UK Financial Conduct Authority Dear CEO letter on priorities for payments portfolio firms

The Financial Conduct Authority has published a Dear CEO letter to firms in the payments portfolio sector (including payment institutions, e-money institutions and registered account information service providers). Although the FCA has observed improvements following its letter of 16 March 2023 which set out priorities for payments firms, it remains concerned that there are risks of harm to consumers and financial system integrity. The letter therefore sets out three key outcomes for firms, namely that:

• there is effective competition and innovation to meet customers' needs, characteristics and objectives: the FCA continues to observe cases where products and services do not consistently deliver good consumer outcomes. It encourages firms to innovate, including by attending its Tech and Policy Sprints, and notes that a significant proportion of firms have more to do on implementation of the Consumer Duty, which it will continue to monitor and take appropriate action where it sees consistent failure to meet standards.
• firms do not compromise financial system integrity: the FCA is focusing in particular on reducing and preventing financial crime, expecting firms to have appropriate governance arrangements and to minimise the impact on legitimate payments if they apply payment delays when managing APP fraud, and on operational resilience (noting the transitional period on new requirements to strengthen operational resilience ends on 31 March 2025).
• firms keep customers' money safe: the FCA remains concerned the about the safety of customer money if payments firms fail and is focusing on certain areas (including safeguarding, prudential risk and wind-down planning) which have been identified as weaknesses in the sector.

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