Impact of FCA's Business Plan on payments

As part of its 2021/22 Business Plan, published on 15 July, the FCA has stated that making payments safe and accessible is one of its four “consumer priorities” for the coming year.

Specifically, the FCA has summarised the following outcomes it hopes to achieve:

• Consumers making payments safely and with confidence;
• Ending financial loss to consumers who make payments when firms fail and increasing the timely return of funds to consumers where firms that safeguard consumer funds fail;
• Promoting access for consumers and businesses to a variety of payments services, including cash, with banks who close branches or ATMs ensuring alternative services are available and vulnerable customers are considered; and
• Driving a competitive and innovative payments market, offering a variety of services to smaller businesses.

The payments market has been subject to increasing innovation and diversification in recent years, and the social turbulence caused by the Covid-19 pandemic has only served to accelerate several prevailing market trends.

Perhaps the most prominent of these trends is the continuing decline of cash use, so it is no surprise to see the FCA focussing on the preservation of cash access to consumers, particularly those who are more vulnerable and place greater reliance on cash.  To help achieve this, the FCA is supervising bank branch closures more closely to ensure that customers are treated fairly and given adequate and timely information to help plan their cash access requirements.

The pandemic’s impact can also be seen in the FCA voicing its concerns around the financial strength of some payments firms and the resulting risk of consumer loss if those firms fail. In this regard, the FCA plans to step up its reviews and audits of such firms, and is keen to ensure they are transparent to customers on the difference between the safeguarding of e-money accounts and FSCS coverage.

To tackle fraud, the FCA is increasing its proactive surveillance and monitoring, including the removal of FCA-supervised fraudsters from the financial systems and working with other regulators and fraud partners on initiatives to reduce fraud across the market, such as collaborating with the PSR on measures to reduce Authorised Push Payment fraud.

To help drive competition and innovation, the FCA will continue to influence the ongoing design of the regimes and systems underpinning the payments market.  This includes working with the Treasury to develop policy and recommendations on payments, e-money and crypto assets.

As the payments market continues to develop from a technological perspective and consumer behaviour continues to change, it will remain an area of proactive focus for the FCA and its fellow regulators. While consumer protection is a core part of the FCA’s remit, its Business Plan also recognises the value of competition and innovation, so it will be interesting to see how the FCA strikes the right balance when executing against its outcomes and objectives. We will keep a close eye on this over the coming months.

TLT’s specialist Payments team has vast experience across the entire payments ecosystem, including from a regulatory perspective, and can support payment services and e-money firms in a number of ways. Should you wish to discuss the above, or how TLT’s Payments team can support your business, please contact Stuart Campbell or Alex Williamson.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions.