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FCA’s Priorities for Payments Firms: Key Takeaways and Actions

The FCA has issued a Dear CEO Letter titled “Priorities for Payments Portfolio Firms” which sets clear priorities for payment and e-money firms: effective competition and innovation, maintaining financial system integrity, and keeping customers’ money safe. These priorities, aligned with the National Payments Vision, underscore the need for robust governance, oversight, and leadership to prevent regulatory failures.

Additionally, the FCA places its policymaking priorities on the continuous development of Open Banking and reviewing Strong Customer Authentication (SCA).

What Does the FCA Intend to Achieve?

In examining the key priorities and outcomes outlined in the FCA’s recent letter, it is clear that the FCA is focused on ensuring that firms within its scope address several critical areas. These include protecting customers, maintaining robust internal governance, complying with the Consumer Duty, ensuring operational and financial resilience, implementing comprehensive financial crime controls, and providing enhanced pricing clarity for customers of foreign exchange firms. By adhering to these priorities, firms can better align with regulatory expectations and enhance their overall effectiveness and reliability.

What Firms Need to Do?

  1. Firms looking to innovate in the market should use the available FCA resources for support and assess and improve the effective implementation of the requirements of Consumer Duty. Examples of how to achieve this can include appointing a Consumer Duty Champion, and ensuring products achieve good customer outcomes. Foreign exchange firms should ensure customers understand their fees and stay updated on new rules.

  2. Ensure internal controls and oversight to prevent financial crime are appropriate for their business and customers. Implementing requirements on APP Fraud and payment delays, with Consumer Duty in mind is crucial.

  3. Identify important business services and test their ability to remain within tolerable levels. This can be done through continuous monitoring and use of key documentation such as Outsourcing Registers, Business Continuity Plans, Business Impact Assessments, IT Security and Enterprise-Level Risk Policies, and Registers, ensuring sound governance around these processes.

  4. Ensure the Firm fulfils its safeguarding obligations according to regulatory requirements and notifies the FCA about materially adverse events. Assess financial risks to consistently meet capital requirements. Review wind-down plans and triggers for early detection and a solvent wind-down.

  5. Ensure the firm operates with sufficient resources and oversight of key business areas and external stakeholders like 3rd party service providers. Regularly monitor agents and distributors, and address identified shortfalls. For UK-authorised firms, ensure the head office is in the UK and that directors and senior management fulfil their duties from the UK.

How Thistle Team Can Help

The Payment Services team at Thistle Initiatives brings deep expertise in areas such as Consumer Duty, Safeguarding and Operational Resilience requirements, guiding Firms through regulatory complexity with precision. We provide tailored support, including Operational Resilience and Safeguarding Audits, to ensure your Firm not only meets but exceeds FCA expectations.