Electronic money and payment service providers: conduct of business requirements

The Payment Services Regulations 2017 (PSRs) conduct requirements apply to all PSPs including e-money institutions (EMIs) providing payment services. 

The Electronic Money Regulations 2011 (EMRs) conduct requirements apply to all e-money issuers.

Full details are set out in:

• Parts 6 and 7 of the PSRs[1]
• Part 5 of the EMRs[2]
• Chapter 8 of Payment Services and Electronic Money – Our Approach[3]

Conduct of business and the PSRs

Part 6 and 7 of the PSRs set out conduct of business requirements that apply to the provision of payment services from an establishment in the UK, maintained by a PSP or its agent.

PSPs must provide users with a range of information, including:

• pre-contract information, such as terms and conditions
• post contract information, such as amount and currency of payment transactions

Other provisions regulate the rights and obligations of payment service users and providers. For example, firms are prevented from deducting charges unless otherwise agreed.

Conduct of business and the EMRs

Part 5 of the EMRs sets out conduct of business requirements that apply to the conduct of e-money business, where the issuance or redemption of the electronic money is carried out from an establishment in the UK, maintained by an electronic money issuer or its agent.

They relate to:

• issuing and redeeming e-money
• the prohibition on the payment of interest or other benefits linked to the length of time that e-money is held

Conduct of business and other legislation

In addition to following the PSRs and EMRs, PSPs and electronic money issuers will have to comply with other relevant legislation and rules. This may include:

• relevant provisions of our Handbook[4] (such as in the Dispute Resolution complaints source book (DISP) and the Supervision manual (SUP)
• Consumer Credit Act 1974 – see Parts I and II of Chapter 8 of the Approach Document[3]
• the Distance Marketing Regulations 2004
• the amended cross-border payments and Single Euro Payments Area (SEPA) legislation
• E-Commerce Regulations 2002
• Part 2 of the Consumer Rights Act 2015 and the Unfair Terms in Consumer Contracts Regulations 1999 – read more about unfair terms[5]
• Consumer Protection from Unfair Trading Regulations 2008 (CPRs)
• Payment Account Regulations 2015 (PARs)
• Interchange Fee Regulation (IFR) (as on-shored by the EU (Withdrawal) Agreement 2018 and amended by the Interchange Fee (Amendment) (EU Exit) Regulations 2019)
• data protection legislation
• anti-money laundering and terrorist financing legislation 

We also expect firms to comply with EBA Guidelines[6] on the remuneration of sales staff.

Firms should continue to apply EBA Guidelines to the extent that they remain relevant, interpreting them in light of the UK’s withdrawal from the EU and the associated legislative changes  

PSPs and electronic money issuers that are credit institutions, or that are authorised under the Financial Services and Markets Act 2000 for a separate regulated activity (such as credit related activities), will also have to follow their obligations under the act and the Handbook, including:

• the Principles for Businesses[7] (PRIN)
• Senior Management Arrangements, Systems and Controls sourcebook[8] (SYSC)

Corporate opt-out

The 'corporate opt-out' enables PSPs to agree different terms with their customers for certain conduct of business provisions.

The corporate opt-out is only available where the customer is not:

• a consumer
• a micro-enterprise, or
• a charity with an annual income of less than £1m

The corporate opt-out must be agreed by the customer. This can be done through account terms and conditions.