Following a consultation, the FCA has updated its payment services and e-money Approach Document to support amendments to the PSRs made in the Payment Services (Amendment) Regulations 2024.
The provisions came into force on 30 October 2024, and allow PSPs to delay making outbound APP transactions where they have reasonable grounds to suspect fraud or dishonesty. The aim of the amendments was to allow flexibility in preventing APP fraud more effectively, while minimising the impact on legitimate payments. The guidance outlines how the FCA expects PSPs to apply these changes:
- PSPs need an objective factual foundation for the ‘reasonable grounds to suspect’ threshold to be met. The guidance also sets out what PSPs should consider when assessing whether the threshold has been met;
- the purpose of the delay window is to provide an opportunity for PSPs to contact the payer or other relevant third parties (e.g. law enforcement) to establish whether to execute the payment order. The delay should last no longer than is necessary for this purpose and can last no longer than 4 business days.
- obligations on PSPs if they delay an outbound transaction:
- the PSP must notify certain parties if a transaction is delayed, being mindful of relevant obligations under the Consumer Duty for its interactions with the payer; and
- the PSP may incur liability to compensate a payer for any costs resulting from the transaction delay.
Following industry requests, the FCA also set out its views on when the force majeure provisions in the PSRs 2017 apply to financial crime legislation. The Treasury did not amend these provisions, and the FCA confirmed that the force majeure provisions provide that where a PSP must breach the execution timescales in the PSRs (for example, by delaying making incoming funds available to a payee) to comply with other laws (including financial crime laws), the PSP will not be liable for the PSRs breach.