Shearman & Sterling LLP | FinReg | UK Payment Systems Regulator Publishes Progress Report on Access to and Governance of Payment Systems
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  • UK Payment Systems Regulator Publishes Progress Report on Access to and Governance of Payment Systems
    06/27/2019
    The U.K. Payment Systems Regulator has published its fourth report on developments in access to payment systems and the governance of those systems. The report focuses on developments in 2018, including the following:
     
    • Retail payment systems: The report finds that a record 12 new participants have now joined the Faster Payments Scheme, BACS and CHAPS, three of the U.K.'s interbank retail payment systems. Pay.UK has been appointed as the administrator of the U.K.’s interbank retail payment systems. Pay U.K. was created to aid the delivery of a new payments architecture, which is designed to drive competition and innovation for the benefit of payments services systems users. 
    • Indirect Access Providers: The Payment Services Regulations came into force in January 2018 and place obligations upon firms providing "indirect access" to payment systems. Indirect access enables payment services providers to access payment systems via a sponsor bank which itself has access to the relevant payment systems, without requiring the payment service provider to obtain its own membership of the payment system. The report states that challenges remain in the indirect access market, such as a reluctance for indirect access providers to supply their services to non-bank payment services providers. The Payment Systems Regulator intends to continue to monitor the indirect access provider market and will consider formal enforcement proceedings against any indirect access providers that it considers to be in breach of the Regulations. 
    • Pay U.K. governance: As part of its mandate, the Payment Systems Regulator is charged with promoting the interests of users of payment systems. This includes ensuring the governance structures of payment services system operators support engagement with service-users and represent users' views. To that end, in 2018 Pay U.K. consolidated the governance of Bacs Payment Schemes Ltd, Faster Payments Schemes Ltd and Cheque & Credit Clearing Company Ltd, in accordance with recommendations made by the Payments Strategy Forum.
    • Review of Payment Systems Regulator's directions: When it was launched in 2015, the Payment Systems Regulator issued directions setting out basic rules for the operation of participants in the payment systems market and the relationship of those participants with the Payment Systems Regulator. In the last year, the Regulator ran a public consultation on the directions, publishing policy decisions on a set of revised directions in March 2019. The revised directions are expected to be made in late 2019.
     
    The report also sets out the areas on which the Payment Systems Regulator will focus over the coming year, which include: (i) continuing to monitor direct and indirect access for users of payment systems; (ii) monitoring Pay U.K.'s new governance arrangements and progress with the new payments architecture; and (iii) monitoring compliance with the Payment Systems Regulations and the impact of the PSR's new Directions.
     
    View the Progress Report.
     
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