HM Treasury Publishes a Draft Payment Services (Amendment) Regulation
New Regulation Allows Payment Service Providers Up to Four Days’ Delay to Manage Potential Fraud
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2024年3月20日
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HM Treasury has published a near-final statutory instrument (SI), alongside the Payment Services (Amendment) Regulation 2024, detailing new rules targeted to decrease levels of authorised push payment (APP) fraud. The SI promotes a risk-based approach for payment service providers (“PSPs”) by allowing additional time to assess potentially fraudulent payments.
What Are the Key Regulatory Changes?
Under the Payment Services Regulation 2017, once an outbound payment order is received, the amount is to be credited to the payee’s account by the end of the following business day. The new regulation would allow PSPs to delay a transaction by a maximum of four business days when there are reasonable grounds to suspect that a payment order from a payer has been placed subsequent to fraud or dishonesty perpetrated by someone else. The delay may also only be used when the payer’s PSP requires further time to contact the customer or a third party, such as law enforcement, to establish whether to execute the payment.
The government, through its 2023 Fraud Strategy, is continuing to build on its commitment to investigate how legislation can be amended to allow PSPs time to assess potentially fraudulent payments and tackle APP fraud. PSPs are already required to implement a mandatory reimbursement process in relation to payment orders executed over the Faster Payments System due to fraud or dishonesty under the Financial Services and Markets Act 2023.
What Are the Next Steps?
The government has now pledged to subsequently set out its wider approach to the Payment Services 2017 Regulation as part of delivering a Smarter Regulatory Framework for financial services in due course. HM Treasury is set to lay the draft SI before Parliament this summer, and the mandatory rules on reimbursement for APP fraud will take effect on 7 October 2024.
What Should Firms Do?
Ahead of the implementation date, payment firms should commence a review to identify the types of transactions that would be subject to the delay and their technical capabilities and resourcing for reviewing transactions that are held due to suspicions of fraud. Tackling financial crime, including APP fraud, continues to be a priority for the Financial Conduct Authority (“FCA”). Firms may also want to take this opportunity to conduct a broader review of the adequacy of their systems and controls for the detection and prevention of fraud with due consideration to the FCA’s publication on 7 November 2023 on anti-fraud controls.
How Can We Help?
Our financial services, including financial crime, experts regularly support firms with regulatory change and compliance framework enhancements. For more information, go to: fticonsulting.com/uk/industries/financial-services.
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2024年3月20日
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Senior Managing Director, EMEA Head of Financial Services, Forensic & Litigation Consulting
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