On 13 April 2017, the FCA published its consultation paper on the implementation of PSD2. The paper proposes a revised Approach Document which will set out the FCA’s approach to applying the Payment Services Regulations 2017 (PSRs 2017) and the amended Electronic Money Regulations 2011. Helpfully, the FCA has also provided a draft which includes track changes.
The revised Approach Document will be a single document replacing the two existing Payment Services and E-Money Approach Documents. As well as the changes necessary as a result of PSD2, the revised Approach Document includes some proposed clarifications of existing guidance and some new guidance, largely in response to the FCA’s February 2016 call for input on its approach to the current payment services regime.
The FCA has also proposed changes that include:
- The regulatory perimeter – Chapter 15 of the perimeter guidance manual (PERG) will be revised to take account of the new regulated activities under PSD2, the new definitions, and the ‘regular occupation or business activity test’;
- The approach to authorisation and passporting – the consultation paper includes the new requirements for businesses seeking to become authorised or registered, and requirements for existing PIs and EMIs. It also sets out the FCA’s proposed approach to changes in qualifying holdings of authorised PIs, and the new requirements for businesses passporting under PSD2;
- Certain conduct of business requirements – these include in relation to how PSPs and EMIs handle complaints as well as amending the Banking Conduct of Business sourcebook (BCOBS) to extend some of the new requirements introduced by PSD2 to retail banking services and service providers outside the scope of the PSRs 2017;
- Regulatory reporting – these changes focus on complaints reporting, fraud reporting and controllers and close links reports;
- PSPs’ access to payment account services – in accordance with PSD2, the PSRs 2017 require credit institutions to provide PSPs with access on a proportionate, objective and non-discriminatory basis and for such institutions to notify the FCA whenever access is refused or withdrawn. The FCA is consulting on the form, content and timing of such notification;
- Account information services and payment initiation services – the FCA is consulting on the proposed approach to regulating the firms who will be subject to the regime for the first time. The regulator sets out guidance that is aimed at helping the relevant firms navigate the relevant requirements; and
- FCA approach to supervising the PSRs 2017 and EMRs – the FCA has updated the guidance on its approach to supervision in the Revised Approach Document. In particular, it has removed references to complaints-led supervision, as it will no longer be following this supervisory approach.
Authorisation forms are not being consulted on at this point in the implementation process. The FCA has also confirmed that the consultation is based on HM Treasury’s draft legislation and, where sufficiently developed, draft RTS and Guidelines, in order to give industry as much time as possible to prepare. If changes are made to the draft legislation that affect the proposals set out in the consultation paper, the FCA will reflect these in its final rules, directions and guidance. It will also consult on any further changes where it believes it is appropriate to do so.
In the paper, the Payment Systems Regulator (PSR) is also consulting on its approach to monitoring and enforcing the four Regulations in the PSRs 2017 for which it is solely responsible, including access to payment systems and payment account services and information to be provided by independent ATM deployers. The PSR has, in addition, published a separate consultation paper relating to this.
The consultation for both Approach Documents is being coordinated through the FCA and closes on 8 June 2017. The consultation will run for eight weeks with the FCA stating that it expects to publish its Policy Statement in Q3 2017. The aim with this timing is to enable the FCA to take into account HM Treasury’s thinking post-consultation (though at this stage not its final position) and to put the relevant rules and guidance to the FCA Board in July 2017. As a result, we expect to see legislation laid and final rules issued with less than six months ahead of the go live date making implementation projects very tight.
A further FCA consultation on matters related to the EBA mandates under PSD2 (such as the RTS on strong customer authentication and common and secure open standards of communication) will be issued in mid-2017 and the proposals finalised in Autumn 2017, subject to progress on the various EBA work streams.