The UK’s payments regulator could be scrapped and folded into another regulator as part of efforts by No10 to slash red tape, according to Sky News.

Ministers are mulling whether to abolish the Payment Systems Regulator (PSR) and amalgamate it into the Financial Conduct Authority (FCA), the broadcaster has reported.

A decision could come within weeks on the principle of the issue, Sky said, with sources describing the government as “actively considering” whether to eliminate the body.

It comes as Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves have embarked on a wider clampdown on regulators in a bid to drive economic growth and remove red tape – starting from Christmas Eve with a letter to 15 watchdogs about removing bureaucracy. 

Marcus Bokkerink, chairman of the Competition and Markets Authority (CMA), was removed from his role last month over concerns the CMA wasn’t focused enough on competitiveness.

He was replaced by former Amazon executive Doug Gurr – and the chairman and the chief executive of the Financial Ombudsman Service have since confirmed plans to step down.

In January, the business and trade secretary Jonathan Reynolds said: “”We’ve got to genuinely ask ourselves the question: have we got the right number of regulators?”

And the Financial Times this week reported Reeves is set to audit some 130 regulators across the UK to identify whether they had a strong enough focus on growth, while a series of roundtables have been held with watchdogs who received Starmer and Reeves’ letter.

The PSR employs around 160 people and is directly accountable to parliament, Sky said, with its interim managing director David Geale having been appointed last summer.

The organisation was created in 2013, via the Financial Services (Banking Reform) Act, and came into force two years later – but has been criticised for its regulatory approach and is chaired by Aidene Walsh, ex-boss of financial wellbeing charity, the Fairbanking Foundation.

Sky cited one source who said: “No other major economy has a standalone payments regulator like this, and it is hard to make the case for it continuing to exist.”

City AM has contacted the PSR and the Treasury for comment.