingness to use a power is not written into the power.
The Payment Systems Regulator had one subject. Payments were not part of its remit; payments were the whole of it. Every unit of attention it had went to card fees, access to payment systems, and fraud reimbursement. When the card networks pushed back hard enough to go to court, it defended its position, and won.
A power that is one body’s entire reason for existing becomes, inside a larger body, one item on a list.
The FCA is not a payments regulator that also does other things. It supervises conduct across the whole of financial services, and the same Bill that hands it payments also reforms the Financial Ombudsman Service, rewrites the consumer credit regime, changes bank ring-fencing and creates a new provisional licensing scheme. That is an enormous amount of institutional attention committed at once.
None of which means payments get neglected. It means payments now compete for attention, and they did not before.
The case for consolidation
The argument for the merger is real and was made in good faith.
Two regulators covering overlapping ground produces duplication, and firms end up answering similar questions twice to bodies that do not always agree. The FCA and PSR had already been working closely on open banking, variable recurring payments and the payments vision work, so the practical distance between them was smaller than the org chart suggested. Consolidation removes a seam.
There is also a fair point about capability. A larger regulator has deeper legal resources, more data, and more ability to absorb a loss in court without existential consequences. The PSR’s win in January was hard-fought against three well-funded litigants. The FCA fights that kind of case routinely.
And the Treasury has retained a check: it will be able to commission an independent review of the FCA’s economic efficiency and effectiveness in payments. That is an unusual provision and it suggests the government anticipated exactly this objection.
Why it still matters
Specialist regulators are inefficient by design, and that inefficiency is sometimes the point. A body that can only justify its existence through one subject will pursue that subject past the point a generalist would consider proportionate. Card fees are unglamorous, technical, and worth billions to a small number of very large firms with excellent lawyers. That is precisely the kind of fight a distracted regulator declines to pick.
The PSR has not gone yet. It keeps its statutory powers until the transfer completes and has published a work programme for 2026-27 covering card fees and fraud. The interesting period starts when it stops.
The FCA should publish a payments work programme before the transfer completes, naming which of the PSR's live measures it will carry forward and on what timetable. The Treasury has kept a power to review the FCA's effectiveness in payments; it should use it early rather than after the card fee work has quietly slowed.
What would change this view
Watch the FCA's payments work programme after commencement, and specifically whether the cross-border interchange fee cap and the authorised push payment reimbursement regime are carried forward with the same push behind them. If the FCA publishes a programme that keeps the card fee remedies on the same timetable and continues to litigate them when challenged, then this was an org chart change and the concern was misplaced.
The clearer test is the next contested intervention. If the FCA imposes a remedy the card networks take to court, and defends it as the PSR did, the appetite transferred with the powers. If the fee work quietly slows while the consumer credit and ombudsman reforms in the same Bill absorb the attention, then a specialist regulator was traded for a line item.
Worked from
- A Streamlined Approach to Payment Systems Regulation: consultation response
HM Treasury (GOV.UK) · 2026-04-21 - Financial Services and Markets Bill [HL]: HL Bill 5 of 2026-27
House of Lords Library - Financial Services and Markets Bill 2026
Bratby Law · 2026-06-14 - PSR abolition confirmed
Leaman Crellin - The PSR is being folded into the FCA: what it means for UK merchants
Monek