The Bank of England's payment system fees are set to become more extensive, with the government consulting on updates that could see digital settlement asset service providers fall under its regulatory umbrella. The proposed changes aim to harmonise regulation across emerging financial technologies, with a potential expansion of the fee regime's scope by £1 billion annually – an additional 10% on current levies.
This consultation specifically addresses the recognition of digital settlement asset service providers as part of the existing fee structure for recognised payment systems and designated service providers. By incorporating these entities, the government seeks to ensure a consistent and comprehensive regulatory approach across the evolving landscape of financial services. The expansion reflects the increasing prominence of digital assets in the UK's financial infrastructure – with £12 billion worth of investment in this sector predicted by 2025.
Beyond the expansion of the fee regime's scope, the consultation also invites feedback on the limits that can be placed on supervisory and special project fees. These caps determine the maximum amount (£45 million) that can be levied on firms falling under the Bank of England's oversight for its regulatory activities and for specific, non-routine projects. The government's review suggests an effort to balance the costs of robust regulation with the operational realities of the regulated entities.
The Financial Services and Markets Act 2023 provided the legal framework for the Bank of England to oversee digital settlement asset service providers, acknowledging their critical role in maintaining financial stability. This consultation is a practical step to align funding mechanisms for this oversight with broader regulatory responsibilities. It underscores the government's commitment to adapting financial regulations to emerging technologies and market structures.
The consultation invites stakeholders – including financial institutions, technology firms, and other interested parties – to submit their views by 28 February. The feedback gathered will inform the government's final decisions on the fee regime, which will ultimately impact how the Bank of England funds its supervisory activities over a crucial segment of the UK's financial system.