What has happened?
The FCA has recently issued a Dear CEO portfolio strategy letter to authorised payment institutions (APIs) and e-money issuers (EMIs), explaining how it expects these firms to act to prevent harm to their customers.
In its 2020/21 Business Plan, the FCA announced that the risks to consumers in the payment services sector are a priority requiring its supervisory focus and intervention. In the portfolio strategy letter, it sets out the actions firms must take to prevent harm to customers by ensuring that they are compliant with their regulatory obligations across six key areas.
The FCA has also recently published a feedback statement and finalised guidance following a short consultation. The guidance provides additional direction for firms to meet their safeguarding requirements and outlines the FCA’s expectation of firms to put in place more robust plans for winding down so that customer funds can be returned in a timely manner.
As part of the FCA Coronavirus and Safeguarding customers’ funds guidance which was released on 9 July 2020, it has been stipulated that all API and EMI firms are to carry out an annual audit of the firm’s safeguarding controls, along with clarification on other safeguarding requirements highlighted within the guidance document.
We will be providing an in-depth breakdown of the FCA’s guidance of how a firm can demonstrate its controls in relation to safeguarding.
What do you need to do?
The FCA expects payment firms to consider and discuss these key areas and additional guidance internally and agree on what further action to take to ensure that they meet the requirements. They should also consider the application to them of the FCA’s Principles for Business and the guidance set out in the FCA approach document and where they employ agents, consider the implications for those agents.
The regulator has identified six key areas where non-compliance with obligations harms consumers and in which issues are widespread and many firms may be failing to meet the required standards. These are;
The portfolio strategy letter also covers the FCA’s expectations concerning firms servicing of EEA-based customers following the end of the Brexit transition period.
How can we help you?
If you’d like to know more about how we can help with your payment services governance, oversight and processes, or any other aspect of FCA compliance, our expert team is here to help. Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.