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Monday, 6 February 2017

#PSD2: Bill Payment Services In Scope Of UK Regs?

The Treasury is currently consulting on regulations to implement the new Payment Services Directive (PSD2).  There is little commentary in the consultation paper and many old questions remain unanswered, with the regulations to go live on 13 January 2018.  Government policy is to simply gold plate 'copy out' EU directives, which creates a rod for the UK's own back leaves the FCA to say how it will interpret the new rules in a consultation paper it proposes to issue in Q2.  One issue is whether bill payment services are viewed as being in scope in the UK or other EEA member states. If so, providers will need to outsource the operation of the service to a duly authorised firm or its agent, or become authorised or the agent of an authorised firm. Timing for those options is now tight...

Bill payment services enable a customer to pay a supplier's bill by paying a third party, e.g. at the till in a local shop.  

The Financial Conduct Authority has said these services are not caught by the current Payment Services Regulations so long as the customer's payment to the third party discharges the customer's obligation to pay the supplier. In other words, in such a scenario the third party is the 'payee' or intended recipient of funds, not the supplier.

But the new Payment Services Directive (PSD2) instructs EU member states to treat these services as 'money remittance', unless they are treated as part of some other type of regulated payment service (recital 9).  And there is no word, yet, on whether or how the UK plans to deliver on this edict, which is critical to deciding which option existing providers should choose in the event their services are ruled in scope.  

An additional issue is that, even if bill payment services are ruled out of scope by the UK authorities, there is no way to 'passport' that interpretation to other member states in the EEA. So there is still the awkward possibility that a service provider offering the same type of service on a cross border basis from the UK (or from outside the UK) could find that another member state rules the service as being in scope of PSD2.  In that case, the same options would apply: outsource the service to a duly authorised firm or its agent, or get a local entity authorised or appointed as an agent in the relevant jurisdiction(s) - which might be useful when passporting disappears post-Brexit, in any event.