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Payment Matters 18: UK

  • United Kingdom
  • Financial services - Payment services


In this issue:

Payments Strategy Forum established

On July 15, 2015 the Payment Services Regulator released draft terms of reference for the Payments Strategy Forum, which is being established to lead an ongoing process to identify, prioritise and develop initiatives where the payments industry can collaborate to deliver innovation for the benefit of service users. Its scope is to review both payment systems and payment services, in so far as their development can be considered an enabler of new or improved payment services.

A call for members for the forum has been issued: 20 individuals in senior positions with the ability to shape and make decisions on strategy and/or policy within their organisations are sought. The PSF will meet six times per year in or around London (with the possibility of invitations to further meetings). Members of the forum will be required to put service-users' (rather than their own organisation's) interests first - although service-users covers a broad spectrum including anyone who uses payment systems and the services they provide. It therefore covers payment service providers, for example, as well as individual end-consumers. 

What this means for you

Individuals who are interested in becoming a member need to apply by 5pm on 12 August 2015. An application form is available via the PSR’s website. The first Forum meeting is expected to be held in the autumn.

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FCA publishes final guidelines on competition concurrency powers

On July 15, 2015 the FCA published final guidance and Handbook amendments relating to its concurrent competition powers, together with a policy statement setting out its responses to feedback received during the consultation earlier this year. The guidance and policy statement deal with a number of issues, including the contentious Principle 11 self-reporting duty. One of the key concerns raised during the consultation related to the extension of Principle 11 to a duty to report actual or possible competition law infringements to the FCA. Concerns were raised as to the timing, scope and nature of this duty, and the possibility that it conflicts with the privilege against self-incrimination and the CMA’s competition leniency policy.

What this means for you

In light of these responses, the FCA has agreed to qualify the self-reporting obligation so that it only captures ‘significant’ infringements, and has provided guidance on the meaning of ‘significant’. The FCA has also urged firms to take a sensible approach to the wording ‘may have infringed’. Although the inclusion of a materiality threshold is helpful, there is still a degree of uncertainty as to when the duty arises. For further information please contact Julia Woodward-Carlton or Abby Green.

New high profile payments platforms launched

On July 14, 2015 Apple Pay was rolled out in the UK, allowing iPhone, iPad and Apple Watch users to take advantage of Apple's take on contactless and mobile payments, which incorporates technology that allows users to swipe their mobile device on a point of sale terminal to purchase a product or service. Several major banks and credit card providers are already supporting the service.

On July 1, 2015 Facebook announced that its Messenger payments service is available to all users across the US. The service allows the app's 700 million users to connect a MasterCard or Visa debit card to their accounts, and from there send instant payments to other service users.

What this means for you

These high profile developments are consistent with the rest of the market as technology firms look to develop a significant role in the mobile payments market. However, they are overlaying their technology on the existing solutions/infrastructure of banks, building societies and the networks, so it will be very much a case of the different players working together as the mobile payments sector continues to rapidly expand. For more information on contracting with new technology providers and/or the regulatory responsibilities which are relevant to these types of payment services, please contact Richard Jones or Ruth Fairhurst.

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Payment Systems Regulator updates payments infrastructure market review

On June 30, 2015 the Payment Systems Regulator published an update to the market review they are conducting of the ownership and competitiveness of infrastructure services provided related to interbank payment systems. The final terms of reference are now available, which incorporate the feedback from consultation responses.

What this means for you

The review is now in the information gathering phase and will concentrate on collecting further evidence and information from stakeholders; an interim report is expected in early 2016, with a final report to follow in the summer. For further information please contact Julia Woodward-Carlton or Abby Green.

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Payments Council now a trade association

On June 29, 2015 the Payments Council relaunched as Payments UK, a trade association that aims to provide a single, authoritative voice for the UK payments industry at home, across Europe and the globe. Payments UK will work closely with the Payment Systems Regulator in its remit to promote competition and innovation across the sector. Its top priorities include creating an instant payment system for euros, improving customer identification processes and working collaboratively to implement the Payment Services Directive II. The association will launch a newsletter and other industry publications later in 2015.

The representative body also launched Access to Payment Systems, a web-based information hub displaying options for direct and indirect access to the payment schemes for any organisation that needs to access to the UK’s payments systems.

What this means for you

Payments UK will work with stakeholders to share payments knowledge and expertise and it will continue to offer best practice guidelines and industry statistics. It will work closely with payments organisations and regulators including The UK Cards Association, Payment System Operators, the FCA and the PSR on industry issues. 

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FCA calls for input on terms and definitions for services which are linked to payment accounts and subject to fees

On June 17, 2015 the FCA sought views on a proposed list of standardised terms and definitions for key services linked to payment accounts subject to a fee in the UK. Under the Payment Accounts Directive, a key objective is to improve the transparency and comparability of fee information in relation to payment accounts for consumers, including through introducing standardised terms and definitions to describe the key services linked to payment accounts. The services were identified and defined through qualitative consumer research  and are listed on page eight of the FCA’s call for input document.

What this means for you 

The FCA will now analyse responses and consider any specific proposals for changes to the choice of services on the draft list or to the suggested terms and definitions. It intends to publish a Feedback Statement during the first half of September 2015 and the UK provisional list will then be submitted to the European Commission and the EBA by the deadline of 18 September 2015. For further information please contact Richard Jones or Ruth Fairhurst.

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Payment Systems Regulator conducts market review into the supply of indirect access to payment systems

On May 29, 2015 the Payment Systems Regulator initiated the information gathering phase of its review to develop final terms of reference on indirect access to payment systems and whether competition is working well for service-users. The key questions that the review seeks to address are set out in the Terms of Reference, and include exploring the gap between the services that indirect payment service providers want and what they receive, the factors which have led to a limited number of indirect access providers in the market and the options available to improve indirect access to interbank payment systems. The review covers the main interbank payment systems (Bacs, CHAPS, Cheque and Credit, Faster Payments Service and LINK). The Payment Systems Regulator expects to publish an interim report by January 2016 and a final report by May 2016.

What this means for you

Firms are advised to:

  • consider how to influence the direction, focus and outcome of the review. Where firms are not required to participate, consider whether there is benefit to them in proactively engaging with the PSR.
  • think strategically about what outcomes would be most advantageous for the firm and how to influence to best achieve those outcomes.
  • think about whether it is appropriate to challenge requests for information, for example if the scope is too wide, or to rephrase questions to ensure the focus of any data-gathering is useful.
  • be careful to mark selectively any sensitive written submissions to the PSR as confidential - the PSR will assume anything not marked confidential can be published and will not accept ‘blanket’ confidentiality claims.
  • be aware that while confidential information is generally likely to be protected from disclosure, the PSR is empowered to share firms’ confidential information where it would assist it in performing its functions.

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