9â Payment Services Regulations 2009

9â Payment Services Regulations 2009

The Payment Services Directive 2007/64/EC was implemented in the United Kingdom on 1 November 2009 via the Payment Services Regulations 2009.161 The FSA was designated the competent authority to implement the Directive through the 2009 Regulations.162 The Payment Services Directive applies to a wide range of firms that supply payment services to their customers, including banks, building societies, e-money issuers, money remitters, non-bank credit card issuers and non-bank merchant acquirers. A firm that provides payment services must comply with two requirements:

(1) it must be authorised or registered with the FSA, unless it is eligible for an exemption; and

(2) it must satisfy the Payment Services Regulations 2009 conduct of business requirements.163

The Payment Services Regulations 2009 established a new type of regulated institution, a payment institution, which is compelled to be authorised or registered with the FSA. If a firm is seeking to provide a payment service, even if it is eligible to take advantage of the FSA’s transitional provisions, the payment institution is still required to comply with the conduct of business requirements of the 2009 Regulations.164 A firm may be registered as

(a)a small payment institution;

(b)an authorised payment institution; or

(c)an agent of a payment institution.

A firm seeking registration as a small payment institution must satisfy four requirements:

160FSA, The Banking Conduct Regime, available at www.fsa.gov.uk/Pages/Doing/Regulated/ banking/bcobs/index.shtml.

161SI 2009/209.

162For a more detailed discussion of the role of the FSA in relation to the Payment Services Regulations 2009, see FSA, The FSA’s Role under the Payment Services Regulations 2009: Our Approach (London, 2010).

163FSA, Payment Services Regulations, available at www.fsa.gov.uk/pages/Doing/Regulated/ banking/psd/index.shtml.

164For a more detailed overview of these obligations, see FSA, above n. 162, at 15–34.

(1)its average monthly payment transactions (over the preceding twelve months) must not exceed €3 million;

(2)none of the individuals responsible for managing the business has been convicted of offences relating to money laundering or terrorist financing or other financial crimes;

(3)its head office, registered office or place of residence must be in the United Kingdom; and

(4)it must comply with the registration requirements of the Money Laundering Regulations 2007, where those requirements apply to it.165

The second option for a firm is to become an authorised payment institution, which requires the applicant to provide the FSA with a wide range of information about its payment services, including:

•details of the payment services business the applicant carries out;

•the governance arrangements and internal procedures in place;

•how the firm will meet the capital requirements;

•details of the individuals responsible for payment services; and

•details of any persons with qualifying holdings.166

The final option available for a firm is to become an agent of a small payment institution or an authorised payment institution.

Once a payment institution is authorised or registered with the FSA, it is legally obliged to comply with the FSA’s prudential requirements and with the Payment Services Regulations 2009 conduct of business requirements. Furthermore the payment institution is required to provide the FSA with certain types of information, which have been categorised as reports and notifications. The reporting information is required by the FSA on a regular basis so that the payment institution can conform to the FSA’s supervisory obligations and EU reporting obligations. The payment institution is also obliged to provide the FSA with notifications if the information it has already provided needs to be altered. The FSA require this information to be provided within twenty-eight days of the change.

10â Conclusion

This chapter has discussed the interpretation of important terms such as a ‘bank’ and ‘customer’ and provided an overview of the relationships between aÂbank and its customers. What becomes clear is that, not only the definition of a bank and the practices it is involved with, but also the bank’s relationship with its customers have both dramatically altered. Part 6 Chapter 3 deals with various aspects of banking regulation.

165FSA, ‘Becoming a small payment institution’, available at www.fsa.gov.uk/pages/Doing/ Regulated/banking/psd/applying/small/index.shtml.

166FSA, ‘Becoming an authorised payment institution’, available at www.fsa.gov.uk/pages/Doing/ Regulated/banking/psd/applying/authorised/index.shtml.

461 11â Recommended reading

11â Recommended reading

Bollen, R. ‘European regulation of payment services: recent developments and the proposed Payment Services Directive, Part 2’ (2007) 22(10) Journal of International Banking Law and Regulation 532

â ‘European regulation of payment services: the story so far’ (2007) 22(9) Journal of International Banking Law and Regulation 451

Brandt, P. and Graham, P. ‘An update on the UK’s implementation of the Payment Services Directive’ (2009) 64 Compliance Officer Bulletin (March) 1, 3

Cartwright, P. ‘Retail depositors, conduct of business and sanctioning’ (2009) 17(3)

Journal of Financial Regulation and Compliance 302

Chen-Wishart, M. ‘Case comment: transparency and fairness in bank charges’ (2010) 126 Law Quarterly Review (April) 157

Cranston, R. Principles of Banking Law (Oxford University Press, 2002)

Davies, P. ‘Case comment: bank charges and unfair terms’ (2008) 67(3) Cambridge Law Journal 466

Ellinger, E., Lomnicka, E. and Hare, C. Ellinger’s Modern Banking Law (Oxford University Press, 2011)

Hsiao, M. ‘Legitimised interference with private properties: Banking Act 2009’ (2010) 25(5) Journal of International Banking Law and Regulation 227

Hudson, A. The Law of Finance (Sweet and Maxwell, London, 2009)

Mulheron, R. ‘Recent milestones in class actions reform in England: a critique and a proposal’ (2011) 127 Law Quarterly Review (April) 288

Mullineux, A. ‘The regulation of British retail banking utilities’ (2009) 17(4) Journal of Financial Regulation and Compliance 453

Rahmatian, A. ‘Must cheques disappear by 2018?’ (2011) 26(7) Journal of International Banking Law and Regulation 310

Ramage, S. ‘Legislative comment: digital money, electronic fraud, new regulations and the old money laundering regulations’ (2011) 200 Criminal Lawyer 1.

Stokes, R. ‘The banker’s duty of confidentiality, money laundering and the Human Rights Act’ (2007) Journal of Business Law (August) 502

Wadsley, J. and Penn, P. Penn and Shea, The Law relating to Domestic Banking (Sweet and Maxwell, London, 2000)