Everyone cheering this consultation bills by the hour
What I noticed
I pulled every client alert I could find on Treasury’s payments consultation before writing this. Skadden, A&O Shearman, Bird & Bird, Travers Smith, Baker McKenzie, Lewis Silkin, Hogan Lovells. Every single one lands somewhere between neutral and enthusiastic. ‘Thrilling glimpse of a high-tech future,’ one calls it. Not one flags a real cost to the firms that will actually have to live under this regime day to day.
That is not evidence the consultation is bad. It is evidence that the loudest commentary on it is being produced by people whose business model is advising large, well-resourced institutions through exactly this kind of regulatory transition. A law firm doesn’t sell ‘read the Handbook update yourself.’ It sells ‘we’ll track the FCA rule changes for you.’ The more rulemaking migrates from static legislation into a living FCA rulebook, the more retainer work exists. I don’t think that’s cynicism. I think it’s the incentive structure, and it’s worth naming before you read their analysis as neutral.
The part nobody’s saying out loud
Moving PSR and EMR detail out of statute and into FCA rules is being framed entirely as agility for the sector. It is also, mechanically, a transfer of compliance-tracking cost from a fixed, occasional event — Parliament passing a statutory instrument every few years — to a continuous one: the FCA amending its Handbook whenever it judges the market has moved. A bank with a regulatory affairs team of twenty people barely notices that shift. A ten-person SMB fintech that currently checks in on payments law once a year now needs a standing process to monitor Handbook changes, or a retainer with someone who does. The consultation doesn’t create that asymmetry. It widens one that already existed.
The senior manager accountability question points the same direction. Treasury is asking whether individual accountability at payment and e-money institutions should be strengthened. Read charitably, that’s consumer protection catching up with the sector’s growth. Read as an operator, it’s a rising personal cost of holding a payment institution licence directly rather than operating as an agent or reseller under someone else’s authorisation — a BaaS platform, an EMI wrapper, a bigger sponsor. Every previous round of UK payments regulation has nudged smaller firms toward exactly that kind of dependency. I’d want to see the final rule before assuming this round is different.
Almost 1,200 firms are currently authorised or registered under the PSRs and EMRs. Treasury’s own framing treats that as a success story — proof the current regime supported competition. It’s also the base of firms this consultation is asking to absorb a more dynamic, less predictable compliance environment, with no indication yet of extra support for the smaller end of that population.
Where I could be wrong
Treasury has been explicit that core consumer protections and the payments perimeter stay in statute, which limits how far this can drift toward unaccountable FCA discretion. And a more agile rulebook cuts both ways: it can also update faster in an operator’s favour, for instance if it turns out current safeguarding or authorisation requirements are heavier than newer business models need. Agility isn’t automatically a cost. It’s a cost specifically for firms that lack the capacity to track it, which is exactly the segment this newsletter writes for. That’s the piece worth watching, not the general sentiment.
