On 17 June 2021, there was published on the legislation.gov.uk website The Payment and Electronic Money Institution Insolvency Regulations 2021 together with an explanatory memorandum.
The Regulations provide for a new special administration regime for payment and electronic money institutions. The new regime will give insolvency practitioners administering the insolvencies of payment or electronic money institutions an expanded toolkit. The existing Special Administration Regime for Investment Banks (IBSAR) has been utilized as a model for this new regime, with amendments to reflect the operational and regulatory differences between the sectors. The IBSAR has been successful in returning client assets more quickly and at reduced cost, and similar outcomes are anticipated for consumers of institutions in the payment and electronic money sectors.
The Regulations also extend the full suite of Financial Services and Markets Act 2000 Part 24 provisions to all payment and electronic money institutions entering the standard insolvency process. This will provide the FCA with specific powers to participate and protect consumers in the event of an insolvency of a payment or electronic money institution as it does for other FCA supervised firms.
The Regulations come into force on the twenty-first day after the day on which they were made.
The Regulations follow an earlier consultation by HM Treasury which sought feedback on proposed insolvency changes for payment institutions and electronic money institutions. HM Treasury’s feedback on the consultation, published in April, can be found here.