The legislation that would abolish the Payment Systems Regulator (PSR) and transfer its functions to the Financial Conduct Authority (FCA) has completed its passage through the House of Lords and is now in the House of Commons.

Where the bill has got to

The Financial Services and Markets Bill was introduced in the House of Lords on 19 May 2026. It had its second reading on 8 June, committee stage between 22 June and 8 July, report stage on 7 and 9 September, and third reading on 15 September 2026. It received its first reading in the Commons the same day and is waiting for its Commons second reading (UK Parliament, bill stages).

The House of Lords Library describes it as a government bill that makes reforms to several areas of financial regulation, including "abolishing the Payment Systems Regulator" and transferring its functions to the FCA (Lords Library briefing).

The background

On 21 April 2026, HM Treasury confirmed its intention to abolish the PSR and integrate all of its functions into the FCA, following a consultation that received 30 responses. The government said pre-existing PSR instruments would transfer to the FCA, which would then decide its approach under the new framework (HM Treasury response).

In a separate consultation published in July 2026, the Treasury said the bill "proposes that these powers are maintained in substance as the Payment Systems Regulator is consolidated into the FCA", referring to the PSR's powers over card fees, including its market reviews of cross-border interchange fees and scheme and processing fees (Modernising Payment Services Regulation, para 2.3).

What it means for a small business

For now, nothing changes day to day. The PSR continues to operate until the bill becomes law and the transfer takes effect. Its recent decisions on card fees are written with the move in mind: in its July 2026 policy statement on Visa and Mastercard fees, the PSR said references to its future actions "should be understood as including the FCA" once the consolidation legislation is in place (PSR PS26/1).

That matters because PSR rules already affect small businesses that take cards, including limits on the length of card machine rental contracts from larger providers. Our guide to leaving a card machine contract explains those rules.

If you want to check whether your current card costs are competitive, you can upload a statement for a free comparison.