FCA outlines expectations for payment firms’ customer protections
The UK’s Financial Conduct Authority has written to the CEOs of payments firms outlining the regulator’s concerns that some firms do not have sufficiently robust controls.
FCA sets out expectations for payment firms’ customer protections
FCA director of payments and digital assets Matthew Long says the regulator welcomes competition in the payments space and improved choice, value and convenience this offers customers.
However, many firms present “an unacceptable risk of harm” to their customers and to the wider integrity of the financial system, exacerbated by the current rocky economic climate and the cost-of-living crisis.
Long outlines three priorities for payments firms: ensure customers’ money is safe; ensure firms do no compromise financial system integrity; and meet customers’ needs, including through “high quality” products and services, competition and innovation, and “robust implementation” of the FCA Consumer Duty.
“We expect you to take make it a top priority to ensure that your customers’ money is safe.”
Firms should regularly review their prudential risk management arrangements, Long says. Firms should also have an appropriate wind-down plan in place and ensure that it is reviewed regularly and kept up to date.
Anti-money laundering (AML) systems and controls should be “effective and commensurate” with the risks in the business, including as it grows over time.
“We expect you to take immediate action to protect your firm’s customers against the risk of fraud and to ensure that your firm is not being used to receive the proceeds of fraud,” Long says.
The FCA contacted payments firms authorised or registered under the Payment Services Regulations 2017 (PSRs) and the Electronic Money Regulations 2011 (EMRs) such as Payment Institutions (PIs), Electronic Money Institutions (EMIs) and Registered Account Information Service Providers (RAISPs).
