If a fraudster tricked you into moving money to a fake account at some point in the past year, and your bank refunded you within days rather than making you fight for it, you have a regulator almost nobody has heard of to thank. The Payment Systems Regulator wrote the rule that forces UK banks and payment firms to reimburse victims of authorised push payment fraud. It also caps what Mastercard and Visa can charge on card transactions, and it decides which fintechs get direct access to the pipes that move money around Britain. None of that will change overnight — but the regulator itself is being abolished, and the process is now far enough along that it is worth understanding exactly what happens next.
A regulator nobody notices, doing work everyone feels
The PSR was set up under the Financial Services (Banking Reform) Act 2013 and became operational in 2015, built specifically to stop the big banks and card schemes controlling access to UK payment systems on their own terms. Since then it has quietly built a track record most consumers never connect to their own banking experience: the mandatory APP fraud reimbursement scheme that came into force in October 2024, the interchange fee caps that limit what Mastercard and Visa can charge retailers on card payments, and the access rules that let challengers such as Monzo, Starling and Revolut plug into Faster Payments without needing a sponsor bank's permission first. It also oversees the rulebooks behind Bacs, CHAPS and the LINK ATM network, the unglamorous infrastructure that decides whether a standing order clears overnight or a cash machine in a rural town stays open. None of that work makes headlines on its own, which is partly why the regulator itself has so little public profile despite the size of the decisions it makes. That changed briefly in January 2026, when the High Court dismissed a joint judicial review brought by Mastercard, Visa and Revolut against the PSR's power to cap cross-border interchange fees. The case, win or lose for the challengers, confirmed just how much authority sits inside a body most people couldn't name if you asked them on the street.
That authority is now moving house. In March 2025 the government announced it would abolish the PSR and fold its functions into the Financial Conduct Authority, arguing that having a separate regulator for payments alongside the FCA and the Bank of England created duplicated oversight, slower decisions and confusion for firms trying to work out which regulator to call. HM Treasury opened a formal consultation on the mechanics in September 2025, and its response — published on 21 April 2026 — confirmed the plan without softening it: the PSR disappears as an independent body, and the FCA absorbs its Part 5 powers under the Financial Services (Banking Reform) Act 2013, including the general direction powers, the competition duties and the mandatory APP fraud reimbursement rule itself.
What the Financial Services and Markets Bill 2026 actually does
The legal vehicle for all this is the Financial Services and Markets Bill 2026, confirmed in the King's Speech on 13 May 2026 and given its First Reading in the House of Lords six days later, on 19 May. The Bill folds the PSR's functions into the FCA's existing legal framework under the Financial Services and Markets Act 2000 wherever that framework already fits, and creates equivalent standalone provisions where it doesn't. Practically, that means the FCA becomes the single point of contact for payment institutions and e-money firms that currently answer to both regulators, a single access regime replaces the overlapping access provisions in Part 8 of the Payment Services Regulations 2017, and appeals against specific FCA directions move from the Competition Appeals Tribunal to the High Court — a change payments lawyers have flagged as tightening the review process rather than loosening it.
Two safeguards survive the merger intact. The Bank of England and the Prudential Regulation Authority keep their existing veto powers over payment system rules, and those vetoes now apply to the FCA in its expanded role exactly as they applied to the PSR before. And Treasury has explicitly confirmed the changes won't touch the UK's SEPA membership or the level playing field UK firms currently have with other European payment participants — a detail that matters more than it sounds, given how much cross-border transfer volume runs through SEPA rails for UK businesses trading with the EU.
Who actually regulates your money right now
Nobody new, yet.
The Bill has cleared its First Reading, but it still needs to pass through the rest of the House of Lords, then the Commons, before it receives Royal Assent — and even after that, the actual transfer of powers happens on a commencement date set separately, not automatically the moment the Bill becomes law. Until commencement, the PSR keeps operating exactly as before, with its full statutory powers, its own leadership structure and its own casework. A complete transition within 2026 is very unlikely given how much parliamentary time primary legislation of this size typically needs, and Treasury's own consultation response stopped short of naming a commencement date at all.
The man already doing both jobs
One detail makes the coming merger feel less abrupt than the headline suggests: the FCA has already combined the PSR managing director role with its own executive director post for payments and digital finance, and both currently sit with the same person, David Geale. Speaking at the Payments Regulation and Innovation Summit on 2 February 2026, Geale described the consolidation as "an evolution, not a revolution" — a line that reads like corporate reassurance until you notice he has spent the past year running both regulators' payments functions in practice, which is precisely the kind of operational continuity that tends to determine whether a merger like this goes smoothly or badly. Firms authorised under the current PSR regime keep their existing permissions; the technical standards, directions and guidance the PSR has issued transfer across through the Bill's transitional provisions rather than needing to be reissued from scratch.
What changes for you, and what genuinely doesn't
Your APP fraud reimbursement rights don't change. If you're scammed into sending money to a fraudster today, the same rule applies regardless of which regulator's name sits at the bottom of the policy document — banks and payment firms must still refund eligible victims within five working days in most cases, and that obligation is one of the powers explicitly listed as transferring to the FCA rather than being watered down in the handover. The same goes for interchange fee caps: card scheme fees stay capped at their current levels through the transition, so retailers pricing in 2026 don't need to plan for a sudden jump in card acceptance costs. Open banking access for the apps you already use — Monzo, Starling, Revolut, Emma, Snoop and the rest — runs on rules that are separately headed for a statutory instrument in the final quarter of 2026, a process linked to but not dependent on the PSR merger itself.
Where I'd actually pay attention is the accountability question, not the plumbing. A single regulator covering prudential rules, conduct rules and payment systems rules can move faster and cut genuinely duplicated paperwork — that's the government's real argument, and it's not a weak one. But it also means one organisation now holds direction-setting powers, competition powers and consumer-protection powers over the same firms at the same time, with fewer external checks than when two separate bodies had to each justify their own position. Moving appeals from the Competition Appeals Tribunal to the High Court is being sold as a simplification, and on paper it is one, yet a specialist tribunal built to weigh competition economics is not quite the same forum as a generalist court. Firms with genuine grievances about access or fee decisions will be arguing their case in front of judges who see far fewer payments disputes than the CAT ever did. Businesses that currently deal with the PSR on access or fee disputes should expect the same substantive rules, just routed through a different door — and should not assume, because a bill has had its First Reading, that anything about their obligations changes before commencement actually lands.
If you run a small business that accepts card payments, the practical move is to keep doing exactly what you're doing and watch for the FCA's own communications once commencement is confirmed, rather than reacting to Bill-stage headlines. Don't switch banking apps or payment providers over this alone — nothing in the merger changes which provider protects you better, so treat it as background noise until commencement actually lands. If you're a consumer who has simply benefited from faster scam refunds without knowing why, the honest answer is that the protection was never really about which acronym sat on the letterhead — it was about a specific rule, written into UK payments law, that happens to be surviving the move to a new landlord largely unchanged. The Bill is still sitting in the House of Lords as this goes to press, with no commencement date confirmed and full transfer unlikely to complete before the year is out.