UK Financial Conduct Regulator Proposes to Apply Principles and Conduct Rules to Payment Service Providers and Electronic Money Firms
08/01/2018The U.K. Financial Conduct Authority has launched a consultation on general standards and communication rules for the payment services and e-money sectors.
Payment Service Providers and e-money firms are authorized or registered under the Payment Services Regulations 2017 and Electronic Money Regulations 2011, respectively. The Payment Services Regulations 2017 brought certain of these firms within the scope of the FCA's rulemaking powers.
Currently, the FCA's overarching requirements on firms-the Principles for Businesses-apply to the issuance of e‑money by credit institutions, which are authorized and regulated under the Financial Services and Markets Act 2000. However, because provision of payment services is not a regulated activity under FSMA, the Principles only apply to payment services when such services are carried on as ancillary to a regulated activity. The FCA proposes to amend its rules to ensure that all entities that provide payment services and issue e‑money are subject to the Principles in respect of such activities. This change therefore affects Payment Institutions, Electronic Money Institutions and Registered Account Information Service Providers as well as credit institutions.
The FCA also proposes to clarify its expectations around firms advertising their services to customers, by: (i) applying its rules and guidance on communications (including marketing communications) to communications with payment service and e‑money customers; and (ii) extending their application to EMIs, PIs and RAISPs. The FCA considers that the proposals in the consultation paper will set consistent expectations for all regulated actors in the sector and reinforce the effectiveness of its enforcement approach across the markets for payment services and electronic money. The rule changes should also ensure that consumers are confident that the information they receive from PSPs and e‑money issuers is fair, clear and not misleading and that they are not misled about the rates they can achieve or alternative providers’ services.
Comments on the consultation are invited by November 1, 2018. The FCA intends to publish a policy statement and final rules by the end of January 2019.
View the consultation paper (FCA CP 18/21).
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