PSR MR15/1.3 - Final report: market review into the supply of indirect access to payment systems

We have published the final findings for our market review into the supply of indirect access to payment systems.

This market review is part of our wider programme of work aimed at helping more organisations obtain access to the UK’s regulated payment systems.

What is access and why is it important?

For banks, building societies, and other payment service providers (PSPs) to operate, they need to be able to move money between accounts. To do this they need access to a payment system. PSPs can have either direct or indirect access to the payment systems.

Indirect access is the ability to send and receive payments through a third party, such as another bank. It is just one way in which smaller banks, building societies and other PSPs can get access to payment systems.

Having access is a key enabler of competition and innovation in both the payments and banking sectors.

Why are we publishing this review?

In March 2016 we published our interim findings and set out our proposed next steps. We have published the responses to our interim findings here.

We considered the feedback received from our interim report which was broadly supportive of our interim findings and proposals – and are confirming our conclusions.

Who should read this report?

This final report is relevant to banks, building societies and other PSPs who currently provide indirect access to, or receive indirect access from, other PSPs.

It may also be of interest to payment system operators and other payments industry participants.

What did we find?

Our final conclusion is that, although competition in the supply of indirect access appears to be producing some good outcomes, we have specific concerns about the quality of access, limited choice for some PSPs, and barriers to switching.  We are seeing developments that, combined with the PSR’s work on access, are likely to address these concerns. We are focusing on encouraging those, rather than intervening directly.

Since our interim report we have seen progress in several of these developments. For example, the Bank of England has announced that it will be extending settlement account access to non‑bank PSPs and FPS has announced that five companies are now accredited with providing direct technical access to FPS  both of which provide more options for PSPs to have direct technical access.

What are the next steps?

Indirect access remains a priority area in our ongoing work programme. We will monitor and support the developments we have identified that have the potential to address our concerns.

We will report on the outcomes of our monitoring activities as part of our annual report on wider access and governance issues. Where appropriate and necessary, we will consider further action.

We have also published draft guidance for consultation to help parties understand our general approach when considering applications made to us under sections 56 and 57 of the Financial Services (Banking Reform) Act 2013 (FSBRA).

The guidance covers applications to gain both direct access and indirect access to regulated payment systems, as well as applications to vary existing agreements concerning the use of services provided by a regulated payment system.