The Financial Conduct Authority (FCA) has today published its approach to implementing the revised Payment Services Directive (PSD2).
PSD2 is an EU Directive which sets requirements for firms that provide payment services, and will affect banks and building societies, payment institutions, e-money institutions and their customers. As well as promoting innovation, PSD2 aims to improve consumer protection, make payments safer and more secure, and drive down the costs of payment services. The new regime will be in force from 13 January 2018.
More services will be brought within the FCA’s scope by PSD2. These include account aggregation services which aim to help consumers manage their finances by bringing all of their bank account data together in one place, and services that allow consumers to make payments in different ways online, without using a credit or debit card.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said:
'Competition in the retail banking and payments is vital to UK consumers and the wider economy. PSD2 builds on this by giving consumers more choice around how they manage their payments and bank accounts. It also brings in some important protections for consumers and seeks to increase the security of payments.
'Firms should make sure they know what’s required of them to be ready for the new regime. We will continue to monitor closely whether competition in the market improves in the interests of consumers.'
PSD2 also introduces a number of new requirements around how firms treat their customers and handle their complaints, and the data they must report to the FCA.
It requires existing payment institutions and e-money institutions to be re-authorised or re-registered. Firms should consider whether they now need to seek authorisation or registration because of changes to the scope of regulation made by PSD2. This includes businesses providing account aggregation or online payment initiation services. Applications will open on 13 October 2017.
In the UK PSD2 is largely implemented through the Payment Services Regulations 2017, which was published by HM Treasury(link is external).
The FCA is the competent authority for PSD2. The FCA has published the PSD2 Policy Statement which explains the changes we are making to our proposals following consultation and confirms amendments to our Handbook and new non-Handbook directions for certain firms excluded from regulation. The FCA has published its Approach Document alongside this - this is designed to help firms navigate the payment services and e-money regulatory requirements, including those set out in HM Treasury regulations.
PSD2 requires all payment account providers across the EU to provide certain regulated firms access to customers’ accounts, subject to their explicit consent. One way of making this access possible could be through the Competition and Markets Authority’s Open Banking remedy, which follows from the 2016 market investigation into competition in the UK’s retail banking sector.
On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers