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The consolidation of UK payment system operators marks another big step in delivering on the New Payments Architecture.

By Stuart Davis and Brett Carr

What happened?

Operational responsibility for the Bacs and Faster Payments systems, which process a combined £6.3 trillion worth of payments annually, has transferred to the New Payment System Operator (NPSO).

The successful consolidation of the operators (and planned consolidation of the Cheque and Credit Clearing Company in late 2018) has been a key focus for both the Payment Systems Regulator (PSR) and the Bank of England. Proponents argue that by bringing the operators together, the NPSO will help not only to simplify access to payment systems and promote competition, but will also help deliver other identified solutions (see What’s next?). As a single, primary deliverer of many of these solutions, the NPSO will be more efficient than the current three entities and it will be able to realise projects and their benefits more quickly and cost effectively. The consolidation plan has been articulated in the Payment System Operator Delivery Report issued in May 2017.

ESMA to introduce measures to restrict the provision of CFDs, and prohibit the provision of binary options, to retail investors in the EU.

By Nicola Higgs and Charlotte Collins

The European Securities and Markets Authority (ESMA) has announced the first use of its new product intervention powers under MiFID II. ESMA had announced before MiFID II came into force that it would introduce such measures, and had launched a brief call for evidence on its specific proposals on 18 January 2018. Despite receiving almost 18,500 responses to the proposals (many of which were presumably objections from the industry), ESMA has pressed ahead regardless, suggesting that the consultation was a mere formality.

The measures will introduce:

  • A prohibition on the marketing, distribution, or sale of binary options to retail investors in the EU
  • A restriction on the marketing, distribution, or sale of contracts for differences (CFDs) to retail investors in the EU

By Stuart Davis and Brett Carr

Driven by payments innovation and new regulation, 2018 is cited as the year for some of the most significant changes retail banking has seen.

At the Westminster Business Forum for Digital Payments, Adoption, Innovation and Policy Priorities, Graeme McLean (Head of Banking, Lending & Distribution at the FCA) appraised a panel and audience including legislators, innovators, and market infrastructure providers on the regulatory state of play heading into 2018.

With the revised Payment Services Directive (PSD2) set to apply from 13 January 2018 (see Latham’s Client Alert Understanding PSD2: Key Points to Know About the Upcoming Regime), the industry finds itself, according to McLean, just weeks away from an impending “diversification the retail banking sector has never seen before”.

Closely following the publication of the long awaited Regulatory Technical Standards (RTS) on Strong Customer Authentication and Secure Communication (SCA), McLean discussed PSD2, competition, and the UK’s Open Banking initiative. McLean highlighted that the transitional period applying to these standards has raised some uncertainty across the industry, and reminded those concerned to familiarise themselves with the FCA’s Approach Document and joint statement with HM Treasury, which detail the FCA’s approach to the transitional period.