The following posts provide a snapshot of selected UK, EU and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.
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UK APPG publishes report assessing the APP fraud mandatory reimbursement requirement
2 July 2025
The UK All-Party Parliamentary Group (APPG) on Fair Banking has published its latest report, "No Half Measures – A Blueprint to Beat APP Fraud", alongside a press release. The report assesses the UK's response to authorised push payment (APP) fraud and the early impact of the mandatory reimbursement requirement (MRR) introduced by the UK Payment Systems Regulator (PSR) in October 2024. The APPG recognises the MRR as a step forward in consumer protection but emphasises that it is not a complete solution to fraud. Key gaps remain, particularly in areas such as cryptocurrency platforms and international transfers, which remain outside the scope of the current reimbursement framework. The APPG calls for a balanced, system-wide approach, urging collaboration to effectively combat APP fraud rather than placing disproportionate expectations on financial institutions alone. In Q4 2025, there will be an independent one-year review assessing the impact of the MRR, as well as the PSR's wider policy approach to APP fraud.
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Council of the EU publishes comparison tables on Payment Services Package
30 June 2025
The Council of the EU has published initial four-column tables for the two key legislative proposals under the Payment Services Package: (i) the proposed Payment Services Directive (PSD3); and (ii) the Payment Services Regulation (PSR). The tables present, side-by-side, the positions of the European Commission, the European Parliament and Council of the EU, along with a fourth column left blank for Member State comments. -
FCA findings on risk and wind-down planning in payment and e-money firms
26 June 2025
The UK Financial Conduct Authority (FCA) has published the findings of its multi-firm review into risk management and wind-down planning across e-money and payment firms. While the FCA had observed examples of good practice in the structure of firms' wind-down plans (WDPs) and risk management frameworks, it concluded that no firm fully met its expectations and in particular were not adhering to the FCA's finalised guidance. Key areas identified as needing improvement are set out below.
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PSR consults on the revocation of SD4
26 June 2025
The UK Payment Systems Regulator (PSR) has published consultation paper CP25/2 alongside a new webpage, proposing the revocation of Specific Direction 4 (SD4) and its amendment, SD4a. SD4, introduced following the PSR's 2016 infrastructure market review, requires the operator of the LINK payment system to procure its central infrastructure every ten years via a competitive process.
The PSR now considers this requirement may no longer be an effective means of addressing competition concerns, due to evolving market conditions (in particular, decreased cash withdrawals and reduced scheme revenues). Instead, the PSR proposes that active regulatory oversight of LINK and its infrastructure provider, Vocalink, would be a more effective way to mitigate risks associated with a monopoly position. The consultation seeks views on the proposed revocation, particularly the risks the removal may create on competition, innovation and end-user outcomes, and how enhanced supervision of LINK and Vocalink could help address them. The deadline for responses is by 5:00pm on 17 July. -
UK regulators publish updated MoU on payment systems
24 June 2025
The UK Financial Conduct Authority (FCA), Bank of England, Payment Systems Regulator (PSR) and Prudential Regulation Authority have issued a joint statement announcing their revised memorandum of understanding (MoU) on the supervision of payment systems in the UK.
The update follows a review conducted by the authorities in December 2024 which identified opportunities to enhance cooperation among the authorities in overseeing payment systems. The revised MoU aims to clarify the respective roles and coordination mechanisms of the authorities and introduces principles for regulatory cooperation including through regular engagements to share insights on the sector, delivering joint policy initiatives and coordinating supervisory work. The revised MoU reflects the PSR's current responsibilities, notwithstanding the UK government's announcement that the PSR's functions will largely be rolled into the FCA in the future, with no immediate changes being made by the UK Government to the PSR's remit or ongoing work programme. -
UK Government publishes 10-year industrial strategy plan
23 June 2025
The UK Government has published a policy paper outlining its industrial strategy. The strategy centres around eight priority sectors (the IS-8), including financial services. The UK government's ambition is to establish the UK as the world's most innovative full-service financial centre by 2035. A dedicated sector plan is expected to be published alongside the mansion house speech on 15 July.
Key measures to achieve this objective include:- Ensuring financial services enables growth across the real economy, with retail banks and wholesale markets providing credit and liquidity.
- Mobilising pensions capital into the UK.
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EBA review of RTS under PAD
20 June 2025
The European Banking Authority (EBA) has published a report and accompanying press release, on its review of the regulatory technical standards (RTS) under the Payment Accounts Directive concerning standardised terminology for payment account services. The EBA concludes that the current terminology remains fit for purpose. It acknowledges the growing relevance of instant credit transfers and notes that their inclusion in the RTS may become appropriate in the future, although no immediate changes are deemed necessary. Instead, the EBA proposes revisiting the findings in four years or when significant market or legislative developments occur to ensure the terminology remains relevant and effective. -
FATF updates standards on payment transparency
18 June 2025
The Financial Action Task Force (FATF) has published revised standards and an accompanying explanatory note, updating its comprehensive framework on recommendations to strengthen global efforts in anti-money laundering, counter-terrorist financing and counter-proliferation financing, as announced during the joint FATF-MONEYVAL Plenary meeting. The FATF update includes amendments to Recommendation 16, which governs the transparency of wire transfers through the payment chain and is commonly referred to as the "Travel Rule. The revised recommendation is aimed to modernise FATF standards in response to the evolving payments landscape, which now includes a broader range of products and services, technologies and business models.
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HMT updates BNPL policy for domestic premises suppliers
16 June 2025
HM Treasury has published a policy paper setting out an update to its final position to its 2024 consultation on regulating Buy-Now, Pay-Later (BNPL) products which led to the laying of the draft secondary legislation, The Financial Services and Markets Act 2000 (Regulated Activities etc) (Amendment) Order 2025. Under the draft regulation, domestic premises suppliers (DPS merchants), which are businesses who sell, offer to sell or agree to sell goods or offer to supply or contract to supply services in people's homes, are required to seek credit broking permissions to offer BNPL products as a payment option. However, in response to industry feedback, the UK Government has concluded that this requirement may have a disproportionate impact for small businesses and will potentially reduce consumer choice. Consequently, an amending negative statutory instrument to coincide with the BNPL regulation, will be laid to remove this requirement, while maintaining key consumer protections. These include: (i) BNPL lenders will be required to conduct affordability and creditworthiness checks before consumers can use the product; (ii) consumers will be able to raise complaints through the Financial Ombudsman Service and access protections under section 75 of the Consumer Credit Act; and (iii) BNPL lenders authorised by the UK Financial Conduct Authority (FCA) will be expected to comply with Consumer Duty rules, including regular monitoring and review of consumer outcomes. BNPL firms will also be expected to exercise greater oversight of the merchants using their services—including DPS merchants. The UK government and the FCA will continue to monitor the BNPL market and will take any action, if required, to prevent consumer harm. -
HMT issues wholesale cash oversight orders
16 June 2025
HM Treasury (HMT) has published a series of wholesale cash oversights orders (dated 12 June) issued for the purpose of the Bank of England's (BoE) wholesale cash oversight regime. The orders confirm the recognition of several firms under Part 5A of the Banking Act 2009 for their roles in the wholesale cash distribution system. Under the Banking Act 2009, the BoE is accountable for overseeing risks to the effectiveness, resilience and sustainability of wholesale cash distribution across the UK, or any part thereof. The firms recognised include Vaultex UK Limited, G4S Cash Centres (UK) Limited, Post Office Limited, National Westminster Bank Public Limited Company, The Royal Bank of Scotland Public Limited Company, Lloyds Bank PLC, Bank of Scotland PLC, Barclays Bank UK PLC, Barclays Bank PLC, HSBC UK Bank PLC, HSBC Bank PLC and Santander UK PLC. -
The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025
13 June 2025
The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 (SI 2025/688) have been published, alongside an explanatory memorandum. The regulations amend regulation 51 of the Payment Services Regulations 2017 (PSRs) to strengthen consumer protections when banks and payment service providers (PSPs) terminate payment service contracts. Under the new rules, PSPs must now provide customers at least 90 days' notice—an increase from the two months currently required—before closing a customer's account or ending a payment service contract. They must also give a clear, specific written explanation for the termination, enabling customers to understand the decision and, if necessary, challenge it through the Financial Ombudsman Service.
The aim is to prevent arbitrary account closures, enhance transparency and support small businesses by giving them more time to secure alternative banking arrangements, reinforcing the government's commitment to economic growth and security under the Plan for Change.
The regulations also amend regulations 25 and 26 of the Payment Accounts Regulations 2015 to bring the notice period and the requirement to provide reasons for terminating basic bank account contracts in line with the updated PSRs. Banks will also need to provide reasons for refusing an application for a basic bank account.
The legislation enters into force on 28 April 2026 and will apply to contract terminations and bank account closures for contracts agreed from and including 28th April 2026. -
Council of European Union agrees negotiating mandate for proposed Payment Services Package
13 June 2025
The Council of the European Union has announced it has adopted its negotiating mandate for the proposed Payment Services Directive (PSD3) and Payment Services Regulation (PSR), collectively known as 'the Payment Services Package'. The legislative package aims to modernise the EU's regulatory framework for payment services, building on the foundations of PSD2 to enhance consumer protection, strengthen fraud prevention and improve the functioning of open banking. It also seeks to address the pending challenges in the context of the impact and application of PSD2 in the internal market and adapt it to align with new market developments. Once formally agreed by both the Council of European Union and the European Parliament, the proposals will establish the PSR, which will be directly applicable in the EU and will repeal PSD2, replacing it with PSD3. We discuss the Payment Services Package in our bulletin, "Combatting payment account fraud - latest regulatory developments from the European Union." -
ECB Decision (EU) 2025/1148 on access by Non-Bank Payment Service Providers to TARGET published in OJ
10 June 2025
The Decision (EU) 2025/1148 of the European Central Bank (ECB) adopted on 2 June, has been published in the Official Journal of the European Union. This decision amends Decision (EU) 2025/222 concerning access by non-bank payment service providers (NB-PSPs), namely payment institutions and electronic money institutions, to central bank operated payment systems, including TARGET. Due to delays by some member states in transposing the relevant EU directives into national legislation, the ECB has decided to defer the date from which NB-PSPs can request access to TARGET from 16 June to 6 October. Additionally, the transition period for NB-PSPs to migrate to from their current status (e.g., as addressable BIC holders or reachable parties) to full TARGET participants has been extended from 31 December to 31 March 2026. To ensure a smooth transition, the decision enters into force immediately following its publication in the Official Journal of the European Union. -
EBA opinion on PSD2 and MiCAR
10 June 2025
The European Banking Authority (EBA) has issued an opinion (referred to as the No Action letter) in response to a request from the European Commission (EC) in December 2024, on the interplay between Payment Services Directive (PSD2/3) and Markets in Crypto-Assets Regulation (MiCAR) in relation to electronic money tokens (EMTs). It seeks to clarify how national competent authorities (NCAs) should approach the authorisation and supervision of crypto-asset service providers (CASPs) that engage in EMT-related activities during the transitional period before PSD3 and the Payment Services Regulation (PSR) come into effect. The EBA advises the EC, European Council and European Parliament to avoid long-term dual authorisation requirements and advises NCAs to require PSD2 authorisation only after a transition period ending on 2 March 2026, and only for a defined subset of CASPs—specifically those providing services such as the custody and administration of EMTs or facilitating EMT transfers on behalf of clients. NCAs are encouraged to adopt streamlined authorisation procedures that leverage information already submitted during the MiCAR process. Post-transition, NCAs must ensure entities who are not licensed as a payment service provider (PSP) or have not entered partnership with a PSP, are prevented from providing EMT related services that qualify as a payment service.
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ECB consults on extension to T2 operating hours
6 June 2025
The European Central Bank (ECB) has published a consultation paper (CP) exploring the extension of operating hours for its real-time gross settlement (RTGS) system, T2. This involves both its daily operational hours and its operational days, while also considering the potential interaction with the operating hours of TARGET2-Securities (T2S), even though T2S is generally outside the scope of the consultation. T2's operating hours were extended previously in 2023, but the ECB is consulting on a further extension given the growing liquidity management challenges for banks due to increasing use of instant payments and the potential introduction of a digital euro.
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Law Commission consults on reforming private international law for digital assets
5 June 2025
The UK Law Commission has published a consultation on reforms to private international law necessitated by emerging technologies such as decentralised ledger technology (DLT). The Law Commissions state that their project has a particular focus on crypto-tokens, electronic bills of lading and electronic bills of exchange because these assets are prevalent in market practice while also posing novel theoretical challenges to the methods by which issues of private international law have traditionally been resolved. The consultation focuses primarily on wholly decentralised applications of DLT. Among other things, the Law Commission proposes:
- To create a new free-standing information order to help claimants who have lost crypto-tokens through fraud or hacking, obtain information about the perpetrators or the whereabouts of their tokens without having to go through the existing gateways.
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PSR consolidated policy statement on APP scams reimbursement requirement
21 May 2025
The UK Payments Systems Regulator (PSR) has published a consolidated policy statement (PS25/5) concerning the authorised push payment (APP) fraud reimbursement requirement within the Faster Payments system, which came into effect on 7 October 2024. The document brings together previous publications on the reimbursement requirement to serve as a single point reference for stakeholders seeking to understand the policy and how it may impact them. The statement acts as general guidance to aid interpretation of the policy. The policy statement has also included FAQS on aspects of the APP scam reimbursement policy and, except where otherwise indicated, also applies to the requirements for reimbursement of APP fraud committed over the CHAPS payment system. -
UK Government advances BNPL Regulation
19 May 2025
HM Treasury (HMT) has published a response to its 2024 consultation on regulating Buy-Now, Pay-Later (BNPL) products and laid the draft secondary legislation (Financial Services and Markets Act 2000 (Regulated Activities etc) (Amendment) Order 2025), to implement the proposed regime before Parliament. The consultation response is accompanied by an updated webpage and press release. The proposed regulatory framework aims to bring BNPL products under the UK Financial Conduct Authority's (FCA) oversight, ensuring consumers receive clear information, undergo affordability checks, have access to the Financial Ombudsman Service and benefit from the protections of section 75 of the Consumer Credit Act (CCA)—which imposes liability upon a creditor for breaches by a supplier—should something go wrong with their purchases.
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PSR update on impact of APP fraud reimbursement scheme
15 May 2025
The UK Payment Systems Regulator (PSR) has published an update on what it has seen since the implementation of its authorised push payment (APP) fraud reimbursement scheme in October 2024. The data covers UK payments made via the Faster Payments system from the start of the reimbursement policy (7 October 2024) to the end of 2024.
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Amendment to the TARGET Guideline postponed
15 May 2025
The European Central Bank (ECB) has announced that the amendment to the TARGET Guideline, which would allow non-bank payment service providers (non-bank PSPs) to participate in TARGET is postponed. This has resulted from delays in some euro area countries in transposing the required amendments to the Settlement Finality Directive and revised Payment Services Directive (PSD2) into their national legislation. The amendment, outlined in Decision ECB/2025/2, is now expected to enter into force in October. -
BoE speech on the digitalisation of money and assets: proposed stablecoin regulatory framework
6 May 2025
The Bank of England (BoE) has published a speech by Sarah Breeden, Deputy Governor for Financial Stability, at the Point Zero Forum. The subject of the speech was the digitalisation of money and assets, and in particular the BoE's focus on interoperability. In terms of general commentary, Ms Breeden highlighted the need to collaborate closely with international partners to ensure safe innovation and support for firms with cross-border transactions. She also emphasised the importance of enabling users to switch seamlessly between different forms of money and across asset classes. To drive interoperability, harmonised technical standards and working with the public sector is needed to understand further how to integrate these new, digital forms of assets and money into the wider financial system.
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PSR annual plan and budget
1 May 2025
The UK Payment Systems Regulator (PSR) has published its annual plan and budget for 2025/26. The foreword by Aidene Walsh, Chair of the PSR, references the government's announcement to incorporate the PSR into the FCA and how, while full transfer of responsibilities requires legislation, the PSR has where sensible already commenced the process of further alignment and consolidation with the FCA as it awaits the outcome of the consultation being run by HM Treasury (HMT) in the coming months. David Geale, Managing Director, reiterates that HMT has made it clear that the PSR retains its full suite of powers pending changes in legislation, and the PSR intends to use them to deliver against its work programme and commitments. This includes completing phase one of the rollout of variable recurring payments, completing an evaluation of its APP reimbursement requirements, implementing the remedies following its card reviews and working with industry to unlock innovation and growth. The PSR will work with the Bank of England to drive infrastructure upgrades, as per the direction set by the government in the National Payments Vision (NPV). You may like to see our article, "Payment Services and Payment Systems" in which we discuss, among other things, the NPV in more detail. -
FCA findings on international payment pricing transparency
1 May 2025
The UK Financial Conduct Authority (FCA) has published examples of good and poor practices following its review into international payment pricing transparency. Under the consumer duty, in line with the FCA's Handbook (PRIN 2A.5.3R), firms are required to communicate information to retail customers in a way which is clear, fair and not misleading. The FCA reviewed the websites of a sample of firms offering UK customers international money remittance and cross-border payments and found that only some firms clearly displayed the amount recipients would receive, along with detailed fees and charges. Many firms did not, making it difficult for customers to compare prices and make informed decisions. Transaction fees, additional intermediary bank fees and variable fees were also not usually clearly displayed. As a result of these findings, the FCA sets out examples of good and bad practices to help firms improve their communication practices with consumers and deliver better outcomes for retail customers. The FCA expects firms to comply with their obligations under the consumer duty by regularly monitoring the effectiveness of their communications, to assist consumers in understanding costs and making informed decisions. The FCA is likely to undertake future work in the area to understand what improvements have been made. -
IOSCO – CPMI report assessing EU implementation of Principles for Financial Market Infrastructures
28 April 2025
The International Organization of Securities Commissions (IOSCO) and the Committee on Payments and Market Infrastructures (CPMI) has published a report, alongside a press release, evaluating the EU's implementation of the Principles for Financial Market Infrastructures (PFMI) for systemically important payment systems (PSs), central securities depositories (CSDs) and securities settlement systems (SSSs), collectively referred to as "financial market infrastructures" (FMIs). The report sets out conclusions using a level 2 peer assessment to determine whether, and to what degree, the contents of the EU's legal, regulatory and oversight framework are complete and consistent with the PFMI. Due to the distinct regulatory frameworks for PSs in the euro area and Sweden, which differ from the EU-wide regime for CSDs/SSSs, they were assessed individually. The report concludes that the EU's legal, regulatory and oversight frameworks are complete and consistent with the PFMI in most aspects for PSs, although identified areas for improvement, particularly in risk and governance principles relating to CSDs and SSSs. The assessment reflects the status of implementation as of 30 October 2019, although Annex C to the report discusses the EU's amendments to the CSR Regulation (CSDR Refit) and concludes that this leads to an even greater consistency of the EU regulatory framework with the PFMI and will help authorities address some of the gaps identified in this assessment. -
HMT announces new rules for bank account closures and payment service terminations
28 April 2025
The HM Treasury (HMT) has published a draft statutory instrument introducing new rules requiring banks and payment service providers (PSPs) to give customers at least 90 days' notice before closing their account or terminating a payment service—an increase from the two months currently required. The draft Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 is accompanied by an explanatory memorandum, and aims to protect customers from arbitrary account closures and ensures they receive a clear, written explanation, allowing them to challenge decisions through the Financial Ombudsman Service. The new rules will also support small businesses by providing more time to find alternative banking solutions, reinforcing the government's commitment to economic growth and security under the Plan for Change. Subject to Parliamentary approval, the legislation is expected to come into force in April 2026 and will apply to all PSPs terminating payment service contracts without a definite expiry date, including bank account closures, for contracts agreed from and including 28th April 2026. Certain exceptions will apply, for example, to enable PSPs to comply with their obligations under financial crime law. -
UK 2025 Regulatory Initiatives Grid published
14 April 2025
The Financial Services Regulatory Initiatives Forum (the Forum) has published the Regulatory Initiatives Forum Grid (the Grid), with the UK Financial Conduct Authority (FCA) also updating its webpage. The previous Grid was due to be published in May 2024 but was postponed due to the General Election, meaning the Forum published only an interim update in October 2024.
The 2025 Grid sets out the regulatory pipeline for the next 24 months and reflects the reprioritisation that has taken place since the new government came into power. Notable initiatives include:- motor finance commission review: the FCA intends to confirm, within six weeks of the Supreme Court's decision on past use of discretionary commission arrangements by motor finance firms, whether it will propose a redress scheme;
- liquidity risk management in funds: the FCA will consult on refined proposals regarding liquidity risk management in funds to implement FSB and IOSCO guidelines;
- Consumer Composite Investments (CCI) Regulation: the FCA published a second consultation paper on the new CCI regime on 16 April (see our update) and plans to issue a Policy Statement with final rules in late 2025;
Topics : Client Asset Protection, Conduct and Culture, Consumer / Retail, Financial Crime and Sanctions, Financial Market Infrastructure, FinTech, Fund Regulation, MiFID II, Operational Resilience, Other Developments, Payment Services and Payment Systems, Prudential Regulation, Recovery and Resolution, Securities -
EPC publishes Guidelines for PSPs joining payment schemes
11 April 2025
The European Payments Council (EPC) has issued Version 7.0 of the Adherence Guide to the EPC Payment Schemes, together with an updated webpage. The updated guide provides guidelines and template application forms for payment service providers (PSPs) seeking to adhere to one or more of the EPC managed payment schemes (namely, the SEPA Credit Transfer Scheme, the SEPA Instant Credit Transfer Scheme, the SEPA Direct Debit Core Scheme, the SEPA Direct Debit Business-to-Business Scheme and the One-Leg Out Instant Credit Transfer Scheme). The Guide sets out: (i) detailed instructions for completing adherence documents; (ii) the eligibility criteria; and (iii) the adherence process to be followed. -
UK PSR delays APP scams claims management consultation
10 April 2025
The Payment Systems Regulator (PSR) has published an update regarding next steps for its claims management consultation and its intention to adopt reporting standard B by December 2026. The claims management consultation was originally planned for April this year but is being delayed. The PSR notes how effective claims management and receiving quality compliance data are crucial components in its APP reimbursement policy, which went live on October 2024. Having considered stakeholder feedback, the PSR has updated the timing of the planned consultation to take into account the work being carried out in relation to the UK government's National Payments Vision (NPV) (for further background, please see our update). The PSR expects to consult within three to six months, subject to NPV developments. The additional time will enable Pay.UK and the wider industry to continue working on an effective common system that meets the needs of all its users. The future consultation will not propose placing a regulatory mandate on PSPs to use a particular system for managing claims or for meeting the Reporting Standard B requirements. In line with previous plans, the deadline for comments to the consultation for adopting Reporting Standard B, is December 2026. -
New FCA work programme for 2025/26
8 April 2025
The UK Financial Conduct Authority (FCA) has published its work programme for 2025/26, alongside a press release summarising its approach to supporting the testing of innovative products and new firms. The work programme sets out how the FCA will deliver its four strategic priorities of being a smarter regulator, supporting growth, helping consumers navigate their financial lives and fighting financial crime, as set out in the FCA's five year strategy.
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BoE response to discussion paper on reviewing access to RTGS accounts for settlement
8 April 2025
On 8 April, the Bank of England (BoE) has published its response to the discussion paper on reviewing access to Real-Time Gross Settlement (RTGS) accounts for settlement. In the discussion paper, initially published on 8 February 2024, the BoE requested for feedback on four priority areas to further improve access to settlement in central bank money, remove unwarranted barriers, and realise the capabilities and benefits of the renewed RTGS service. The feedback was generally supportive of the review and underpinned the importance of clear, transparent processes and criteria to facilitate access to RTGS accounts.
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UK PSR consults on remedies following market review of card scheme and processing fees
2 April 2025
The UK Payment Systems Regulator (PSR) has published its consultation CP25/1 on potential remedies to address findings following the PSR's final report (published on 6 March) on its review of card schemes and processing fees. The consultation seeks to address the findings of the review, namely that there were ineffective competitive restraints, fees have risen without sufficient evidence of the rationale, and there is insufficiently clear and detailed information provided in respect of costs and pricing. The proposals in the consultation paper relate to:- Information transparency and complexity remedies – to ensure that acquirers have sufficient information to understand the fees they are charged and enable merchants to make informed decisions about fees. The PSR is also seeking input on the reduction of the volume of fees being charged, and complexity.
- Regulatory financial reporting – this would provide the PSR with more detailed and accurate information of the profits the card schemes earn from UK businesses so it can monitor their performance and assess whether any future regulatory action is needed.
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FSB forum on cross-border payments data
27 March 2025
The Financial Stability Board (FSB) has announced the establishment of a forum on cross-border payments data, a key outcome from the FSB's recommendations for data frameworks related to cross-border payments published in December 2024. The forum seeks to bring together experts in payments, anti-money laundering and countering terrorist financing, sanctions and data privacy and protection, to strengthen cooperation on data-related issues in cross-border payments. Working with international organisations, including with the Financial Action Task Force (FATF) and the Organisation for Economic Cooperation and Development (OECD), the forum will serve as a platform for dialogue, information exchange and research, helping to identify and address inconsistencies in global data frameworks. An advisory body comprised of private sector representatives will also be created to provide industry perspectives and expertise to the forum. Its first meeting will be held in May. -
Bank of England discusses opportunities in innovating wholesale payments
25 March 2025
Victoria Cleland, Executive Director of Payments, Bank of England (BoE) has given a speech on innovating wholesale payments: building a resilient and innovative future. In the speech, Ms Cleland discusses the BoE's innovation work, including on tokenisation, synchronisation of foreign exchange between sterling and euro and developing a wholesale central bank digital currency. Ms Cleland highlights the BoE's work on enhancing access to the RTGS service. Before Easter, the FCA will publish a summary of the key feedback received on its February 2024 discussion paper, an update on work so far and its forward-looking policy work in this area. Market participants can expect in April the publication of an updated guide for non-bank payment service provider (NBPSP) access to UK payment systems. The Bank will also be considering offering safeguarding facilities directly to NBPSPs, so that NBPSPs could securely hold funds overnight and manage their liquidity and payment obligations. It is also working with HM Treasury and the Financial Conduct Authority on reforming the regulatory regime for NBPSPs to support their RTGS access. The BoE will also soon be publishing updated information on access to RTGS to give more details on benefits, costs and processes, including for foreign banks. The Bank intends to continue engaging with industry on assessing the appropriateness of the CHAPS direct participation threshold. Additionally, given the value of a consistent adoption of the ISO 20022 global messaging standard, the BoE will mandate the use of ISO 20022 enhanced data for certain CHAPS payments from 1 May, including the use of Legal Entity Identifiers for payments between financial institutions. -
UK FCA engagement paper on contactless payments limits
14 March 2025
The UK Financial Conduct Authority (FCA) has published an engagement paper which seeks views on increasing or removing the current £100 contactless limit, giving payment service providers (PSPs), consumers and businesses greater flexibility to decide limits that work for them. The FCA is engaging stakeholders before consulting on any revised standards, rules or guidance. Given the regulatory and market trends happening around contactless payments, the FCA is considering several options for amending its existing standards for contactless limits: (i) Introducing a new risk-based exemption for in-person transactions which would give PSPs greater flexibility to set their own contactless limits for in-person transactions as long as they are able to achieve low rates of fraud; (ii) Amending the limits in the existing contactless payments exemption, including removing the limits altogether; and (iii) Relying on the consumer duty following legislative change.
The FCA notes that any changes would need to support good consumer outcomes as required by the consumer duty. The FCA is considering prioritising reforms to the contactless payments exemption under its existing regulatory framework before considering wider strong consumer authentication (SCA) requirements. It aims to replace SCA more widely, as and when legislation allows it to do so. With legislative change, other options for reform to contactless payments may be possible and the FCA is also interested to hear if there are alternative approaches which it might implement in the longer term when legislation allows. The paper poses eight specific questions for feedback, which is requested by 9 May. -
PSR publishes policy statement on 2024 APP scams data
11 March 2025
The UK Payment Systems Regulator (PSR) has published a policy statement outlining its approach to publishing authorised push payment (APP) scams data for 2024.
In 2025, the PSR will take a different approach to publishing the data, following the introduction of the reimbursement requirement on 7 October 2024, which ensures victims of APP scams are reimbursed in all but exceptional cases. As a result, the PSR is planning to publish two separate data updates for 2024, as data before and after the policy took effect cannot be directly compared. The first report will cover APP scams where the fraudulent transaction took place over Faster Payments before 7 October 2024 and the case was closed between 1 January and 31 December 2024. The second report will cover APP scams where the fraudulent transaction took place after 7 October 2024 and the case was closed between 7 October and 31 December 2024.
The PSR also confirms that it intends to publish a call for views in Spring 2025 to ensure that its future reporting aligns with consumer needs, regulatory requirements and its commitment to transparency. Considerations will include whether the PSR reports at the firm or industry level, the frequency of future reporting and the potential inclusion of additional metrics. -
ECB flags reliance of EU card payments on international schemes
28 February 2025
The European Central Bank (ECB) has published a report on card schemes and processors. The report provides an updated analysis of the development of card schemes and processing entities in EU member states. In the report, the ECB considers whether changing market conditions allow national card schemes to remain sustainable and considers the distribution of processors across EU countries, including the extent to which non-EU ownership may lead to EU dependence. The ECB concludes that the EU is highly reliant on non-EU solutions to operate card payments. This includes both card schemes and processors. According to the ECB, it is important for an EU solution to be developed at the point of interaction to secure operational resilience and autonomy of EU payment systems. -
FATF second consultation on payment transparency
24 February 2025
The Financial Action Task Force (FATF) has published a second consultation on payment transparency, and in particular proposed revisions to recommendation 16 (R.16). The revisions adapt the FATF Standards to the changes in payment business models and messaging standards, as well as to the evolving risks and vulnerabilities. This consultation picks up the main issues raised in the first consultation during February to May 2024, and how these have now been addressed. It also provides more information on the questions of policy intent and proportionality which were raised as overarching issues during that consultation. The revised proposal is attached as an annex to the consultation.
The deadline for responses is 18 April. The FATF will finalise the revisions in June, following which it will develop a guidance paper on payment transparency to facilitate consistent implementation of the updated standards. -
FSB letter to G20 finance ministers and central bank governors ahead of meeting
24 February 2025
The Financial Stability Board (FSB) has published a letter (dated 21 February) to the G20 finance ministers and central bank governors ahead of their meeting on 26 and 27 February. The letter addresses areas of focus for the FSB, including:- Implementation monitoring, providing a strategic review of the FSB's monitoring of 15 years of implementation of reforms. The review is intended to provide valuable insights into the effectiveness of the monitoring of post-global financial crisis regulatory reforms and identify areas where improvements can be made in the tools used to ensure consistent, global implementation of agreed reforms. The FSB will publish a progress report in October.
- Completing the G20 roadmap to enhance cross-border payments. The FSB note that as the work has advanced, many structural issues have become apparent that require concerted efforts to resolve. Addressing these issues calls for significant additional work up to and beyond 2027. The FSB will report in October on progress towards the G20's goal of making cross-border payments faster, cheaper, more transparent, and accessible. The FSB's focus this year is on improving the end-user experience, coordinating closely the work of the Bank for International Settlements Committee on Payments and Market Infrastructures and other partner organisations.
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Wolfsberg Group FAQs to help assess risks generated by the emergence of digital assets for AML and CTF purposes
21 February 2025
The Wolfsberg Group has published FAQs on defining digital assets. The FAQs propose definitions to be used by financial institutions, policymakers, supervisors and regulators to understand the characteristics of digital assets, money laundering, terrorist financing and operational risks they generate, as well as serve as an input to financial institutions developing policies and appropriate controls. The Wolfsberg Group intends to supplement these FAQs in future with guidance on the risks and associated controls for digital assets in line with the concepts developed in the FAQs.
The Wolfsberg Group has also published guidance on payment transparency roles and responsibilities to supplement the Wolfsberg Group Payment Transparency Standards. -
Wolfsberg Group guidance supplementing payment transparency standards
21 February 2025
The Wolfsberg Group has published guidance on payment transparency roles and responsibilities to supplement the Wolfsberg Group Payment Transparency Standards. The guidance discusses roles played by key actors in a payment chain and their respective responsibilities to adhere to payment transparency standards across a sample of commonly observed payment flows. It includes an example of cross-border payment between two countries, two parties and with no intermediaries, as well as an example of three different ways in which an intermediary agent payment service provider (PSP) can be involved in a payment to draw attention to what information is available to each actor from the payment message and what responsibilities they have in relation to payment transparency requirements. The guidance serves as a reference guide that can be used by all PSPs, regulators and standard setters.
The Wolfsberg Group has also published FAQs on defining digital assets. -
EU MiCAR technical standards published
20 February 2025
Two delegated acts were published in the Official Journal of the European Union (OJ) in respect of the EU MiCAR.- Commission Delegated Regulation (EU) 2025/303, which comprises regulatory technical standards specifying the information to be included by certain financial entities in the notification of their intent to provide crypto-asset services.
- Commission Implementing Regulation (EU) 2025/304, which comprises implementing technical standards for the standard forms, templates and procedures for the notification by certain financial entities of their intention to provide crypto-asset services.
Both sets of technical standards concern the notification requirements applied to certain firms seeking to provide crypto-asset services, where article 60 of MiCAR imposes a requirement to supply specified information to the competent authority of the applicant's home member state at least 40 working days before providing those services. The Delegated and Implementing Regulations will enter into force on the twentieth day following their publication in the OJ. -
UK regulators publish feedback statement on big tech and digital wallets
19 February 2025
The UK Financial Conduct Authority (FCA) and the UK Payment Systems Regulator (PSR) have issued a joint feedback statement on the usage and impact of big tech and digital wallets (FS25/1). The feedback statement was accompanied by a press release and joint letter to the UK Competition and Markets Authority (CMA) regarding the CMA's invitation to comment on investigations in relation to certain mobile ecosystems. The feedback statement highlights four potential issues around big tech and digital wallets:- First, there are competition concerns as between different digital wallets (and mobile ecosystems).
- In addition, there are competition concerns as between payment systems within digital wallets, particularly where digital wallets do not provide a choice of payment methods except for cards.
- Operational resilience and consumer rights and protection are an issue, given that reliance on digital wallets could impact the financial system's resilience if consumers do not have other means of payment.
- Finally, there are regulatory perimeter questions around whether the regulatory framework should include digital wallets in order to be more effective (although some responses raised concerns that this approach may hinder innovation).
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ESMA consultation on MiCAR guidelines on assessment of knowledge and competence
17 February 2025
The European Securities and Markets Authority (ESMA) has published a consultation paper on the guidelines for the criteria on the assessment of knowledge and competence under Markets in Crypto-Assets Regulation (MiCAR). The guidelines relate to natural persons giving advice or information about crypto-assets or a crypto-asset service. In terms of approach, ESMA has taken as a reference the Markets in Financial Instruments Directive guidelines on the assessment of knowledge and competence.
ESMA proposes four guidelines. The first guideline is a general guideline to ensure that crypto-asset service providers (CASPs) take sufficient steps to ensure that their staff providing information or advice on crypto-assets or crypto-asset services possess the necessary knowledge and competence to fulfil their obligations. This includes an understanding of how to apply the CASPs internal policies and procedures designed to comply with MiCAR. Guideline two concerns criteria for staff giving information about the relevant crypto-assets or crypto-asset services. Guideline three concerns criteria for staff giving advice about crypto-assets or crypto-asset services, and addresses the minimum requirements for professional qualification and professional experience, as well as the minimum number of hours of continuous professional development or training per year. Finally, guideline four on organisational requirements states that CASPs' organisational requirements should ensure that the knowledge and competence of the staff giving information and advice on crypto-assets or crypto-asset services is assessed, maintained and updated appropriately.
The deadline for comments is 22 April. ESMA will publish a final report and guidelines in Q3 this year. -
European Central Bank decision on non-bank payment service providers' access
6 February 2025
The European Central Bank (ECB) has published Decision (EU) 2025/222 relating to access by non-bank payment service providers (NB-PSPs) to Eurosystem central bank operated payment systems and central bank accounts. The EU Instant Payments Regulation (Regulation (EU) 2024/886) introduced certain changes to the EU Settlement Finality Directive (SFD) and Payment Services Directive (PSD 2), including adding NB-PSPs to the list of institutions eligible to become participants in payment systems designated under the SFD and permitting NB-PSPs to deposit their clients' funds for safeguarding in a separate account in a bank or central bank, at the central bank's discretion.
The ECB's decision: (i) sets out the circumstances in which a Eurosystem central bank should provide access to central bank operated payment systems, (ii) prohibits Eurosystem central banks from offering or providing safeguarding accounts to NB-PSPs or crypto-asset services providers, (iii) determines the maximum amounts that may be held by an NB-PSP across its accounts at any given central bank operated payment system, and (iv) provides for penalties in the event that an NB-PSP fails to comply with the maximum holding amount limit or requirements for access to central bank operated payment systems.
The Decision will enter into force on 26 February 2025 and will apply from 9 April 2025.
For more information on the issues and developments relating to fintech, see our blog A&O Shearman on fintech and digital assets. -
UK Payment Systems Regulator publishes compliance monitoring framework
4 February 2025
The Payment Systems Regulator (PSR) has published a policy statement (PS25/2) on its new compliance monitoring framework, setting out the scope of its monitoring work, its approach to compliance monitoring and how, in practice, it will monitor the parties that it regulates. Its approach is informed by three monitoring principles, namely that it should: (i) act in a way which is proportionate and risk-based, (ii) act quickly, and (iii) provide clear, reciprocal engagement. In practice, it monitors firms in three stages, firstly identifying and assessing whether firms are complying with regulatory requirements, then taking action where it identifies non-compliance and finally escalating cases to the Enforcement team where there are concerns that a firm is still non-compliant or investigation in relation to past conduct is warranted. The PSR also engages with and educates firms as part of its supervisory engagement and coordinates with other regulatory bodies.
Alongside the PS25/2, the PSR has published a thought piece which explains why the framework is necessary and how the PSR will work with firms in ensuring compliance. The PSR provides that its next steps include planning changes to its Process and Procedures Guide. -
UK Financial Conduct Authority Dear CEO letter on priorities for payments portfolio firms
3 February 2025
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 sets out key outcomes for firms.
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Financial Stability Board publishes work program for 2025
January 23, 2025
The Financial Stability Board has published its work program for 2025. Priority areas of work for 2025 include:- supporting global cooperation on financial stability: the FSB will continue monitoring global financial stability developments and the implications of emerging financial innovation, and conduct in-depth analysis on vulnerabilities in non-bank financial intermediation and climate change;
- enhancing the resilience of NBFI: while preserving its benefits, the FSB workstream includes finalizing policy recommendations on NBFI leverage, developing and beginning implementation of a medium-term workplan to address issues relating to non-bank data availability, use and quality and analyzing the resilience and functioning of the repo market;
- harnessing the benefits of digital innovation while containing its risks: the FSB will produce a thematic peer review on implementation of its crypto-asset recommendations, a report on how financial authorities can monitor AI adoption and assess related vulnerabilities, and finalize the format for incident reporting exchange;
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UK payments regulators discuss next steps for open banking
January 23, 2025
The Financial Conduct Authority and Payment Systems Regulator have set out the next steps for open banking, focusing on variable recurring payments. In the statement the regulators explain the benefits of variable recurring payments, which includes helping consumers take more control of their regular payments, reducing the risk of unexpected expenditure. It will also offer businesses greater competition to current payment methods and could help reduce processing fees. As part of the next steps to deliver variable recurring payments, Open Banking Limited will establish an independent central operator to coordinate how variable recurring payments are made. The FCA and PSR will support this endeavor by working with industry and trade associations and are looking forward to significant progress being made in 2025. The regulators are also working with industry and trade associations to progress development of the commercial arrangements underpinning both variable recurring payments and use of open banking for e-commerce. -
UK Financial Conduct Authority responds to Government call for regulators to support growth
January 17, 2025
The Financial Conduct Authority has published a letter (dated January 16, 2025) from Nikhil Rathi, FCA Chief Executive, sent to the Government, setting out its work to ensure that it is supporting the Government's U.K. growth mission. The letter responds to Government's December call for regulators to support growth. In the letter, the FCA explains that to achieve the vast reforms, the FCA will need to take greater risks and prioritize resources. The Government's support and acceptance of this approach is required, including an acceptance that there will be failures because it will not be possible to prevent all harm under an approach based on risk-based choices. The FCA emphasizes that this acceptance needs to be shared across all accountability mechanisms, including in Parliament, and states that metrics for "tolerable failures" within the overall system would assist.
The areas addressed in the letter include:- unlocking capital investment and liquidity: in addition to the planned reforms for the wholesale markets, the FCA will fast-track a review of capital requirements for specialized trading firms to improve liquidity;
- accelerating digital innovation to enhance productivity: the FCA makes a number of suggestions on how to do this including introducing a new open banking payment method and developing open finance, the removal of the £100 contactless payment limit to enhance consumer flexibility and level the playing field with digital wallets. The FCA also suggests that government action could help by introducing digital identity authentication, enhancing the quality of the Companies House database to reduce costs for business, and digitalizing court systems to reduce delays;
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EBA repeals guidelines on major incident reporting under the revised Payment Services Directive
January 17, 2025
The European Banking Authority has announced that it has repealed its guidelines on major incident reporting under the revised Payment Services Directive due to the application of harmonized incident reporting under the Digital Operational Resilience Act. DORA introduced harmonized incident reporting requirements that apply to financial entities across the banking, securities/markets, insurance, and pensions sectors, including most payment service providers. DORA also disapplies the incident reporting requirements under PSD2 for those PSPs. As such, the EBA has repealed the guidelines to simplify the reporting of major incidents by PSPs and provide legal certainty to the market. The EBA reminds firms that incident reporting requirements under PSD2 still apply for other types of PSPs, such as post office giro institutions and credit unions, that are not covered by DORA. The EBA notes that those PSPs that are still subject to PSD2 incident reporting requirements may be subject to national incident reporting requirements, regardless of the existence of the EBA guidelines. Competent national authorities willing to retain the incident reporting approach included in the EBA guidelines for those PSPs can continue to do so under their national legal framework or supervisory measures.