On 23 February 2024, the Payment Systems Regulator (PSR) published a letter providing details of how it will assess Pay.UK’s proposals for monitoring compliance with the Faster Payment System (FPS) reimbursement rules to determine whether to approve them.

Background

In Policy Statement PS23/3, the PSR set out its view that Pay.UK is the appropriate body to monitor compliance with the FPS reimbursement rules and outlined the PSR’s intention to require Pay.UK to create and implement a monitoring regime. In December 2023, the PSR published its final policy statement, PS23/4, and three legal instruments to implement the policy. One of these, Specific Direction 19 (SD19), places a number of obligations on Pay.UK as the FPS Payment System Operator (PSO), including to:

  • Prepare proposals for monitoring directed payment services providers’ (PSPs) compliance with the FPS reimbursement rules.
  • Give FPS scheme participants, whether they are members or not of the FPS, reasonable opportunities to make representations to it about its compliance monitoring proposals, consider these and take them into account.
  • Submit the proposals to the PSR by 5 April 2024.
  • Publish the approved compliance monitoring regime, by 7 June 2024. It is reiterated that the PSR requires Pay.UK to deliver proposals for monitoring the compliance of all PSPs in scope of the policy.  As such, the letter provides further detail on the approach that the PSR will take to reviewing, and determining whether to approve, Pay.UK’s compliance monitoring proposals.

‘Confidence objectives’ the PSR will use to review and approve Pay.UK proposals

The PSR will be using ‘confidence objectives’ to review and assess the proposals.

For the PSR to approve the proposals, Pay.UK must demonstrate and provide assurance of certain factors, including:

  • Gathering the necessary data from all PSPs and being clear on the steps Pay.UK will take to identify potential non-compliance, to enable effective monitoring of compliance with the FPS reimbursement rules.
  • Assuring itself as to the accuracy and integrity of the data received.
  • Reporting data and information regularly to the PSR, including to support PSR monitoring activities, on: PSP compliance, using clearly defined metrics, and Pay.UK’s monitoring activities.
  • Being clear on the steps Pay.UK will take in respect of managing potential non-compliance with the FPS reimbursement rules of the member PSPs, using the data it has collected and in line with its existing approach to consequence management.
  • Having a defined basis and process for escalating compliance issues to the PSR, including outside of the regular reporting cycle that Pay.UK will propose to the PSR.
  • Having developed a clear and effective process for how Pay.UK will manage subsequent changes to its compliance monitoring regime.
  • Having sought sufficient representations on its compliance monitoring proposals and demonstrated how it has duly considered these.
  • Being clear on where and how it will publish its compliance monitoring regime once approved by PSR.

Next steps

The PSR states that it would welcome sight of draft proposals in March 2024, ahead of Pay.UK formally providing these by 5 April 2024. This will provide the PSR with additional assurance of progress and delivery and allow it to provide feedback as Pay.UK finalises the proposals. In addition, as Pay.UK is aware, SD19 does not give Pay.UK the power to require the provision of data or information from PSPs, and the PSR will be consulting in April 2024 on a direction that will require all PSPs in scope of the policy to report data to Pay.UK to enable it to effectively monitor compliance with the FPS reimbursement rules.