(Note: the below is a high level review of certain potential issues and is not to be relied upon in any definitive manner nor as legal and/or regulatory advice).
The UK Payment Systems Regulator (“PSR”) becomes fully operational on 1 April 2015 and has published its policy statement on 25 March 2015. The policy statement comes on the back of the consultation the PSR ran in November 2014.
What is covered in by the PSR Policy Statement?
The policy statement sets outs the PSR’s key policy decisions as well as launching two market reviews (indirect access and infrastructure provision). You will also find some details on the PSRs annual plan and budget / policy work programme for 2015/2016.
Why is it important?
The PSR is a new regulator and its actual impact on the industry is still uncertain. This policy statement sets out its key policy decisions which provides further guidance on its approach and in particular, for those directly impacted (ie those designated by HM Treasury to expressly fall within the scope of the PSRs remit), the extra compliance burden they will need to carry.
Who should be interested?
Of particular interest will be those impacted by key initial directions being issued by the PSR – the Treasury designated Interbank Operators (such as Bacs, C&C, CHAPS, FPS, Link – exceptions in the directions are made under certain circumstances for NICC), with a close monitoring on Card Operators (such as MasterCard Inc. and Visa Europe) .
However, everyone with an interest in the payments industry should be paying close attention as the PSR will at the least indirectly impact them – as mentioned in the introduction of the statement:
This policy statement is relevant to payment system operators, banks, building societies and other payment service providers (PSPs), infrastructure providers, people and organisations that use UK payment systems, trade bodies, consumer groups and other parties interested in UK payment systems.
What are some of the PSR’s key Policy Decisions?
The policy statement provides good detail on its policy decisions and they cover a number of topics. Some of the key ones include:
- Payments industry strategy and areas for collaboration – The PSR will establish a process for industry strategy setting via a forum (referred to as the “Payments Strategy Forum”). The Payments Strategy Forum will consist of industry members and service user stakeholders. The PSR will control the set-up of the new forum and will hold the industry to account for the forum’s success. If the strategy-setting process is ineffective or industry delivery of agreed priorities is too slow then the PSR will consider intervening.
- Ownership, governance and control of payment systems – giving service-users a voice – The PSR is keen to ensure that payment systems work in the interests of those that use them. The PSR is directing (effective 30 September 2015) that Interbank Operators (with limited exception) are to ensure representation of service users’ interests in the decision making processes of their governing bodies. No direction has been issued for Card Operators, but the situation with them is to be monitored.
- Ownership, governance and control of payment systems – conflicts of interest – The PSR will make a general direction (effective 30 April 2015) requiring Interbank Operators (except NICC) to ensure that any individual acting as a director of an Operator must not simultaneously act as a director of a Central Infrastructure Provider to that payment system.
- Ownership, governance and control of payment systems – transparency – The PSR will make a general direction (effective from 30 April 2015) requiring Interbank Operators (except NICC) to publish minutes of their governing body, including votes.
- Direct Access to payment systems – Access Rule – Effective 30 June 2015, the PSR will implement an access rule which will apply to those pan-GB Operators who are not already subject to access obligations, i.e. Bacs, C&C, CHAPS and FPS. It will require these Operators to have “objective, risk based and publicly-disclosed Access Requirements, which permit fair and open access”.
- Direct Access to payment systems – Reporting Rule – As part of the above a Reporting Rule will be implemented. This rule will require Operators to:
- keep under review their Access Requirements and provide the PSRs with an annual compliance report, the first report being due by 31 July 2015; and
- publish their Access Requirements from 30 June 2015.
- Indirect Access to payment systems – information direction – The PSR will require the four primary Sponsor Banks (Barclays, HSBC, Lloyds and RBS) to publish clear and up-to-date access-related information. The publication of this information is intended to permit Indirect PSPs to assess and compare the different offers by these Sponsor Banks.
- Indirect Access to payment systems – Sponsor Bank Code of Conduct – The PSR will work with industry to develop code of conduct which will be approved by the PSR and anticipated to become effective by 30 September 2015. The purpose of the code of conduct is to address concerns around indirect access by sponsor banks.
- Indirect Access to payment systems – Technical Access – The PSR is looking to industry to develop technical access solutions and will monitor the situation.