UK’s FCA Proposes Removing Contactless Limit to Allow ‘Greater Flexibility’

The U.K.’s Financial Conduct Authority may remove the 100-pound (about $123) contactless limit and “set new digital service standards” as part of its efforts to support the government’s growth mission.

The regulator included these proposals in a Thursday (Jan. 16) letter to Prime Minister Keir Starmer, which it sent in response to the government’s recommendations on growth.

FCA Chief Executive Nikhil Rathi said in the letter that the removal of the contactless limit would allow firms and customers greater flexibility and level the playing field with digital wallets.

He added that the new digital service standards could include requiring firms to accept electronic verification of death to speed up bereavement claims in insurance.

In addition to making these proposals, Rathi said in the letter that the FCA will work with the Payment Systems Regulator (PSR) to introduce variable recurring payments as a new open banking payment method, “increasing competition and choice,” and use powers it expects to have under the Data (Use and Access) Bill to develop open finance, “potentially prioritizing [small- to medium-sized business] lending.”

These measures will join several that the regulator had already planned, including developing a digital securities sandbox and a roadmap for digital assets; improving credit information with changes to industry governance; reforming online tools explaining pensions; and relying on existing frameworks for artificial intelligence rather than adding regulations, according to the letter.

“We already had significant work in train for this year which I set out below, along with new proposals which go further,” Rathi said in the letter, addressing Starmer. “We have listed ideas to test with you and through wider consultation, which we would do as quickly as possible, including with our statutory panels. This will be supported by academic research we have commissioned to better understand the links between financial regulation and growth.”

Starmer promised an era of “national renewal” following the Labour Party’s election victory in a landslide vote, PYMNTS reported in July.

The party’s plans for the financial services sector at the time included “delivering the next phase of open banking.”

It was reported Tuesday (Jan. 21) that the chair of the U.K.’s Competition and Markets Authority was removed from his position by the business secretary in a decision that underscored the administration’s push to align regulatory practices with its economic priorities.