The FCA is consulting in its new CP 18/21 on rules and guidance intended to improve conduct standards and communications in the payment services and e-money sectors.
Details of the Consultation Paper are found here.
The Consultation Paper proposes to extend the application of the Principles for Businesses and certain specific rules about promotions and communications so that they cover wider categories of businesses that the FCA regulates (including businesses authorised or registered under the Payment Services Regulations or the Electronic Money Regulations).
This includes broader types of activities (including, in the UK, the provision of payment services and the issuing of electronic money where these activities are not connected to an activity regulated under the Financial Services and Markets Act, the provision of connected activities or the activities of registered account information service providers (RAISPs)).
Currently, the Principles apply to the issuance of e‑money by credit institutions, but, in most cases, to payment services only when such services are carried on as ancillary to a regulated activity.
These proposals follow modifications to the FCA’s rule-making powers in 2017, which brought certain businesses authorised or registered under the Payment Services Regulations or the Electronic Money Regulations within their scope alongside businesses authorised under FSMA.
The FCA has also proposed new guidance to help ensure that firms do not mislead consumers when they are advertising payment services that involve a currency conversion.
This delivers on a commitment by the FCA made last year to act on concerns about firms’ use of currency converter tools in relation to their currency transfer services.
The new rules will prevent firms from misleading consumers:
- by stopping firms promoting unachievable exchange rates to consumers
- by stopping firms making claims about the cost of a service provided by another provider unless the comparison is fair and balanced and the firm can prove that the claims made are true
The FCA proposes to limit its proposals to communications to consumers who are individuals acting outside their trade, business or profession, micro-businesses and charities with an annual income of less than £1 million.
These proposals will not apply to currency exchange services that are not carried out as part of a payment or e‑money service.
These measures should help customers to better understand the standards the FCA expects of firms in the market and will make it easier for the FCA to intervene when it sees harm. The FCA’s disciplinary powers under FSMA would apply to breaches of the proposed new rules, including those relating to marketing and communications, and this would reinforce the effectiveness of the FCA’s enforcement approach across the markets for payment services and electronic money.
The FCA is now seeking comments on the proposals set out in this Consultation Paper, which closes on the 1 November 2018. It will consider feedback and expects to publish rules in a Policy Statement before 31 January 2019.
How Thistle can help you?
Thistle will continue to keep this area under review and will issue further updates where necessary. Please contact us if you need assistance in relation to any of these issues.
Visit our Payment Services and E-Money pages for more information.