Payments regulatory news, 28 May 2021

FIG Bulletin

Recent UK regulatory developments focussed on the payments sector. This week includes FCA deadline extension for implementing SCA and PSR call for views on phase 2 of confirmation of payee. See also our Financial institutions general regulatory news of broad relevance in the Related Materials links.


Hogan Lovells Global Payments Newsletter

We have published our Global Payments Newsletter for May 2021 which reports on key developments of interest to the payments industry over the last month, including:

  • United Kingdom: Financial Services Act 2021 becomes law.
  • Turkey: Central bank prohibits use of cryptoassets for payments for goods and services.
  • United Kingdom: Bank of England and HM Treasury establish CBDC Taskforce and external engagement groups.

PSRs 2017: FCA deadline extension for implementing SCA

The UK Financial Conduct Authority (FCA) has announced that it is providing firms with a further six months to implement strong customer authentication (SCA) for e-commerce under the Payment Services Regulations 2017 (PSRs 2017) as it recognises ongoing challenges facing the industry to be ready by the previous 14 September 2021 deadline. The new 14 March 2022 deadline is the latest the FCA expects full SCA compliance for e-commerce transactions. The FCA had already granted a previous six-month extension due to COVID-19.

The FCA emphasises that it still expects firms to continue to take robust action to reduce the risk of fraud.

Confirmation of payee: PSR call for views on phase 2

The Payment Systems Regulator (PSR) has published a consultation paper, CP21/6, calling for views on phase 2 of the introduction of confirmation of payee (CoP). This follows phase 1 of CoP when the PSR issued specific direction 10 (SD10) and the UK's six largest banking groups (SD10 banks) introduced CoP for faster payments and CHAPS transactions.

In the paper, the PSR sets out the findings of its analysis of the impact of phase 1 of CoP and the feedback received on phase 2. It welcomes views on:

  • the progress, dependencies and expected costs and benefits of phase 2;
  • whether certain types of accounts with secondary reference data (SRD) should be excluded from the scope of phase 2, and whether alternative solutions are more appropriate for SRD accounts overall; and
  • how CoP messaging works and how it could be enhanced.

The PSR also outlines a number of policy responses that it could implement for CoP, including options such as issuing a further direction mandating PSP actions to enable phase 2, bringing about improvements to the CoP service, and the future of SD10.

The consultation closes on 30 June 2021. The PSR envisages that it will consult on next steps in July or August 2021 and publish a policy statement with direction(s) if appropriate in September or October 2021.

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Authored by Yvonne Clapham


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