Recent regulatory developments focussed on the payments sector. See also our General Regulatory News of broad relevance in the Related Materials links.

Contents

• COVID-19: Pay.UK report on current account switching behaviours
• Proposed new special administration regime for PIs and EMIs: summary of draft rules

COVID-19: Pay.UK report on current account switching behaviours

On 6 January 2021, Pay.UK published a report on how COVID-19 has affected current account switching attitudes and behaviours in the UK.

The report finds that current account switching in 2020 was 30% lower compared to previous years. It explores the mechanisms that have driven these changes, including the pandemic and wider changes to the financial services market.

Proposed new special administration regime for PIs and EMIs: summary of draft rules

HM Treasury has published a summary of proposed draft rules to accompany the new special administration regime for payment institutions (PIs) and electronic money institutions (EMIs). The summary is published as a new annex to the consultation on this proposed special administration regime that was issued on 3 December 2020.

As with the draft regulations, the draft rules are closely modelled on the equivalent provisions in the existing special administration regime for investment banks. Key points of difference with the related investment bank provisions include:

• omissions to reflect that payment institutions (PIs) and electronic money institutions (EMIs) do not undertake deposit-taking activities. This includes the omission of any role for the Financial Services Compensation Scheme as creditor;
• different contents for a special administrator's statement of affairs, including details of the individuals that use or hold funds through the institution, security interests and relevant safeguarding measures used;
• new provisions that approved costs incurred by the administrator due to a breach of the institution's safeguarding regime will be paid out of the institution’s own assets, with any shortfall being met out of the asset pool;
• provisions setting out reasonable measures that the administrator needs to take before a hard bar takes effect; and
• omission of provisions allowing a claimant or the Financial Conduct Authority to submit a claim following the bar date.

As with the investment bank rules, the draft rules will set out the specific procedural requirements in relation to court proceedings for commencing a special administration procedure. The Insolvency Rules Committee will be consulted in due course in finalising the detail of the draft rules.

The principal consultation closes at midnight on 14 January 2021. Responses specifically on the proposals for the draft rules can be submitted until midnight on 28 January 2021.

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