Published: 10 February 2009
Summary
New legislation on payment services to deliver benefits for consumers and businessesUpdate:
New legislation on payment services to deliver benefits for consumers and businesses
The Government yesterday laid before Parliament regulations to implement the EU Payment Services Directive (PSD) into UK legislation. These regulations are due to enter into force on 2 March 2009, and the PSD regulatory regime will be in place on 1 November 2009. The Government committed to early implementation in order to help firms consider the incoming requirements and prepare for compliance.
The PSD was agreed unanimously among all EU Member States in 2007. It should deliver greater competition, economic efficiency gains, and further innovation in the payment services market, while ensuring adequate consumer protection across Europe. In the UK, the Financial Services Authority (FSA) will be the regulator for most aspects of the PSD regulatory requirements.
Publishing the new legislation, the Financial Services Secretary to the Treasury, Lord Myners, said:
“This legislation will drive competition in the market for payment services, leading to greater efficiency, transparency and more innovation, bringing further benefits and certainty to UK consumers and businesses making everyday payments. It will also enhance consumer protection, with the new rules for payment service providers.”
The benefits of the PSD will be seen by consumers and businesses making everyday payments such as cash deposits and withdrawals, credit transfers, direct debits, credit and debit card payments, money remittance payments and other digital payment services. It affects domestic payments made in Sterling, in Euro and other non-Euro EU currencies, as well as cross-border EU payments from Sterling and other non-Euro EU currencies into Euro.
The PSD will also enable UK-based, non-bank businesses to enter and compete in the EU payments market on the basis of a licence obtained from the FSA in the UK. Licensing requirements are based on a prudential authorisation regime. Small firms operating in the UK only will only need to register with the FSA, and comply with the relevant anti-money laundering supervisory requirements.
Significantly, the legislation also introduces statutory EU-wide conduct of business rules, requiring providers to properly inform their customers about the payments they are making, and rights and responsibilities for providers and users, to increase certainty about the way payments will be delivered.
The FSA will shortly be issuing guidance to help businesses understand their compliance duties.
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