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HM Treasury

The Government has appointed the FSA as the competent authority for most aspects of the Payment Services Directive (PSD). The UK will implement the PSD on 1 November 2009. These pages will help firms affected prepare for implementation.


The European Commission adopted a legislative proposal for a Payment Services Directive (PSD) in December 2005.  Political agreement between the Council and the European Parliament was reached in April 2007 and the Directive was adopted  in November 2007.  The Directive was published in the EU Official Journal in December 2007.

Broadly, the aims of the PSD are to:

  • enhance competition, efficiency and innovation in the European payments market by removing barriers to entry and ensuring fair market access; and
  • establish a set of rules on the information requirements, and the rights and obligations which would be applicable to all payment service providers and end-users in the European Union.

To achieve these aims, the PSD:

  • introduces a new tiered prudential authorisation regime according to the size of the payment services firms that are neither banks, building societies or e-money issuers.  Such firms are known as ‘Payment Institutions’. Once authorised in one EU Member State, they will be able to passport their payment services business and operate in other member states.
  • allows smaller payment services firms operating beneath a certain threshold to be registered under the PSD instead of obtaining authorisation. Such firms will be unable to passport.
  • sets out conduct of business requirements on the information to customers and the rights and obligations of providers and customers. These requirements are applicable to Payment Institutions (whether authorised or registered) and banks, building societies and e-money issuers.

Who does the PSD affect?

It will affect firms providing payment services and their customers. Such firms include:

  • banks;
  • building societies;
  • e-money issuers;
  • money transfer operators; and
  • non-bank credit card issuers.

When does the PSD come into force?

The PSD will be implemented in the UK on 1 November 2009. It will be implemented primarily through secondary legislation made by HM Treasury under the European Communities Act 1972.

Anticipated timeline

  • Summer 08 - HM Treasury consultation on the draft regulations that will implement the PSD on 1 November 2009;

  • Summer 08 - FSA consultation on:

    •  Changes to the Dispute Resolution(DISP) section of the Handbook so that our complaints handling rules apply to Payment Institutions;

    •  Changes to the jurisdiction of the Financial Ombudsman Service (FOS) so that it can perform the out-of-court redress function as required under Article 83

    • Changes to the Decision Procedure and Penalties Manual (DEPP) and the Enforcement Guide (EG) to explain our approach to enforcement of the PSD implementation legislation; and 

    •  Any necessary consequential changes.

  • October 2008 - draft guidance published for firms uncertain if their activities fall within the scope of regulations. Responses to the consultation due by 6 December 2008.

  • October 2008 - outline our thinking on our approach to PSD fees in the annual fees consultation paper.

  • Early 2009 - FSA will publish an 'Approach Document' outlining our approach to matters such as authorisation and supervision under the PSD;

  • February 2009 - consultation on our proposed fees policy.

  • 1st November 2009 - PSD implementation legislation comes into force.

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Which other bodies have roles?

The FSA will be the competent authority for most aspects of the PSD. This means that we will be responsible for authorising, supervising and registering Payment Institutions. Other bodies that will have roles are:

  • HM Revenue and Customs (HMRC) - will retain their current responsibility for the anti-money laundering supervision of money service businesses, and will additionally be responsible for anti-money laundering supervision of any mobile operators and bill payment service providers that fall into the scope of the Third Money Laundering Directive due to the PSD;

  • The Office of Fair Trading (OFT) - will be responsible for the implementation of Article 28 (access to payment systems); and

  • The Financial Ombudsman Service (FOS) - will provide the out-of-court redress mechanism envisaged in Article 83 of the PSD.

What should I do now?

Familiarise yourself with the Directive and draft regulations and consider what it means for your business. Also, think about:

  • whether you will need to seek authorisation as a Payment Institution or whether you qualify for registration only. If you do not need to seek authorisation, you might want to anyway if you want to passport your payment services around Europe.
  • how the PSD conduct of business requirements affect the way you do business and the information you provide to consumers.

The slides which were used for our industry briefing events in October are a useful summary of the requirements, although the Directive and draft regulations need to be reviewed for a complete understanding.

Industry Briefing slides [PDF]

Stakeholder Liaison Group

In working with HM Treasury towards implementation, the FSA has set up a stakeholder liaison group which aims to meet around once a month.

The group is made up of representatives from each of the main industry constituents affected and is chaired by the FSA. Its purpose is to discuss implementation of the Directive and to invite members to raise any concerns or questions they may have.

Minutes of meeting held on 28 July.

Minutes of meeting held on 13 June 2008

Minutes of meeting held on 24 April 2008.

Minutes of meeting held on 13 March 2007.


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