The second European Payment Services Directive (“PSDII”) came into force on 13 January 2016 and the UK is required to comply with the majority of PSDII requirements by 13 January 2018.
On 9 February 2017, the Government published a consultation document titled “Implementation of the revised EU Payment Services Directive II” together with draft Regulations. Following receipt and consideration of over 85 formal responses, the final version of the Payment Services Regulations 2017 were published and laid before Parliament on 19 July 2017. The new Payment Services Regulations will (largely) come into force on 13 January 2018.
PSDII is a maximum harmonisation Directive and the Government’s approach has been to largely copy-out the Directive whilst taking advantage of derogations and ensuring that exemptions from the Payment Services Regulations 2009 are carried over into the Payment Services Regulations 2017 where appropriate.
PSDII and, consequently, the Payment Services Regulations 2017 are more wide ranging than their predecessors; for example, the disapplication of certain provisions in the case of consumer credit agreements under the old law is not replicated in the new law. Further, the new law is aimed at aligning the regulatory framework with modern technology to increase choice and security for consumers; for example, the new Regulations introduce:
- “strong customer authentication” which in many situations requires payment service providers to verify a customer’s identity using two or more elements that are independent of each other (such that the compromise of one element does not compromise the other). These elements must fall into two or more of the following categories:
- something known only by the payment service user;
- something held only by the payment service user;
- something inherent to the payment service user.
- a new regulatory regime for third parties to access bank account information in order to provide information services and make payments on behalf of clients.
The new Regulations also prohibit surcharges for all retail payment instruments (a development which has been widely promoted and publicised in the press).
The new Regulations can be viewed here: Payment Services Regulations 2017
The Government’s response to the consultation can be viewed here: PSDII – Response to the Consultation