The FCA has published Policy Statement 17/19: Implementation of the revised Payment Services Directive (PSD2): Approach Document and final Handbook changes (PS17/19).
The majority of the requirements introduced under the revised Payment Services Directive (PSD2) must be implemented by 13 January 2018. HM Treasury is implementing the PSD2 through the Payment Services Regulations 2017 (PSR 2017) which were published in July 2017. Most of the PSD2 requirements are being implemented in the UK through these regulations. As such, most of the guidance the FCA provides is about the application of these regulations.
Previously the FCA published the following consultations setting out proposed new or amended rules, directions and guidance intended to implement the PSD2:
- Consultation Paper 17/11: Implementation of the revised Payment Services Directive (PSD2): draft Approach Document and draft Handbook changes; and
- Consultation Paper 17/22: Revised Payment Services Directive (PSD2) implementation: draft authorisation and reporting forms.
In PS17/19 the FCA confirms the Handbook changes following the consultation feedback.
The layout of PS17/19 is as follows:
- Chapter 2 – perimeter guidance. This chapter is relevant to businesses offering or wishing to offer payment-related activities. The FCA has made some amendments to its perimeter guidance, including that relating to the newly regulated services, in response to consultation feedback. It also provides feedback on the new notifications that businesses will need to follow if they wish to rely on certain exclusions;
- Chapter 3- authorisation and registration. This chapter is relevant to payment institutions (PIs) and e-money institutions (EMIs), and those looking to acquire control in an authorised PI or small PI. The FCA responds to feedback on its proposed approach to authorisation and registration under the PSD2, including requirements for existing PIs and EMIs. The FCA also confirms its approach to changes in qualifying holdings of authorised PIs, and also highlights changes for small PIs in light of the PSR 2017;
- Chapter 4 – complaints handling and reporting. This chapter is relevant to all payment services providers (PSPs) and e-money issuers. The FCA responds to feedback on its proposed complaints handling rules to implement the PSD2. This includes changes which affect the compulsory and voluntary jurisdiction of the Financial Ombudsman Service. In response to the consultation feedback the FCA is also making some amendments to the new reporting requirements it proposed for PSPs;
- Chapter 5 – conduct of business. This chapter is relevant to all PSPs and e-money issuers, and other providers of retail banking services. The FCA makes some amendments to its guidance in light of feedback and confirms its Handbook rules related to the conduct of business of retail banking firms not subject to the PSR 2017. The FCA also makes some changes to its proposed approach to monthly statements;
- Chapter 6 – regulatory reporting, notifications and record keeping. This chapter is relevant to all PSPs and EMIs. The FCA confirms its approach to collecting data on payment services fraud. It also confirms revisions to the regular reporting required from PIs and EMIs. The FCA further confirms that authorised PIs will be required to submit the annual controllers report and close links report. The FCA responds to feedback received on its proposal regarding how PSPs notify it of major incidents. The FCA confirms that credit institutions will need to notify it before carrying out account information services (AIS) or PIS;
- Chapter 8 – PSPs access to payment account services. This chapter is relevant to credit institutions and firms that need access to payment account services. The FCA responds to feedback on its expectations on access to payment account services being provided by credit institutions;
- Chapter 9 – consequential changes and revisions to the Approach Document. This chapter is relevant to all PSPs and e-money issuers. The FCA confirms minor changes to the Handbook necessary to implement the PSD2. It also confirms further revisions to the Approach Document (see below); and
- Chapter 10 – the Payment Systems Regulator’s approach. This chapter is relevant to independent ATM deployers, operators of payment systems and direct participants in Settlement Finality Directive designated payment systems which provide indirect access to those payment systems for other PSPs. The Payment Systems Regulator (PSR) responds to feedback on its proposals regarding access to payment systems for PSPs. The PSR also responds to feedback on its proposed guidance about information on ATM withdrawal charges to be provided by independent ATM providers. The PSR confirms its approach to enforcing the requirements of the PSR 2017 for which it is responsible.
The FCA is also publishing the Payment Services and Electronic Money: Approach Document which it consulted on previously. The Approach Document is intended to help firms navigate the payment services and e-money regulatory requirements. It replaces the existing Payment Services and E-Money Approach Documents.
The FCA also notes that the regulatory technical standards on strong customer authentication and common and secure communication have yet to be adopted. To address some of the questions related to these issues, HM Treasury and the FCA issued a short publication in July 2017 (Expectations for the third country access provisions in PSD2).
In terms of next steps the FCA states that:
- the final registration and authorisation forms will be published on its website before applications open on 13 October 2017;
- the changes to its Handbook reflect fee changes in its Handbook Notice, following on from the earlier Fees Policy Statement which was published in July 2017;
- as the remaining regulatory technical standards, implementing technical standards and European Banking Authority (EBA) guidance are expected to be finalised in late 2017 and early 2018, the FCA will seek to update the Approach Document and Handbook. Of particular note are the forthcoming EBA guidelines on fraud reporting, which will have a direct impact on firms; and
- it will keep its approach under review more generally in 2018.
The FCA also states that certain firms need to be aware of the particular regulatory deadlines that they will have to meet in order to continue to operate:
- firms that need to become authorised or registered as a result of the PSD2 can apply to be authorised or registered under the PSR 2017 or r the amended Electronic Money Regulations 2011 from 13 October 2017. Firms that are unregulated and carrying out AIS or PIS and are new to the market will have to be authorised or registered if they wish to carry on business from 13 January 2018;
- existing authorised PIs, authorised EMIs and small EMIs have until 13 April 2018 to apply for re-authorisation or re-registration;
- existing small PIs have until 13 October 2018 to apply for re-registration;
- any existing authorised PI or authorised EMI will have to submit a variation of authorisation form if it wishes to provide AIS or PIS services; and
- firms operating under the electronic communications exclusion will have to notify the FCA by 13 January 2018, or before they commence the provision of such services. Those operating under the limited network exclusion will have to notify the FCA from 13 January 2019.
View PS17/19: Implementation of the revised Payment Services Directive, 19 September 2017