The FCA set out three outcomes for payment firms to achieve going forward to address these concerns:
1. Outcome 1: Firms should ensure that customers’ money is safe, including in the event that the firm fails in a disorderly way. To achieve this outcome, firms should focus on:
- Safeguarding: payment firms must ensure that they safeguard customers funds in line with the Payment Services Regulations 2017 (PSRs) and Electronic Money Regulations 2011 (EMRs) and guidance set out in the FCA’s Approach Document.
- Prudential risk management: payment firms must ensure that they regularly review its prudential risk management arrangements, including having adequate capital and liquidity resources (that may include considering holding additional capital above the minimum requirement under the PSRs or EMRs).
- Wind-down planning: payment firms must have appropriate wind-down plans that should be reviewed regularly.
2. Outcome 2: Firms should ensure that payment firms do not compromise financial system integrity by being used for financial crime. To achieve this outcome, firms should focus on two priorities:
- Money laundering and sanctions: payment firms must have robust and proportionate to its risk profile anti-money laundering systems and controls in place. Compliance with anti-money laundering obligations and sanctions requirements must be monitored and regularly reviewed.
- Fraud: payment firms must regularly review their fraud prevention systems and controls, maintain appropriate customer due diligence controls and review its internal risk appetite statements, policies and procedures.
3. Outcome 3: Firms should implement and be ready for the Consumer Duty, as set out in the recently issued FCA’s Dear CEO letter dated 21 February 2023. This means conducting all necessary reviews and implementing the required changes in time for 31 July 2023.