Payment System Regulator revises Directions for regulated parties

The Payment Systems Regulator (PSR) has today (5 March 2020) published revised versions of its General Directions, and Specific Direction 1.

These are the ‘day one’ Directions the regulator published when it became operational in 2015. They cover communication with the PSR as well as payment systems’ access and governance arrangements.

Following consultation, the PSR has updated these Directions to make sure they remain relevant, proportionate and fit for purpose.

General and Specific Directions are requirements the PSR issues to parties that it regulates, such as payment system operators and the payment service providers (PSPs) that use the systems.

The revised Directions will apply to more parties, with some parties having new or amended obligations.

The continued monitoring and review of its Directions reflects the PSR’s commitment to maintaining a robust but flexible regulatory approach that encourages competition and innovation in payment systems, and promotes good outcomes for everyone who uses them.

 “We know how important it is for a regulator to adapt. We’ve worked with our stakeholders and reacted to changes in legislation to update and clarify our Directions, so that we can continue to regulate effectively as payments continue to evolve.”

Chris Hemsley, Managing Director of the PSR

Read the PSR’s announcement at: https://www.psr.org.uk/psr-publications/news-announcements/psr-revises-directions-for-regulated-parties

The PSR have produced a helpful fact sheet to explain the changes: https://www.psr.org.uk/sites/default/files/media/PDF/PSR%20revised%20day%20one%20directions%20Factsheet%202-%20March%202020.pdf

The key changes are:

  • The Directions originally applied to parties regulated under the Financial Services (Banking Reform) Act 2013 (FSBRA). The PSR now also regulate parties under the Payment Services Regulations 2017 (the PSRs 2017) and the Payment Card Interchange Fee Regulations 2015 (the PCIFRS).

 

  • General Direction 2: Requires the operators of Bacs, Faster Payments, and Cheque and Credit to have proportionate, objective and non-discriminatory access requirements; publish these requirements; notify the PSR of changes; and provide the PSR with an annual report containing access information. This Direction no longer applies to CHAPS.

 

  • General Direction 3: Requires payment systems regulated under Regulation 103 of the PSRs 2017 to notify the PSR of changes to their access requirements, and to provide the PSR with an annual report containing access information. Previously this direction covered Visa, Mastercard and LINK, It now also applies to JCB, UnionPay, Diners Club and American Express. Also, no longer requires publication of access requirements.

 

  • General Direction 4: Requires the operators of Bacs, Faster Payments, Cheque and Credit, and LINK to make transparent decisions, consider service-users’ interests in their decision-making processes, and publish forward-looking annual reports on stakeholder engagement activities. This consolidates previous General Directions 4 and 6 focusing on service users’ interests. Changed focus of the reporting obligation to be public-facing and forward-looking and no longer applies to CHAPS.

 

  • General Direction 5: Requires the operators of Bacs, Faster Payments, Cheque and Credit, and LINK to take all reasonable steps to avoid conflicts of interest between operators of payment systems and providers of central infrastructure to those same payment systems. Clarification that the Direction applies where an infrastructure provider is bidding to supply a regulated payment system, as well as where it is supplying that system. No longer applies to CHAPS.

 

  • Specific Direction 1: Requires sponsor banks to publish information on their sponsor bank services and indirect access offerings, and to provide indicative timetables for those seeking indirect access to payment systems. Previously applied to certain named banks. Now applies to all sponsor banks. Now includes indicative timetable requirement. This Specific Direction will expire after three years unless extended.

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