UK PSR Sets Out Tough Approach To Non-Compliance

May 2, 2024
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The UK Payment Systems Regulator (PSR) has proposed setting a “high bar” for granting extensions and exemptions to firms struggling to comply with its rules.

The UK Payment Systems Regulator (PSR) has proposed setting a “high bar” for granting extensions and exemptions to firms struggling to comply with its rules.

The PSR is consulting on draft guidance that sets out how it proposes to make decisions on whether to grant an extension or exemption to a specific direction or requirement.   

The PSR uses directions and requirements to order firms to implement changes in the interests of people and businesses in the UK, such as the Confirmation of Payee name checking service and authorised push payment (APP) fraud reimbursement measures.    

Despite this, the PSR says it recognises that there may be circumstances when an extension or exemption may be appropriate. 

The proposed guidance provides firms with clarity on how and when to engage with the PSR to find an effective way forward in these situations.  

“This proposed guidance aims to increase transparency for firms around the factors we look at when considering exemption or extension requests, and ultimately supports the delivery of our objectives,” said Oliver Hanmer, head of supervision and compliance monitoring at the regulator.

Hanmer said that by consulting on this guidance, the PSR is not facilitating a route to non-compliance. “We propose the bar for exemptions and extensions as a high one because we want as many people and businesses as possible to benefit from the action we take.”

“We will always start from a position that we expect all directed firms to have taken the necessary steps towards achieving compliance by the set deadlines,” he said.  

The PSR now expects to grant extensions and exemptions only in very limited circumstances, and the guidance proposes four key factors for the PSR to use as a starting point when considering an extension or exemption request. 

These include whether granting an exemption or extension would adversely impact payment systems users, undermine any of the PSR’s statutory objectives or undermine the priorities set out in the PSR’s five-year strategy. If granting the request undermines these objectives, the PSR would be unlikely to grant it.

The context in which the specific direction or requirement arises, including the underlying policy aims and the key factors set by the specific direction or requirement, are another consideration.

The PSR will also consider the burden that not granting the request would place on the regulated firm, as well as any impact on businesses or consumers more widely.

Lastly, in relation to extension requests, it will consider the steps the regulated party has taken to ensure that it will comply with the rules promptly and that any risks to service users and/or markets have been mitigated.

Stakeholders have until June 3 to respond to the consultation. 

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