Shearman & Sterling LLP | FinReg | HM Treasury Consults on Insolvency Changes for Payment and Electronic Money Institutions
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  • HM Treasury Consults on Insolvency Changes for Payment and Electronic Money Institutions

    HM Treasury has launched a consultation on the U.K. Government's proposed Special Administration Regime for payment institutions and electronic money institutions that fall within the scope of the Payment Services Regulations 2017 and the Electronic Money Regulations 2011. The SAR would address shortcomings of the existing insolvency regime for PIs and EMIs and would apply alongside Part 24 of the Financial Services and Markets Act 2000, which would also be extended to apply in full to PIs and EMIs. Responses to the consultation should be submitted by January 14, 2021.

    The key objectives of the proposed SAR would be:
    • To return customer funds as soon as reasonably practicable;
    • To facilitate timely cooperation with payment systems and authorities; and
    • To rescue the institution as a going concern or wind it up in the best interests of creditors.

    The regime would apply to all PIs and EMIs captured by the Payment Services Regulations and the Electronic Money Regulations, but would not apply to relevant institutions that are credit institutions, credit unions or municipal banks. U.K. banks are already subject to the recovery and resolution regime under the Banking Act 2009.

    The U.K. Government plans to publish for consultation draft rules for the proposed SAR on December 17, 2020, responses to which should be submitted by January 28, 2021. The U.K. Government is separately considering responses to HM Treasury's call for evidence on its Payments Landscape Review, launched in July 2020, on the opportunities, gaps and risks that need to be addressed to ensure that the U.K. remains at the cutting edge of payments technology.

    View HM Treasury's consultation paper.

    View details of the Payments Landscape Review.

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