On 12 March 2024, HM Treasury published a draft statutory instrument (SI): The Payment Services (Amendment) Regulations 2024, along with an accompanying policy note. The draft SI amends the Payment Services Regulations (PSRs) 2017 to allow payment service providers (PSPs) to delay the execution of an outbound payment transaction by up to four business days, which is not currently permitted in legislation.


Due to increased levels of Authorised Push Payment (APP) fraud in recent years, the Government legislated in the Financial Services and Markets Act 2023 (FSMA 2023) to require the Payment Systems Regulator (PSR) to introduce a mandatory reimbursement requirement in relation to payment orders executed over the Faster Payment System and which were executed subsequent to fraud or dishonesty (including APP fraud).  

In May 2023, the Government published its fraud strategy, which included a commitment to investigate how legislation might need to change to allow PSPs such as banks to adopt a risk-based approach to payments and allow further time to assess potentially fraudulent payments. This would aim to further tackle APP fraud whilst minimising impacts on legitimate payment flows.

Key changes

Currently, the PSRs 2017 broadly govern the authorisation and associated requirements for authorised or registered PSPs. They require that once an outbound payment order is received, the amount of the payment transaction is credited to the payee’s PSP account by the end of the next business day from receiving the payment order. This applies to PSPs operating from the UK which are carrying out non-paper order transactions in sterling within the UK; euro transactions in the UK/EEA under an EEA payment scheme (SEPA); and some sterling /euro conversions in the UK under an EEA payment scheme.

The draft SI amends the PSRs 2017 and allows PSPs to delay the execution of an outbound payment transaction by up to four business days from the time the order is received, which is currently not permitted in legislation. This will be permissible only where there are reasonable grounds to suspect a payment order from a payer has been placed subsequent to fraud or dishonesty perpetrated by someone else (excluding the payer) and those grounds are established by no later than the end of the next business day following receipt of the payment order. The delay may also only be used where the payer’s PSP requires further time to contact the customer or a third party, such as law enforcement, to establish whether to execute the payment.

PSPs will be required to inform customers of any delays, the reasons behind their decision, and what information or actions are needed to help the PSP decide whether to execute the order. However, this will not be required to the extent complying would be unlawful. The thresholds for any delay will ensure that PSPs must have an evidential basis to delay a payment, whilst ensuring that suspicious payments are properly investigated and rejected as required. To help ensure that consumers and businesses do not incur any costs as a result of any delays to payments, PSPs will be liable for any interest or charges resulting from a delay to payments.

The draft SI only applies to APPs executed within the UK in sterling. Small, medium, and large businesses, which may have numerous obligations to make timely payments to suppliers, will be able to opt out of these provisions with the mutual agreement of their PSP.

To monitor the impact of this legislation and ensure it is used in a proportionate manner, the FCA will engage with PSPs over reporting requirements in respect of compliance with the new provisions.

The SI does not make any changes to the PSRs 2017 with regard to inbound payments, i.e. where a PSP receives a payment from another PSP.

Next steps

HM Treasury intends to lay the draft SI before Parliament in summer 2024 and for it to commence at the same time as the PSR’s rules on mandatory reimbursement for APP fraud take effect (7 October 2024). Any comments on the draft SI should be provided to HM Treasury by 12 April 2024.