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Wednesday, 16 March 2016

Are Your Payment Accounts Caught By The Payment Accounts Regulations?

If you offer any type of "payment account" covered by the Payment Services Regulations, then the time has come to assess whether any of those fall within the scope of the Payment Accounts Regulations 2015 (“PARs”). From 18 September 2016, affected accounts will be covered by provisions relating to switching; accounts with basic features; and packaged accounts.

In its recent consultation paper, the FCA has said it expects firms to:
  • make (and record) an initial assessment of the potential application of the PARs;
  • put processes in place to make ongoing assessments for every new account introduced or changes to the functionalities of accounts are introduced; and
  • revisit the issue regularly in case consumers are using the accounts differently or any other relevant factors change.
Unfortunately this is not an easy process. In particular, not all “payment accounts” under the Payment Services Regulations (which include e-money accounts) will necessarily fall within the scope of the PARs, as the definitions are different. This has caused uncertainty as to the scope of the PARs which the FCA has tried to put  right in the consultation paper (see Appendix 2).

The FCA has also offered guidance on what constitutes "packaged accounts" and what information must be given to consumers in relation to those under regulation 13 of the PARs (see Appendix 3).

Payment accounts providers must either participate in a designated switching service or provide one that meets certain minimum requirements in the PARs. There is a separate consultation by the Payment Services Regulator on the designation and monitoring of alternative switching services.

And finally, a little something for those preoccupied by Brexit.

As mentioned in July 2015, the PARs import the provisions of the EU Payment Accounts Directive ("PAD") but, as the FCA has stressed in its consultation paper, the UK created its own complexity and red tape in this scenario - choosing to 'gold-plate' EU law by copying it into UK laws that are interpreted literally, rather than reflecting the purposive interpretation that civil law member states adopt:
"In line with the Government’s default approach to implementing EU directives, the provisions of PAD have been copied out into the regulations as far as this is possible.... " (at para 1.12)
Whichever side of the Brexit debate you're on, if any, it's worth realising that Brussels is not always to blame!