In PS17/19, an all-in-one statement of policy and book of new rules, the UK's Financial Conduct Authority has responded to the European Union's new Payments Services Directive.

The contents of the 'policy statement' affect existing payment service providers (PSPs), who will be subject to the Payment Services Regulations 2017, through which HM Treasury is enshrining PSD2 in British law, e-money issuers who will be subject to the UK's amended E-Money Regulations 2011, and their customers. It will affect banks, building societies and credit unions. PS17/19 mentions another document, amusingly entitled "the approach document" because it "sets out the FCA's approach," 114 times.

Regulating PIS

PSD2, according to the FCA, claims to 'introduce' new regulated services: account information services (AIS) and payment initiation services (PIS). Actually, in the case of AIS, it does not 'introduce' anything of the kind; the FCA states that these services already exist in the UK. The directive, which the EU enacted in 2015, also contains new rules for payment service providers and e-money issuers.

Most of the directive must come into force in the UK by 13 January. The EU will dictate more rules in line with the directive and the FCA will have to interpret them, so the regulator is not done yet.

The Electronic Money Association says that PIS/AIS providers are required to hold professional indemnity insurance, but not many providers offer such policies so far. This, it thinks, could be a "cliff-edge issue" because if the cost of PII is significant, it will result in a distorted market as banks are excluded from PII obligations.

PSD2's objective

The objective of the directive is to:

• standardise, integrate and improve payment efficiency in the European Union;
• protect consumers from various things;
• promote innovation in the payments sector and reduce costs;
• make the law clearer regarding the use of emerging payment methods such as mobile payments and online payments;
• remove some barriers to entry to the payments business for new companies;
• standardise pricing and make payment processing more secure throughout the European Union; and
• subject new and emerging payment services to EU law.