Payment services and e-money

This Overview is a guide to the Financial Services content within the Payment services subtopic, with links to appropriate materials.

EU regulation of payment services

The Payment Services Directive (Directive 2007/64/EC) (PSD1) provided the legal foundation for the creation of an EU-wide single market for payments.

PSD1 was intended to regulate PSPs and harmonise the payments sector within the EU. However, advances in payments systems have outstripped the regulatory capacity of PSD1 and, in July 2013, the European Commission introduced a proposal for a second Payment Services Directive (COM(2013) 547 final) (PSD2) (see: Proposal), which incorporates and repeals PSD1. PSD2 addresses the technological advances affecting payments, the increased incidence of online payments fraud and inconsistent implementation of certain provisions of PSD1. It introduces rules for third-party PSPs, expands the geographic scope, increases requirements on security and narrows the exemptions available under PSD1.

The second Payment Services Directive (PSD2) (Directive 2015/2366/EC) was published in the Official Journal of the EU on 23 December 2015 (here) and came into force on 13 January 2016.

EU regulation of payment services providers—essentials

This Practice Note provides an overview, and

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Latest Financial Services News

FMSB publishes Final Standard for Client Onboarding: Documentation and Processes

The Financial Markets Standards Board (FMSB) has published its final ‘Standard for Client Onboarding: Documentation and Process’ and related Annexes. The Standard seeks to harmonise the data and documents required from clients, as well as codifying elements of best practice in the interaction between clients and onboarding firms, to create greater efficiency. Drafted to allow onboarding firms to continue to fully apply the UK’s Risk Based Approach to KYC, the Standard provides more granular guidance for the practical implementation of the UK Money Laundering Regulations (UK MLRs). The FMSB will continue to monitor developments in the UK MLRs and other applicable regulation and guidance and update the Standard as required.

BoE welcomes API Panel of Expert recommendations to enhance cross-border payments

The Bank of England (BoE) has welcomed recommendations by the API Panel of Experts (APEX) for the development of payment APIs. The recommendations were published in the October 2024 report to the G20 by the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI): ‘Promoting the harmonisation of application programming interfaces to enhance cross-border payments: recommendations and toolkit’. The BoE views the recommendations and their associated action items as a timely and practical push for increased harmonisation of APIs in cross-border payments which is in line with the objectives of the G20’s cross-border payments programme.

PRA corrects error in Solvency II standard formula mass lapse life underwriting risk rule

The Prudential Regulation Authority (PRA) has published a statement stating that it has identified and rectified an error in the recently published Solvency II restatement of assimilated law. The error was in rule 3B6.6(1) in the Solvency Capital Requirement - Standard Formula (SCR-SF) Part of the PRA Rulebook published in Policy Statement 15/24. The rule incorrectly included a reference to Regulated Activities Order (RAO) Schedule 1, Part II, class III ('Linked long-term') business, which should be subject to a 70% stress for mass lapse life underwriting risk. The rule instrument correcting the error will take effect on 31 December 2024.

FCA publishes Handbook Notice 125

The Financial Conduct Authority (FCA) has published Handbook Notice 125 which describes the changes made to the FCA Handbook and other materials by the FCA Board and its Executive Regulation and Policy Committee under their legislative and statutory powers on 9 December 2024, 13 December 2024 and 19 December 2024. The changes effected through several instruments take effect on various dates commencing on 20 December 2024.

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