On 1 May 2024, the Payment Systems Regulator (PSR) published Consultation Paper 24/6 ‘Securing compliance: Proposed extensions and exemptions guidance’ (CP24/6).  

Background

The PSR’s specific directions and requirements are important tools which are used to require firms to implement changes improving payments for people and businesses across the UK. However, the PSR acknowledges that there may be circumstances when an extension or exemption from its requirements may be appropriate.

In CP24/6 the PSR is consulting on proposed guidance which sets out factors that it will use to decide whether to grant an extension or exemption to parties affected by one of the specific directions or specific requirements. This includes guidance on when to engage with the PSR on finding a solution when such circumstances arise. Importantly, the proposed guidance only applies to specific directions or requirements under sections 54 or 55 of the Financial Services (Banking Reform) Act 2013 that contain a provision for the PSR to allow such extensions or exemptions.

The proposed guidance

The proposed guidance in CP24/6 is intended to provide firms with clarity on the limited circumstances in which the PSR may deem an extension or exemption appropriate.

It proposes the following four key factors which will be used as a starting point when considering an extension or exemption request:

  • Whether granting an exemption or extension would adversely impact payment systems users, undermine any of the PSR’s statutory objectives, undermine the priorities set out in its five-year strategy, or adversely impact the improvements it seeks to make. If granting the request undermines these objectives, the PSR would be unlikely to grant it.
  • The context in which the specific direction arose, including the underlying policy aims and the key factors set by the specific direction or requirement.
  • The burden that not granting the request would place on the regulated party, as well as any impact of granting the request on businesses and consumers more widely.
  • In relation to extension requests, the steps the regulated party has taken to ensure that it will comply with the rules in a timely manner and that any risks to service users and/or markets have been mitigated.

The aim of the proposed guidance is to:

  • Ensure that regulated parties recognise that they must comply with the PSR’s specific directions and requirements to achieve the desired outcomes for UK payments users.
  • Make stakeholders aware that extensions and exemptions will only be granted in limited circumstances.
  • Explain the criteria the PSR uses to decide whether to grant exemptions and extensions.
  • Ensure a consistent approach to all existing and future requests for extensions or exemptions.

Next steps

The deadline for responses to CP24/6 is 3 June 2024.

The PSR expects to make final decisions in the summer of 2024 and publish finalised guidance shortly after that.