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HM Treasury policy note on delaying payments processing and
draft amending regulations
On 12 March 2024, HM Treasury published a near-final version of
the Payment Services (Amendment) Regulations 2024,
which aim to delay payments processing when there are reasonable
grounds to suspect fraud or dishonesty. The publication is part of
the government’s work to tackle authorised push payment (APP)
fraud.
The draft regulations amend provisions in the Payment Services
Regulations 2017 which require payment service providers (PSPs) to
execute payment transactions within maximum time limits (regulation
86). The amendments give a payer’s PSP the ability to delay the
execution of certain payment orders where, within a specified time,
it establishes reasonable grounds to suspect the order has been
executed subsequent to fraud or dishonesty perpetrated by a third
party (which may include the payee). The delay should be used to
enable the PSP to determine whether the order should be executed
and must not exceed a specified time limit.
PSPs will be required to inform customers of any delays, the
reasons for their decision, and what information or actions are
needed to help the PSP decide whether to execute the order.
However, this will not be required to the extent complying would be
unlawful (for example, under anti-money laundering
legislation).
HM Treasury intends to lay the regulations before parliament in
summer 2024, and bring them into force at the same time as the new
rules on mandatory reimbursement for APP fraud in October 2024.
HM Treasury policy note on amending payment services contract
termination provisions and draft regulations
On 14 March 2024, HM Treasury published a near-final version of
the Payment Services and Payment Accounts (Contract
Terminations) (Amendment) Regulations 2024, which aim to amend
the requirements relating to provider-initiated terminations of
payment service contracts.
The draft regulations amend the PSRs to impose new requirements
relating to payment service framework contracts concluded for an
indefinite period which are terminated by a PSP. The minimum
termination notice period will increase from two months to 90 days,
and PSPs will be required to explain the reasons for the
termination. The draft regulations also amend the Payment Accounts
Regulations 2015 to bring the notice period and related requirement
to give reasons into line with the new requirements in the
PSRs.
The policy note sets out the rationale for the changes and
explains the intended exceptions to the requirements, as well as
wider scenarios the government has considered. These changes will
not extend to framework contracts that are regulated running
account credit facilities (such as credit cards). Instead, section
98A of the Consumer Credit Act 1974 will continue to apply.
HM Treasury intends to lay the regulations before parliament in
summer 2024, subject to parliamentary timing, and for them to
commence as soon as practicable thereafter.
HM Treasury sets out approach to designation of critical third
parties
On 21 March 2024, HM Treasury published a document setting out its approach to
designating critical third parties (CTPs).
HM Treasury has power under the Financial Services and Markets
Act 2023 (FSMA 2023) to designate a third-party service provider to
the UK financial services sector as “critical”. FSMA 2023
gives the financial regulators (the Bank of England, the PRA and
the FCA) power to set and enforce rules for designated CTPs, as
well as the ability to gather information and conduct
investigations on designated CTPs.
HM Treasury expects to base designations of CTPs on
recommendations from the financial regulators, but may also
designate a CTP without a recommendation from the financial
regulators. The document sets out an indicative process for
designation and how a designation decision will be
communicated.
As the regime aims to mitigate a systemic risk of over-reliance
by the financial services sector on a few major providers, HM
Treasury expects that CTPs will represent a small proportion of
third-party service providers to the industry, with the list
changing over time.
Delegated regulation amending list of high-risk third countries
under MLD4
See Bribery, fraud and anti-money laundering
section.
FCA publishes finalised guidance on financial promotions on
social media
See Advertising and Marketing section, and
our Insight.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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