Skip to main content

Payments Council

Volume 709: debated on Wednesday 25 March 2009

Statement

My honourable friend the Economic Secretary to the Treasury (Ian Pearson) has today made the following Written Ministerial Statement.

On 25 March, the Office of Fair Trading (OFT) published a report setting out its findings on the effectiveness of the Payments Council in meeting its objectives. The Payments Council started work in March 2007, following an agreement in November 2006 by the OFT-chaired Payment Systems Task Force that a new body be created to provide strategic direction for the UK's payment industry. The task force set three key objectives for the Payments Council:

to lead the future development of co-operative payment services in the United Kingdom;

to ensure that the payment system is open and accountable; and

to ensure the operational efficiency, effectiveness and integrity of payment services in the United Kingdom, through a focus on issues which cross schemes.

The task force agreed that the OFT would carry out a review of the effectiveness of the new governance body (subsequently named the Payments Council), after two years of its operation. This was to ensure that the objectives of the new body were being met and delivered on in practice. This Statement highlights the key findings and recommendations in the OFT review of the operations of the Payments Council.

The OFT report concludes that the Payments Council is a definite improvement on what prevailed before its creation. The Payments Council's consultation on a national payments plan, setting out the strategic direction it should pursue over the next five to 10 years, was widely welcomed by stakeholders, and contributed to its objective on openness and accountability. The introduction of the faster payments scheme (FPS) in May 2007 represented a substantial innovation. Users of the system will be able to make telephone and internet payments within a matter of hours, rather than over three working days as under the BACS system.

While the introduction of the faster payment scheme was a real achievement, the rolling out of faster payment services by many banks to their customers has been relatively slow. The report finds that the Payments Council should be more pro-active in following up its initiatives with members and should also consider widening its membership and making more effective use of user groups, to ensure that end-users get the benefits envisaged.

The OFT report recommends that the Payments Council increases the emphasis on its integrity objective in future. Although the safety and security of payment systems have not been compromised, the Payments Council has not added value quickly enough, and this is an area where it needs to improve. The OFT considers that the Payments Council should commission an accountancy firm to report in two years on how well it has performed against its integrity objective. The report (or the executive summary of it) should be published in the Payments Council's annual review, and the Payments Council should outline how it intends to address any action points identified in it. Following the review from the accountancy firm, the Payments Council should self-assess against its integrity objective using the same procedure described below for its other objectives.

The OFT also recommends that the Payments Council provides a self-assessment against progress every two years on:

its strategic direction and openness and accountability objectives;

recommendations of the task force where these have not been met; and

recommendations coming out of this OFT report.

This self-assessment should contain the results of an open consultation with stakeholders on progress against objectives. The OFT may still choose to look into specific aspects of the Payments Council's performance against objectives, if it considers there to be sufficient reason.

The Government welcome the OFT work to review the effectiveness of the Payments Council, and welcome the recommendations made. I am writing today to the chair of the Payments Council to note the Government's continued interest in the future work of the Payments Council.