Welcome to the latest edition of Payments Law Update.
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PSD2 | A revolutionary framework opening up UK payments
Arguably the most revolutionary aspect of PSD2 was the introduction of account information and payment initiation services. The regulation of these ‘third party providers’ along with the mandated access requirements applicable to ‘account servicing payment service providers’ operating payment accounts which are ‘accessible online’, has the potential to open up the banking information and online payment space.
With over 4 months having elapsed since the UK’s implementation of PSD2, we reflect on the current industry landscape and pick out some key developments and themes.
Are payment services providers going to become VAT collectors? HMRC consults on VAT “split payments”
Building on the 2017 call for evidence, HMRC has launched a formal consultation into implementing a VAT “split payments” system. If adopted, this could effectively make PSPs (both card issuers and merchant acquirers) collectors of merchants’ VAT liabilities. This may require significant changes to PSPs’ (and potentially card schemes’) technology systems and contractual arrangements.
5MLD | Strengthening EU rules to prevent money laundering and terrorist financing
On 14 May 2018, the Council of the EU adopted the Fifth Anti-Money Laundering Directive. The changes will complement the existing preventive legal framework by setting out additional measures to better counter the financing of terrorism and to ensure increased transparency of financial transactions and legal entities – without hindering the normal functioning of payment systems.
Consumer payment accounts must comply with new transparency requirements from 31 October 2018
On 30 April 2018, the FCA published the UK’s final linked services list. This is a list of standardised terminology which describes the most representative services linked to certain types of payment accounts. The publication of this list triggers a number of other transparency requirements coming into force.
If you are a firm offering a ‘payment account’ as defined in the PARs, you now have until 31 October to implement a number of changes arising from these transparency requirements.
PSD2 update | Liability under Article 90
In case you missed it, a ‘corrigendum’ to PSD2 was published in the Official Journal on 23 April 2018. Along with making a number of corrections, it contains one substantive point, relating to Article 90, which deals with the liability of a PSP in the case of a non-executed, defective or late payment transaction initiated by a PIS.
New FCA proposals on operational and security risk management by PSPs
In March 2018, the FCA published its consultation on its proposed approach to the implementation of the European Banking Authority’s final guidelines on security measures for operational and security risks of payments services under PSD2.
The consultation introduces a new and important requirement for PSPs to report to the FCA on an annual basis, and submit an updated risk assessment of the operational and security risks relating to the payment services they provide.
PSR publishes decision paper and further consultation on regulatory fees for 2018/19
On 28 March 2018, the PSR and FCA published a combined consultation and decision paper on PSR regulatory fees for 2018/19. The decisions, which will take effect from 2018/19, change the way in which PSR fees will be calculated. They also implement further changes to enable the FCA to calculate, bill and collect fees from PSR fee payers (including PSPs) directly, rather than relying on payment system operators to collect PSR fees on the FCA’s behalf.