Canary wharf building reflection

Payment Services Directive 2 (PSD2)

John Glasby
Canary wharf building reflection
The revised Payment Services Directive (PSD2) is scheduled to come into force on 13 January 2018 and replaces the Payment Services Regulations 2009.

This EU Directive captures firms that provide payment services and will affect payment institutions, e-money institutions, banks and building societies. The revisions also bring more services within the FCA’s scope. These include the new regulated services; account information services (AIS) and payment initiation services (PIS). It also introduces a number of new requirements for Payment Service Providers (PSPs) and e-money issuers.


The main aims of PSD2 are to keep a pace with new technology and promote competition within the payments industry, encouraging lower prices for customers whilst improving consumer protection against fraud.

New legislation

The FCA published the revised PSD2 near final rules and approach document (PS17/19) in September. View full details of the Payment Services Services Directive Policy Statement.

The Payment Services Regulations 2017 (PSRs) replace the 2009 PSRs and make a number of changes to the regulatory regime, including:

  • Authorisations, Passporting, Capital resources
  • Change in control
  • Appointment of agents
  • Complaints handling and reporting
  • Conduct of business
  • Reporting and notifications, including fraud and incident reporting
  • Safeguarding
  • Payment service providers’ access to payment account
  • Payment initiation and account information services and confirmation of available funds.

Re-authorisation for existing authorised payment institutions and e-money institutions: transitional arrangements

Payment institutions and E-money institutions (both authorised and small registered) are required to re-apply for authorisation with the FCA. This is to ensure that existing Payment Institutions and authorised Electronic Money Institutions meet the conditions for authorisation, including the new conditions set out in PSD2, if they wish to continue offering their services after the transitional period ends.

Authorised Payment Institutions and Electronic Money Institutions must make their applications no later than 13 April 2018 if they intend to continue providing their services on or after 13 July 2018. Firms who have not applied or have not be granted re-authorisation before 13 July 2018 will have to cease providing their services, as will their agents.

Re-registration for small PIs and small EMIs: transitional arrangements

Small EMIs [FCA definition]

Under PSRs 2017, small EMIs must make their applications by no later than 13 April 2018 if they intend to continue providing their services on or after rel="noopener noreferrer" 13 July 2018.

Small PIs [FCA definition]

Small PIs must make their applications by no later than 13 October 2018 if they intend to continue providing payment services on or after 13 January 2019.

Any firm that has not successfully been re-registered before the end of the transitional time scale will have to cease providing payment services, as will their agents.

Variation of Permission

Payment Institutions that wish to change their FCA scope of permission to offer/provide additional payment services will need to apply for a Variation of Permission.

Contact us

John Glasby
John Glasby
Partner, Corporate Audit