In his Mansion House speech on 10 July 2023, the Chancellor of the Exchequer Jeremy Hunt referred to further planned reforms - the ‘Mansion House reforms’ - that build on December 2022’s Edinburgh Reforms. This is all part of the post-Brexit work to deliver a Smarter Financial Services Regulatory Framework tailored to the UK. Among other things, the Chancellor announced an independent review into the future of payments to ensure the UK remains at the forefront of payments technology. The government has also laid new legislation to give regulators the powers they need to reform rules on innovative payments and fintech services, and is continuing to explore potential designs for the digital pound with the Bank of England. In addition, the government’s response to the December 2022 consultation on the customer information requirements in the Payment Accounts Regulations 2015 has been published.
Below is a ‘quick glance’ summary of the main payments related measures coming out of the Chancellor’s July 2023 Mansion House speech. Click here for our full form briefing which takes a more detailed look at the package and also provides a snapshot of recent EU legislative activity in this area.
Future of Payments Review 2023
The aim of the Future of Payments Review 2023 is to consider how payments are likely to be made in the future and make recommendations for government, financial services regulators and industry on the steps needed to successfully deliver world leading retail payments, in a further boost to UK fintech competitiveness. A Call for Input has been published to inform the Review, which will be chaired by Joe Garner. The scope of the Review is set out in more detail in its Terms of Reference. The Call for Input closes on 1 September 2023. The Chair will provide a report and recommendations to the government in Autumn 2023.
Enhanced payments regulatory powers for FCA and PSR as part of Smarter Regulatory Framework
The Financial Services and Markets Act 2023 (FSMA 2023) repeals retained EU law (REUL) relating to financial services in order to deliver a Smarter Regulatory Framework (SRF) tailored to the UK. REUL will be replaced with rules set by the regulators, operating within a framework established by government and Parliament (ie a comprehensive FSMA model). The government’s work to repeal retained EU payments law – in particular the Payment Services Regulations 2017 (PSRs 2017) and the Electronic Money Regulations 2011 (EMRs 2011) - is on the list of financial services items in Tranche 2 of its SRF programme, as set out in a December 2022 HM Treasury (HMT) policy statement. A new HMT policy paper on its delivery plan for the SRF programme, published in July 2023, contains a table showing the government’s progress on the programme so far, including that announced by the Chancellor in his 2023 Mansion House speech, as well as next steps for the legislative files in Tranches 1 and 2 of the programme.
As a first step in the work relating to payments law, the Electronic Money, Payment Card Interchange Fee and Payment Services (Amendment) Regulations 2023 (made on 11 July 2023) give the FCA sufficient rulemaking powers and the Payment Systems Regulator (PSR) sufficient powers of direction for payment services and e-money to make replacements as REUL is repealed. The Regulations are subject to phased commencement dates. The government will now continue work to build a new regulatory framework that will, where necessary, replace the PSRs and EMRs. According to HMT’s latest policy paper, a first round of ‘targeted reforms’ is due before the end of 2023. Work on the remainder and the laying of an SI is due ‘in 2024 onwards’.
HM Treasury confirms revocation of consumer information requirements under Payment Accounts Regulations 2015
HMT has published the response to its December 2022 consultation on the need for certain customer information requirements under Part 2 and Schedules 1 and 2 of the Payment Accounts Regulations 2015 (PARs), which implemented the EU Payment Accounts Directive (2014/92/EU) (PAD), for the UK market. HMT confirms that it intends to revoke Part 2, Schedules 1 and 2 of the PARs and the related Binding Technical Standards and hand over responsibility for detailed firm-facing requirements on customer information requirements to the FCA. The Financial Services and Markets Act 2023 (Commencement No 1) Regulations 2023 (made on 10 July 2023) include a provision dealing with the revocation of the relevant PARs provisions which will take effect on 1 January 2024. According to HMT’s policy paper (see above), a ‘consequential SI’ is also due to be laid before the end of 2023. The government understands that the FCA is not planning to make rule changes in this area but will continue to hold firms to account on the standards that it sets through its supervisory activity.
Click here for our full form briefing which takes a more detailed look at the main payments related measures coming out of the Chancellor’s July 2023 Mansion House speech aa well as providing a snapshot of recent EU legislative activity in this area.
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