Treasury launches consultation on the implementation of the Payment Services Directive

Economic Secretary to the Treasury Kitty Ussher said that opening up the EU payments market to greater competition as a result of the Payment Services Directive would improve consumer choice, and make cross-border payments cheaper, easier and more efficient while also providing effective consumer protection.

Kitty Ussher was announcing a consultation on the implementation of the Payment Services Directive, which opens today. The Directive is intended to harmonise the regulatory regime for payment services across the EU. It introduces a new EU-wide licensing regime to allow non-bank payment service providers (such as money transfer operators) to operate across borders, and new, pan-European conduct of business rules for all payment service provision providers.

Kitty Ussher said:

"The main aim of the Payment Services Directive is to support the Single Market in financial services. In implementing this Directive in the UK we will be seeking to balance consumer protection with a proportionate, principles-based regulatory framework. In the consultation published today, we are looking to achieve an approach which will support further competition, choice, efficiency and innovation in the payments market, including opening up markets for UK firms.

"In the context of the financial difficulties experienced by money transfer operator, First Solution, earlier this year, I am encouraging those affected or with an interest to participate actively in this consultation. Significantly, the money transfer sector, along with other payment service providers, will become subject to regulation under the Directive."

The Directive allows non-bank providers to passport their services around the EU on the basis of a single licence obtained in one Member State, and introduces a prudential authorisation regime for businesses operating cross-border, tiered according to the size of the operator.

The Directive also introduces information and liability requirements to provide greater legal certainty for payment services users and providers in the event of a payment transaction going wrong, or of a payment card being lost or stolen, as well as agreed timescales for executing a transaction.

The Payment Services Directive must be implemented in all EU Member States by November 2009.

Notes for editors

1. The Directive was formally adopted on 13 November 2007. The UK Government has informally and formally consulted a wide variety of stakeholders on the Directive since it was proposed by the Commission in December 2005.

2. Payment services include credit and debit cards, direct debits, standing orders, and money remittance. Payment systems are the means by which payment transactions are processed, cleared or settled.

3. Kitty Ussher announced in a speech to the Global Consumers Money Transfer Conference in October 2007, that the Financial Services Authority will be the UK regulator for the supervision of payment service provision, under the Directive, and HMRC will continue to supervise the anti-money laundering requirements on money service businesses.

4. The consultation document covers the content and impact of the Directive and the regulatory implications:

The implementation of the Payment Services Directive: a consultation document

The Consultation closes on 18 March 2008.

5. Media enquiries should be addressed to the Treasury Press office on 020 7270 5238

6. Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558, or by email to public.enquiries@hm-treasury.gov.uk

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