FSA to supervise Payment Services Directive

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LONDON – After much speculation, MP Kitty Ussher, HM Treasury economic secretary, has confirmed the UK Financial Services Authority will be responsible for the provision of payment services established by the Payment Services Directive (PSD).

The money transfer sector, along with other payment service providers, will become subject to regulation under the PSD. The directive, which is due to be implemented in all EU Member States by November 2009, aims to harmonise the system for payment services, such as direct debits, card payments, and remittances, across the EU to increase cross-border competition in payments which is currently hampered by differing national standards.

The PSD seeks to improve consumer choice by opening up the payments market to greater competition. This is supported by the agreement reached on a new licencing regime for non-bank payment service providers such as money transfer operators, which will allow them to operate throughout the EU.

Final details regarding the implementation of the PSD provisions into UK law are currently being considered by the Treasury, which is expected to publish a consultation document on this issue later this year.

“We now need to consider how best to implement the Payment Services Directive in the UK and ensure the regime we create is proportionate and risk-based,” said Kitty Ussher in a speech to the Global Consumer Money Transfers conference. “In consulting on our approach to implementation this autumn we will be looking to support further competition, choice, efficiency and innovation in the payments market, and balance this with ensuring appropriate consumer protection, true to the aims of the Directive."