HM Treasury has said that “equipping Faster Payments for the future” by ensuring that consumers are protected “when a payment goes wrong” is one of its priorities, in its review of the UK payments landscape.
In the Payments Landscape Review: Response to the Call for Evidence, published on 11 October, HM Treasury identified four priority areas and actions for government, regulators and the industry, in order to deliver its vision for a payments sector “at the forefront of technology, ensuring consumer protection and choice, operational resilience, competition, and harnessing innovation”.
In addition to strengthening consumer protections within Faster Payments, the review set out “unlocking the future” of Open Banking-enabled payments, enhancing cross-border payments and future-proofing the regulatory and legislative framework that governs payments as the main priorities.
At a 2019 Mansion House speech, then-Chancellor Philip Hammond announced that HM Treasury would lead a review of the UK’s payments landscape and, in July 2020, the government published the Payments Landscape Review: Call for Evidence.
The government received 68 responses to its call for evidence, from banks, fintechs, building societies and other groups such as retailers and trade bodies.
In its response to the call for evidence, HM Treasury found that lack of protections for consumers is one factor that could inhibit increased use of Faster Payments for retail purchases and offer an alternative to card payments.
“The government expects the PSR [Payment Systems Regulator] to continue to work with industry to ensure that consumers are sufficiently protected when using Faster Payments,” it stated.
“We expect Pay.UK, the Open Banking Implementation Entity (OBIE), and Faster Payments participants to reduce the level of harm to consumers both through preventative measures and reimbursement, and do not rule out that regulation may be needed to achieve this as the market develops.”
The OBIE posted on LinkedIn: “We warmly welcome HM Treasury’s response to the Payments Landscape Review and support its focus on protecting end users while unlocking the potential of #fasterpayments and open banking-enabled payments. This includes paying taxes more easily.
“We look forward to working closely with Pay.UK, banks and #fintechs to bring #openbankingpayments to more people and businesses.”
HM Treasury said that it received a range of views on the opportunities, gaps and risks that need addressing in order to further promote and develop new and existing payments networks and facilitate competition.
Among these were the “critical need” for Pay.UK to make “swift progress” on the New Payments Architecture and the importance of future governance for Open Banking following the completion of the Competition and Market Authority’s (CMA) mandated roadmap.
Given that many respondents believe that the adoption of Open Banking-enabled payments remained “in the early stages, predominantly being used to make one-off payments”, it was suggested that further functionality and standards are required to improve reliability and ease of use.
But there were “mixed views” on whether the adoption of an Open Banking trust mark would encourage take-up.