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SPI Re-Registration Key Considerations

August 16, 2018

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The Small Payment Institution re-registration deadline is 12th October 2018. SPIs are required to assess and update their procedures to ensure they are in-line with the new Payment Service Regulations 2017 (PSR17).

The FCA has issued ‘Action’ correspondence to Small Payment Institutions (SPI) that have not applied for re-registration under the Second Payment Service Directive (PSD2). The notification stresses the importance of firms familiarising themselves with their new regulatory requirements at the earliest opportunity, stating that it was “critical” that firms submit their SPI re-registration application to the FCA by no later than 23:59 on 12 October 2018. The FCA went on to warn firms that if their re-registration was not approved by 13 January 2019, they would have to cease providing their regulated payment services to customers.

The SPI re-registration process presents several challenges for firms, who currently have less than two months to complete the steps to submit their application. SPIs will need to clear the following hurdles:

1) Registering with FCA Connect

Connect is the FCA’s primary portal for submission of applications and notifications. SPIs will need to submit the re-registration through the Connect system. However, as the Connect system was established after many firms became regulated by the FCA, some SPIs might not currently have a Connect account.

2) Understanding the New Regulations

Before preparing their SPI application, the firm should ensure that they understand the new requirements imposed on firms under the Payment Services Regulations (PSR) 2017 and the European Banking Authority’s guidelines. For instance, SPIs should be aware of the new rules for reporting major operational or security incidents to the FCA and the requirement to collect data on fraudulent transactions. It is paramount that SPIs familiarise themselves with these revised requirements as they have implications on the firm’s current reporting and notification obligations to the FCA.

3) Reviewing Internal Processes

SPIs should carefully evaluate their internal procedures, systems, and controls to ensure they align with the revised regulations. As an example, firms should make sure that they have implemented processes to protect customers’ sensitive payment data (e.g. customer card details, beneficiary bank details) and handle complaints in line with the updated provisions under DISP in the FCA Handbook.

4) Collating Information for Application

The SPI re-registration form requires firms to provide information on how they intend to comply with PSD2. To avoid the possibility of post-submission follow-up questions from the FCA, SPIs should make sure their written application answers are as clear and detailed as possible.

5) Submitting Application

Prior to submitting through Connect, SPIs should conduct a thorough review of the application form and all supporting documents, ensuring that they incorporate all information requested by the FCA.

How can Thistle help you?

We have formulated a step-by-step guidance document to support SPIs in completing their re-registering application with the FCA. We have also created an IT Security Policy template designed to help firms demonstrate their relevant controls.

For more information on our package, please click here.