Staff at payments watchdog ‘told on Tuesday that organisation will be abolished’

Staff at the UK’s payment systems watchdog were informed that the organisation would be abolished just hours before the decision was made public, MPs have heard.

David Geale, interim managing director at the Payment Systems Regulator (PSR), also said that no staff redundancies were expected as a result of the move.

The Government announced late on Tuesday that the regulator will be disbanded and merged within the Financial Conduct Authority (FCA) as part of an efficiency drive, saying it would make it easier for firms to deal with “one port of call”.

Giving evidence to the Treasury Committee, Mr Geale said: “We were told yesterday that the decision would be coming out”, but he said the regulator “had prepared for that eventuality”.

He said: “We liaised with the Treasury through the day, we did see the proposed statement, we also saw a draft of the letter that has come to this committee, and I was fortunately able to brief our staff just after close last night.”

He added: “It was a matter of public record that the Government was looking at regulators.”

Mr Geale said “We have been talking to staff in regular cascades… what I could not do is give people any certainty because the certainty was not there for us, in terms of being formally told, we were formally told yesterday that it would be happening, and I agreed that I would brief my staff at 5.30 last night.”

He said there had been media speculation in recent weeks “that suggested that this might happen”.

Mr Geale said he is “hugely proud of the way that people have reacted to that, having been told last night.

“They’ve been very positive, they’ve accepted it and really focused on the future already”.

The committee heard the PSR has 185 staff.

Mr Geale told the MPs: “As things stand, because it requires legislative change to actually move the powers of the PSR over to the FCA, I would expect everybody to move at some point, now I think the caveat to that is that in the letter, in the statement, that the Treasury does say it is considering whether everything moves to the FCA or whether indeed things move elsewhere.”

He said some PSR activities, for example, could be considered for being moved to the Bank of England.

He added: “What I’m anticipating at the moment is that the PSR will continue as an organisation for a period in time until we get legislation, so I would estimate late next year.”

Asked if 185 staff will still be needed, he said: “Yes. Some may be redeployed within the FCA… we are not planning any redundancies.”

He said PSR staff are on FCA contracts and the PSR already has the same IT systems and the same building as the FCA, but there is some duplication of functions.

Mr Geale said: “We’re not planning on redundancies, the FCA is a big organisation, I think we would always look to redeploy people first.”

Prime Minister Sir Keir Starmer has said the move is part of Government efforts to kickstart economic growth.

He said cutting red tape and regulation is a priority in the Government’s Plan for Change.

Committee members also asked about authorised push payment (APP) fraud, cases where people are tricked into transferring money to a fraudster.

In October 2024, the PSR introduced mandatory fraud reimbursement rules for banks.

Under the new protections, there is an £85,000 reimbursement limit – but banks can choose to reimburse higher amounts. The new mandatory reimbursement limit was previously expected to be £415,000.

Mr Geale told the MPs: “To date, we have seen 79 cases over £85,000… that’s totalled about £9.3 million, under 1% of claims are over the £85,000 limit so that’s continued as a trend, and £6.2 million of that has been reimbursed.”