PSD2: Expected timing for UK consultations

During the PSD2 Stakeholder Liaison Group meeting held on 1 December 2016, the Financial Conduct Authority (FCA) discussed its provisional consultation timing and sought views on industry readiness. The FCA publishes its minutes on the related website but the below provides a summary of key points discussed.

UK implementation: timing for consultations

There was stakeholder agreement preferring an early consultation by the FCA, albeit with less certainty, and two consultations rather than one single consultation later in the year. At the start of February, the FCA updated their website to state “we will consult in Q2 2017 on necessary changes to our guidance and Handbook rules, including updates to the existing payment services guidance in our Approach Document“.

The one area of PSD2 which will not be dealt with in this consultation concerns third party providers (TPPs).

Implementation challenges

In response to the FCA’s request, stakeholders identified the following as the list of major implementation challenges facing the industry – none of which were a surprise to the FCA:

• Implementation timelines – stakeholders focused on two key issues, namely the gap between the PSD2 implementation date and the strong customer authentication technical standards effective date, and the late opening for PSD2 authorisation (scheduled to open only 3 months prior to the PSD2 implementation date).
• TPPs – the focus of concerns was on the alignment with the work of the Competition and Markets Authority’s (CMA) Open Banking work as well as the interaction between account servicing payment service providers (AS PSPs) and TPPs.
• CMA Open Banking work – specifically the impact of this work on PSD2 implementation. HM Treasury’s view at the meeting was very clear – there would be a high degree of alignment, with all important issues flushed out through this work. HM Treasury did, however, point out that it could not mandate one approach. Stakeholders expressed concerns as to the flow of information out from the CMA work and those nine firms the subject of the CMA work. Payments UK confirmed that it is setting up an implementation group (open to all) in order to bridge the gap between the CMA work and all other interested stakeholders.
• Consumer consent mechanisms and management – this became a key theme of the meeting, in the context of concerns about consumer confusion (including around how TPPs might use open application programming interface for products covered by PSD2, but continue using screen scraping for other products).
• Insurance arrangements for account information service (AIS) and payment initiation services (PIS) PSPs (given the absence of a market in such policies).
• Lack of clarity around the process for adding AIS and PIS as additional payment services for existing authorised payment institutions (APIs) and electronic money institutions (EMIs) – the FCA confirmed that credit institutions need only notify their supervisors. The additional information, for example around security, would not necessarily be required of them. APIs and EMIs on the other hand would need to follow the process for amending their permissions.