June 16, 2024

Financial services matters – June 2024

CPMI work programme for 2024/25

On 23 May 2024, the Committee on Payments and Market Infrastructures (CPMI) published its work programme for 2024/25.

The programme outlines the strategic priorities for its policy, standard-setting, implementation and analytical activities. The key themes include the following: 

  • Risk management of financial market infrastructures (FMIs): the CPMI’s main priorities are a continuation of the work on FMIs’ resilience and recovery, including FMIs’ practices for non-default losses (NDLs), central counterparty (CCP) margining practices in centrally cleared markets, and foreign exchange (FX) settlement risk reduction.
  • Enhancement of cross-border payments: the CPMI’s main priorities are developing governance and oversight considerations relating to the interlinking of fast payment systems (FPS) and recommendations for technical standards that can help enhance cross-border payments.

PSR update on measures to prevent APP fraud

On 22 May 2024, the House of Commons Treasury Committee published a letter (dated 15 May 2024) from Chris Hemsley (Payment Systems Regulator (PSR) Managing Director) to Harriett Baldwin, Chair of the Committee. The letter provides an update on the PSR’s progress in implementing measures to protect consumers and introduce better incentives on payment service providers (PSPs) to prevent authorised push payment (APP) fraud.

The letter notes that firms’ preparations for complying with the requirement are gathering momentum. Some key steps the PSR expects to see firms take are:

  • Investing in systems and processes to detect and prevent scams, and making use of available data and technology.
  • Reassessing their fraud and risk management to ensure it is fit for purpose, reassessing their transaction limits to ensure that they remain within their risk appetite.
  • Engaging with Pay.UK on the development of the reimbursement claims management system.

The new reimbursement requirement will introduce consistent minimum standards for firms to reimburse victims of APP scams from 7 October 2024.

PSR interim report on market review into card scheme and processing fees

On 21 May 2024, the Payment Systems Regulator (PSR) published the interim report on its market review into card scheme and processing fees (MR22/1.9).

The market review was launched in response to concerns about high fees. The PSR’s provisional conclusion is that the supply of scheme and processing services is neither working well nor working in the interests of all service users. Concerns include that:

  • Mastercard and Visa do not face effective competition when dealing with merchants and acquirers, in respect of core scheme and processing services. 
  • Over the past five years, Mastercard and Visa have increased their scheme and processing fees by more than 30% in real terms, but there is “little evidence that the quality of service has improved at the same rate”.

The PSR consider that intervention to address these issues may be appropriate. Possible remedies could include:

  • Improved transparency so that businesses and acquirers can make informed decisions and are more able to switch to alternative suppliers of optional services.
  • Obligations on Mastercard and Visa to explain, consult and/or document the reasons for price changes and the pricing of new services.

Responses are sought by 30 July 2024.

PSR consults on APP scams data cycle 2 publication guidance

On 8 May 2024, the Payment Systems Regulator (PSR) published draft guidance for payment service providers (PSPs) on publishing authorised push payment (APP) scams data for the second reporting cycle (January to December 2023), together with a consultation on the publication guidance for cycle 2 (CP24/7).

The draft guidance is for the 141 PSPs that are required to publish APP scams data under the PSR’s Specific Direction 18 which was published in March 2023 and revised in December 2023. CP24/7 is designed to be read together with the draft guidance. The PSR has also published a comparison version of the previous guidance for reference.

The PSR is proposing to change the publication guidance for cycle 2 and welcomed views on the changes through CP 24/7 until 30 May 2024. It expects to issue the final version of the publication guidance for cycle 2 by the end of June 2024.

PSR announces launch of mid-point review of five-year strategy 

On 7 May 2024, the Payment Systems Regulator (PSR) published a thought piece in which Dan Moore, Head of Strategy, Analysis and Engagement, discusses the mid-point review of its five-year strategy.

The PSR’s five-year strategy was published in January 2022. As it reaches the halfway point of the five-year strategy, the PSR is launching a mid-strategy review to assess the progress and determine whether the strategic outcomes and priorities remain relevant, or whether they need to be adapted or refined.

Stakeholders across the payments landscape are invited to give their views on how they view the PSRs progress, what issues they consider are important, and whether there are any suggested changes the PSR should made. The online stakeholder survey closed 4 June 2024.

ECB opinion on proposed PSD3 and PSR

On 7 May 2024, the Council of the EU published a note (9761/24) which attached an opinion (CON/2024/13) (dated 30 April 2024) of the European Central Bank (ECB). The opinion is on the proposed directive on payment services and electronic money services in the internal market (PSD3) (2023/0209 (COD)) and the proposed regulation on payment services in the internal market (Payment Services Regulation (PSR)) (2023/0210(COD)).

The opinion is a response to requests from the Council and the European Parliament for an opinion on the proposed regulation and the proposed directive. The ECB welcomes the proposed legislative acts and agrees with their aims.

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