The FCA chose 5pm on the Friday before the Spring Bank Holiday weekend to launch its latest initiative to tighten control on payment service providers (PSPs) and electronic money institutions (EMIs). (see ‘FCA acts to strengthen protections for customers using payment firms’)
It takes the form of a short consultation exercise ending two weeks later on Friday 5 June 2020.
It poses only four leading questions that clearly expect the answer Yes.
This is without precedent in this firm’s view.
The questions are set out below and focus on safeguarding accounts (client money accounts in old money) and prudential standards.
FCA issued an Approach Paper on 3 June 2019 and it is clear from the current initiative that both PSPs and EMIs are still failing to comply with its guidance.
At chapter 10 the guidance sets out a series of straightforward requirements over 11 short pages.
On 4 July 2019 the FCA sent a ‘Dear CEO letter’ to payment service providers.
Failure by PSPs and EMIs to follow the ‘safeguarding’ requirements is a concern, especiallygiven the pressure on this sector recently.
FCA attached a proposed ‘acknowledgement letter’ for use by firms to get their bankers and others to confirm that they understand the nature of segregated client money accounts.