As our previous Payments Updates have discussed, since 1 April 2015, the Payment Systems Regulator (“PSR”) has full concurrent competition powers in relation to payment systems. The PSR is under an explicit statutory duty to promote effective competition in the markets for payment systems and the services they provide.
Over the past couple of months, guidance has been issued on how the PSR will fulfil this statutory objective. We have also seen developments in this new regime which indicate that the regulator’s involvement in the industry could increase dramatically.
PSR’s guidance on its enforcement powers
On 13 August 2015, the PSR published its final guidance on the exercise of its concurrent competition powers and procedures in respect of:
- enforcement of the Competition Act 1998; and
- market reviews, market studies and market investigations.
This guidance will help payment systems and businesses using payments systems understand how the PSR will enforce competition law.
In particular, the market study powers are likely to be heavily utilised by the PSR, given the increasing scrutiny which the financial markets are under generally. Since the Financial Conduct Authority was granted its concurrent competition powers, it has launched several market-wide investigations and we could see the PSR doing the same.
The final guidance documents are not substantially different from the drafts consulted on in January 2015. The main point to take away is that the PSR now has these powers and, as the specific regulator for the payments industry, will be taking an active interest from a competition perspective.
New PSR super-complainants
On 28 September 2015, HM Treasury announced which bodies it will designate as super-complainants to the PSR, mirroring the super-complaints regime in place for the FCA.
HM Treasury has written to Citizens Advice, Which?, the Federation of Small Businesses, and the Consumer Council of Northern Ireland to inform them of its intention to designate them as super-complainants. It has also invited Age UK to make an application for designation as a super-complainant.
As a super-complainant, these bodies have the right to make a super-complaint to the PSR if they consider that there are features of a market in the UK for payment systems that are, or may be, significantly damaging the interests of consumers. On receipt of a super-complaint, the PSR will have a duty to respond within 90 days and must justify any decision it makes not to progress cases referred to it by super-complaints.
Super-complaints made to competition and consumer enforcement authorities have often resulted in significant changes to markets, to the benefit of consumers. For example:
- following a super-complaint from Which? to the Office of Fair Trading (the predecessor to the Competition and Markets Authority), 12 airlines agreed to include debit card surcharges in the headline price for flights and to make any credit card surcharges more transparent in the booking process. The airlines made changes to their pricing structures and websites following the OFT’s enforcement action; and
- a super-complaint from Consumer Focus to the OFT in relation to charges for using credit and debit cards abroad and the purchase of foreign currency within the UK resulted in an agreement from banks and travel money providers to improve significantly the information provided to consumers on options available when purchasing foreign currency or using the credit and debit cards abroad.
Given the current level of scrutiny of the financial sector and the on-going competition litigation against Visa and MasterCard, it will be interesting to see whether the new super-complaint regime leads to even more involvement by the PSR in the sector.