The UK financial regulator, the Financial Services Authority, is to consult the banking industry on proposals on how to broaden its oversight of banking payment systems.

At present, codes governing current accounts, personal loans, overdrafts, savings, cards services and automated teller machines are set by the UK’s Banking Code Standards Board. From next year, as a result of European Union regulations, however, the FSA will take over the job of regulating banks’ and building societies’ payment services systems.

The expansion of the FSA’s remit comes at a time when it is expected that banks, and other financial institutions, face tighter regulatory oversight as a result of the fallout from the credit crunch.

A spokeswoman for the FSA told WealthBriefing that this increased FSA regulatory net would include private wealth managers if they operated banking accounts.

The FSA review considers if it would be more effective to extend the FSA’s regulation across all aspects of banks' relationships with their retail customers.  This would exclude credit, including unsecured loans and credit cards, which is currently regulated by the Office of Fair Trading.

“Retail banking is going through a period of rapid change and regulation needs to keep pace with this change.  We believe that in order to ensure that the regulatory model is fit to meet these challenges, now and in the future, the FSA should regulate the wider aspects of everyday banking for all consumers," Jon Pain, FSA managing director of retail markets, said.