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The Financial Services Authority (FSA) has today issued a consultation paper proposing Handbook changes that are required to implement aspects of the Payment Services Directive (PSD).

The PSD requires countries in the European Economic Area (EEA) to regulate payment services, including for example card payments, direct debits and money transfer.  It will impact all firms providing payment services, including banks, building societies, e-money issuers, money transfer operators and non-bank credit card issuers.  HM Treasury is currently consulting on the text of the Payment Services Regulations 2008, which will implement the directive in the UK on 1 November 2009.

The FSA will be responsible for the authorisation and registration requirements under the PSD, as well as supervising the Directive’s conduct of business regime.  In addition to the responsibilities and powers set out in the Payment Services Regulations, the FSA needs to make a small number of Handbook changes to

• apply its complaints handling rules to payment services firms;
• change the jurisdiction of the Financial Ombudsman Service so that it can perform the out-of-court redress function required by the PSD; and
• introduce an approach to enforcing the Payment Services Regulations that mirrors its general approach to enforcement under the Financial Services and Markets Act 2000 (FSMA).

Graeme Ashley-Fenn, Director of Permissions, Decisions and Reporting at the FSA, said:

"We are working closely with HM Treasury on implementation of the directive. Our proposals are a small but important step in the wider PSD project, and aim to make the transition for firms, some of which will be new to FSA regulation, and consumers as smooth as possible."  

The FSA is inviting responses by 28 November 2008. 

Notes to editors

1. Consultation Paper CP08/14: ‘Implementation of the Payment Services Directive – changes to the FSA Handbook’ can be found on the FSA website.
2. The Payment Services Regulations 2008 will implement the Payment Services Directive in the UK. HM Treasury is currently consulting on the final text of the Regulations – its consultation paper ‘Implementation of the Payment Services Directive: a consultation on the draft legislation’, published in July 2008, is available on HM Treasury’s website. 
3. Other bodies that will have responsibilities under the Payment Services Directive are:
   • HM Revenue and Customs (HMRC), which will retain responsibility for the anti-money laundering supervision of money service businesses;
   • The Office of Fair Trading (OFT), which will be responsible for the implementation of the rules relating to access to payment systems; and
   • The Financial Ombudsman Service (FOS), which will provide the out-of-court redress mechanism required by the PSD.
4. The FSA intends to publish an Approach Document in early 2009, outlining its approach to matters such as authorisation and supervision under the PSD.  More information on the PSD can be accessed on the FSA website.
5. The Financial Services Authority is giving a free seminar for firms who will be affected by the Payment Services Directive (PSD) in Canary Wharf, London on 6 October. It will give these firms an insight into the Directive's key provisions. The seminar is aimed at businesses that provide payment services (including money transfer operators, merchant acquirers, banks, building societies, e-money issuers and non-bank credit card issuers), their suppliers and trade associations. Further details about the event and how to book are available on the FSA's website.
6. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
7. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.