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The Payment Services Regulations 2017

Type Statutory-Instrument

Publication 2017-07-18

Last updated 2026-02-25

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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Made: 18th July 2017

Laid before Parliament: 19th July 2017

Coming into force in accordance with regulation 1

The Treasury are a government department designated for the purposes of section 2(2) of the European Communities Act 1972 in relation to financial services.

The Treasury make these Regulations in exercise of the powers conferred on them by section 2(2) of the European Communities Act 1972, sections 22(1) and (5) and 428(3) of, and paragraph 20(4)(d) of Schedule 1ZA and paragraph 15(1) of Schedule 2 to, the Financial Services and Markets Act 2000 , section 3 of the Child Trust Funds Act 2004 , section 694 of the Income Tax (Trading and Other Income) Act 2005 , sections 85(2)(b) and 109(4)(b) of the Financial Services Act 2012 and paragraph 10(4)(b) and (5)(b) of Schedule 4 to the Financial Services (Banking Reform) Act 2013 .

PART 1 — Introductory provisions

Citation, commencement and extent

1

(1) These Regulations may be cited as the Payment Services Regulations 2017.

(2) The following provisions come into force on 13th August 2017—

(a) this regulation and regulations 2 (interpretation), 106 (functions of the FCA), 112(6) (policy on imposition of penalties), 118 (costs of supervision), 120 (guidance), 121 (FCA's exemption from liability in damages) and 147 (duty to co-operate and exchange of information);

(b) regulation 122 and the following provisions of Schedule 6 (application and modification of legislation)—

(i) paragraph 1 (disciplinary powers) in so far as that paragraph applies sections 69 and 70 of the 2000 Act;

(ii) paragraph 3 (FCA rules) for the purpose of enabling the FCA to make rules;

(iii) paragraph 5 (control over payment institutions) in so far as that paragraph applies the provisions of sections 179 and 191E of the 2000 Act which confer functions on the FCA;

(iv) paragraph 12 (application of the Financial Services and Markets Act 2000 (Service of Notices) Regulations 2001 );

(i) paragraph 2(6) (amendment of section 379A of the 2000 Act);

(ii) paragraph 3(b) (amendment of Schedule 15 to the Enterprise Act 2002 );

(iii) paragraph 5 (amendment of the Electronic Money Regulations 2011 ) for the purpose of enabling the FCA to impose requirements, give directions and make rules;

(d) for the purpose of enabling the FCA to impose requirements and give directions—

(i) regulation 5(3) and (5) (applications for authorisation as a payment institution);

(ii) regulation 6(7)(e) and (f) (professional indemnity insurance for authorised payment institutions);

(iii) regulation 11(1) and (3) (cancellation of registration);

(iv) regulation 13(1), (2), (3) and (5) (application for registration);

(v) regulation 15 (small payment institutions: supplementary provision) in so far as it applies regulation 11(1) and (3);

(vi) regulation 17(1)(b) and (3) (application for registration as an account information service provider);

(vii) regulation 18(4)(b) (professional indemnity insurance for registered account information service providers);

(viii) regulation 19 (registered account information service providers: supplementary provision) in so far as it applies regulation 11(1) and (3);

(ix) regulation 20(3) (duty to notify changes);

(x) regulation 27(1) (notice of intention);

(xi) regulation 30(4), (5) and (7) (supervision of firms exercising passport rights);

(xii) regulation 34(3) and (4) (application for registration of agent);

(xiii) regulation 37(2) (duty to notify change in circumstances);

(xiv) regulation 38(4) (notification of use of limited network exclusion);

(xv) regulation 39(3) to (5) (notification of use of electronic communications exclusion);

(xvi) regulation 71(8)(c) (denial of access to an account information service provider);

(xvii) regulation 98(3) (management of operational and security risks);

(xviii) regulation 99(2) (incident reporting);

(xix) regulation 105(4)(b) (refusal of access to bank account);

(xx) regulation 109(1) to (3) and (5) (reporting requirements);

(xxi) regulation 119 to the extent that it gives effect to paragraph 5(1), (3) and (4) of Schedule 5 (credit agreements).

(3) The following provisions come into force on 13th October 2017—

(a) Part 2, for the purposes of enabling—

(i) the making and determination of applications for authorisation or registration (including the imposition of requirements in relation to authorisations and registrations); and

(ii) the giving of notices under regulation 3(2) (exemption for municipal banks);

(b) for the purposes of enabling the giving of notifications and the making of applications to the FCA and enabling the FCA to take action in response to such notifications and applications, regulations 25 (outsourcing), 34 (use of agents) and 39 (notification of use of electronic communications exclusion);

(c) In Schedule 6 (application and modification of legislation), paragraphs 2 (the Upper Tribunal), 5 (control over payment institutions) in so far as not already in force, 8 (restriction on disclosure of information), 10 (warning notices and decision notices) and 13 (application of the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001);

(d) regulations 142 to 146 (misleading the FCA);

(e) regulation 150 (transitional and saving provisions), for the purposes of enabling the provision of information or giving of notification under regulation 150(3), and enabling the FCA to take action in response to such information or notification;

(f) regulation 156 in so far as it gives effect to—

(i) paragraph 5 of Schedule 8 (amendment of the Electronic Money Regulations 2011), for the purpose of enabling the giving of notifications, the making or determining of applications and the taking of action in response to such applications and notifications under the Electronic Money Regulations 2011;

(ii) paragraph 6 of Schedule 8 (amendment of the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 ), for the purpose of the FCA's determination of applications for authorisation or registration under Part 2 of these Regulations (including the imposition of requirements in relation to authorisations and registrations).

(4) Regulations 27 (notice of intention) and 28 (decision following notice of intention) come into force on 13th December 2017 for the purposes of enabling the giving of notifications and enabling the FCA to take action in response to such notifications.

(5) Regulations 68(3)(c), 69(2)(a) and (3)(d), 70(2)(a) and (3)(c), 77(4)(c) and (6) and 100 (secure communication and authentication) come into force on 14th September 2019.

(6) Except as provided in paragraphs (2) to (5), these Regulations come into force on 13th January 2018.

(7) Paragraph 6 of Schedule 8 (amendment of the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975) extends to England and Wales only.

Interpretation

2

(1) In these Regulations—

“the 2000 Act” means the Financial Services and Markets Act 2000;

“account information service” means an online service to provide consolidated information on one or more payment accounts held by the payment service user with another payment service provider or with more than one payment service provider, and includes such a service whether information is provided—in its original form or after processing;only to the payment service user or to the payment service user and to another person in accordance with the payment service user's instructions;

“account information service provider” means a payment service provider which provides account information services;

“account servicing payment service provider” means a payment service provider providing and maintaining a payment account for a payer;

“acquiring of payment transactions” means a payment service provided by a payment service provider contracting with a payee to accept and process payment transactions which result in a transfer of funds to the payee;

“agent” means a person who acts on behalf of an authorised payment institution, a small payment institution or a registered account information service provider in the provision of payment services;

“authentication” means a procedure which allows a payment service provider to verify the identity of a payment service user or the validity of the use of a specific payment instrument, including the use of the user's personalised security credentials;

“authorised payment institution” means—a person authorised as a payment institution pursuant to regulation 6 (conditions for authorisation as a payment institution) and included by the FCA in the register as an authorised payment institution pursuant to regulation 4(1)(a) (the register of certain payment service providers); ora person included by the FCA in the register pursuant to regulation 150 or 152, and regulation 153(1) (transitional provisions);

“the FCA” means the Financial Conduct Authority;

“branch” means a place of business, other than the head office, of—an authorised payment institution;a small payment institution; ora registered account information service provider;......which forms a legally dependent part of such a payment service provider and which carries out directly all or some of the services inherent in the business of such a payment service provider; ...

“business day” means any day on which the relevant payment service provider is open for business as required for the execution of a payment transaction;

“the capital requirements regulation” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms;

“charity”, in Parts 6 (information requirements for payment services) and 7 (rights and obligations in relation to the provision of payment services), means a body whose annual income is less than £1 million and is—in England and Wales, a charity as defined by section 1(1) of the Charities Act 2011 (meaning of “charity”) ;in Scotland, a charity as defined by section 106 of the Charities and Trustee Investment (Scotland) Act 2005 (general interpretation) ;in Northern Ireland, a charity as defined by section 1(1) of the Charities Act (Northern Ireland) 2008 (meaning of “charity”) ;

“co-badged”, in relation to a payment instrument, refers to an instrument on which is included two or more payment brands, or two or more payment applications of the same payment brand;

“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;

“consumer” means an individual who, in contracts for payment services to which these Regulations apply, is acting for purposes other than a trade, business or profession;

“credit institution” has the meaning given in Article 4(1)(1) of the capital requirements regulation;

“credit transfer” means a payment service for crediting a payee's payment account with a payment transaction or a series of payment transactions from a payer's payment account by the payment service provider which holds the payer's payment account, based on an instruction given by the payer;

“designated system” has the meaning given in regulation 2(1) of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (interpretation) ;

“digital content” means goods or services which are produced and supplied in digital form, the use or consumption of which is restricted to a technical device and which do not include in any way the use or consumption of physical goods or services;

“direct debit” means a payment service for debiting the payer's payment account where a payment transaction is initiated by the payee on the basis of consent given by the payer to the payee, to the payee's payment service provider or to the payer's own payment service provider;

“durable medium” means any instrument which enables the payment service user to store information addressed personally to them in a way accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored;

“electronic communications network” means transmission systems and, where applicable, switching or routing equipment and other resources which permit the conveyance of signals by wire, by radio, by optical or by other electromagnetic means, including satellite networks, fixed (circuit- and packet-switched, including Internet) and mobile terrestrial networks, electricity cable systems, to the extent that they are used for the purpose of transmitting signals, networks used for radio and television broadcasting, and cable television networks, irrespective of the type of information conveyed;;

“electronic communications service” means a service normally provided for remuneration which consists wholly or mainly in the conveyance of signals on electronic communications networks, including telecommunications services and transmission services in networks used for broadcasting, but exclude services providing, or exercising editorial control over, content transmitted using electronic communications networks and services; it does not include information society services, as defined in Article 1 of Directive (EU) 2015/1535 of the European Parliament and of the Council of 9 September 2015 laying down a procedure for the provision of information in the field of technical regulations and of rules on Information Society services, which do not consist wholly or mainly in the conveyance of signals on electronic communications networks;

“electronic money” has the meaning given in regulation 2(1) of the Electronic Money Regulations 2011;

“electronic money institution” has the meaning given in regulation 2(1) of the Electronic Money Regulations 2011;

“excluded provider” means a provider of services falling within paragraphs 2(k)(i) to (iii), (l) or (o) of Schedule 1 (limited network, electronic communications and cash withdrawal exclusions);

“framework contract” means a contract for payment services which governs the future execution of individual and successive payment transactions and which may contain the obligation and conditions for setting up a payment account;

“funds” means banknotes and coins, scriptural money and electronic money;

“group” means a group of—undertakings linked to each other by a relationship referred to in Article 22(1), (2) or (7) of Directive 2013/34/EU of the European Parliament and of the Council of 26th June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC ; orundertakings as defined in Articles 4 to 7 of Commission Delegated Regulation (EU) No. 241/2014 of 7th January 2014 supplementing Regulation (EU) 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards for Own Funds requirements for institutions , which are linked to each other by a relationship referred to in Article ... 113(6) ... of the capital requirements regulation;

“interchange fee regulation” means Regulation (EU) 2015/751 of the European Parliament and of the Council of 29th April 2015 on interchange fees for card-based payment transactions ;

“issuing of payment instruments” means a payment service by a payment service provider contracting with a payer to provide a payment instrument to initiate payment orders and to process the payer's payment transactions;

“means of distance communication” means a method which, without the simultaneous physical presence of the payment service provider and the payment service user, may be used for the conclusion of a contract for payment services between those parties;

“micro-enterprise” means an enterprise which, at the time at which the contract for payment services is entered into, is an enterprise as defined in Article 1 and Article 2(1) and (3) of the Annex to Recommendation 2003/361/EC of 6th May 2003 concerning the definition of micro, small and medium-sized enterprises ;

“money remittance” means a service for the transmission of money (or any representation of monetary value), without any payment accounts being created in the name of the payer or the payee, where—funds are received from a payer for the sole purpose of transferring a corresponding amount to a payee or to another payment service provider acting on behalf of the payee; orfunds are received on behalf of, and made available to, the payee;

“notice” means a notice in writing;

“own funds” means own funds as defined in Article 4(1)(118) of the capital requirements regulation, and “Common Equity Tier 1 capital”, “Tier 1 capital” and “Tier 2 capital” have the same meanings as in that regulation;

“parent undertaking” has the same meaning as in the Companies Acts, as defined by section 1162 of, and Schedule 7 to, the Companies Act 2006 (parent and subsidiary undertakings) ;

“participant” has the meaning given in regulation 2(1) of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (interpretation) ;

“payee” means a person who is the intended recipient of funds which have been the subject of a payment transaction;

“payer” means—a person who holds a payment account and initiates, or consents to the initiation of, a payment order from that payment account; orwhere there is no payment account, a person who gives a payment order;

“payment account” means an account held in the name of one or more payment service users which is used for the execution of payment transactions;

“payment brand” means any material or digital name, term, sign or symbol, or combination of them, capable of denoting under which payment card scheme card-based payment transactions are carried out;

“payment initiation service” means an online service to initiate a payment order at the request of the payment service user with respect to a payment account held at another payment service provider;

“payment initiation service provider” means a payment service provider which provides payment initiation services;

“payment instrument” means any—personalised device; orpersonalised set of procedures agreed between the payment service user and the payment service provider,used by the payment service user in order to initiate a payment order;

“payment order” means any instruction by a payer or a payee to their respective payment service provider requesting the execution of a payment transaction;

“payment service” means any of the activities specified in Part 1 of Schedule 1 (payment services) when carried out as a regular occupation or business activity, other than any of the activities specified in Part 2 of that Schedule (activities which do not constitute payment services);

“payment services directive” means Directive 2015/2366/EU of the European Parliament and of the Council of 25th November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No. 1093/2010, and repealing Directive 2007/64/EC ;

“payment service provider” means any of the following when they carry out payment services—authorised payment institutions;small payment institutions;registered account information service providers;......electronic money institutions, including branches located in the United Kingdom of such institutions whose head office is outside the United Kingdom, in so far as the payment services provided by those branches are linked to the issuance of electronic money;credit institutions, including branches located in the United Kingdom;the Post Office Limited;the Bank of England, other than when acting in its capacity as a monetary authority or carrying out other functions of a public nature; andgovernment departments and local authorities, other than when carrying out functions of a public nature,and in Part 9 (the FCA) and Schedule 6 (application and modification of legislation), includes agents of payment service providers and excluded providers;

“payment service user” means a person when making use of a payment service in the capacity of payer, payee, or both;

“payment system” means a funds transfer system with formal and standardised arrangements and common rules for the processing, clearing and settlement of payment transactions;

“the Payment Systems Regulator” means the body established under section 40 of the Financial Services (Banking Reform) Act 2013 (the Payment Systems Regulator);

“payment transaction” means an act initiated by the payer or payee, or on behalf of the payer, of placing, transferring or withdrawing funds, irrespective of any underlying obligations between the payer and payee;

“personalised security credentials” means personalised features provided by a payment service provider to a payment service user for the purposes of authentication;

“qualifying holding” has the meaning given in Article 4(1)(36) of the capital requirements regulation;

“reference exchange rate” means the exchange rate which is used as the basis to calculate any currency exchange and which is made available by the payment service provider or comes from a publicly available source;

“reference interest rate” means the interest rate which is used as the basis for calculating any interest to be applied and which comes from a publicly available source which can be verified by both parties to a contract for payment services;

“the register” means the register maintained by the FCA under regulation 4 (the register of certain payment service providers);

“registered account information service provider” means an account information service provider registered pursuant to regulation 18 and included by the FCA on the register pursuant to regulation 4(1)(c) (the register of certain payment service providers);

“regulated agreement” has the meaning given by section 189(1) of the Consumer Credit Act 1974 (definitions) ;

“remote payment transaction” means a payment transaction initiated through the internet or otherwise initiated through a device that can be used for distance communication;

“sensitive payment data” means information, including personalised security credentials, which could be used to carry out fraud; but in relation to account information services and payment initiation services does not include the name of an account holder or an account number;

“the SEPA regulation” means Regulation (EU) No 260/2012 of the European Parliament and of the Council of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009;

“single payment service contract” means a contract for a single payment transaction not covered by a framework contract;

“small payment institution” means—a person registered as a small payment institution pursuant to regulation 14 and included by the FCA in the register pursuant to regulation 4(1)(b) (the register of certain payment service providers); ora person included by the FCA in the register pursuant to regulations 151 and 153(1) (transitional provisions);

“strong customer authentication” means authentication based on the use of two or more elements that are independent, in that the breach of one element does not compromise the reliability of any other element, and designed in such a way as to protect the confidentiality of the authentication data, with the elements falling into two or more of the following categories—something known only by the payment service user (“knowledge”);something held only by the payment service user (“possession”);something inherent to the payment service user (“inherence”);

“subsidiary undertaking” has the same meaning as in the Companies Acts (see section 1162 of, and Schedule 7 to, the Companies Act 2006 (parent and subsidiary undertakings));

“transfer order” has the meaning given in regulation 2(1) of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (interpretation) ;

“unique identifier” means a combination of letters, numbers or symbols specified to the payment service user by the payment service provider and to be provided by the payment service user in relation to a payment transaction in order to identify unambiguously one or both of—another payment service user who is a party to the payment transaction;the other payment service user's payment account;

“value date” means a reference time used by a payment service provider for the calculation of interest on the funds debited from or credited to a payment account.

(2) In these Regulations references to amounts in euros include references to equivalent amounts in pounds sterling.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Expressions used in a modification to a provision in primary or secondary legislation applied by these Regulations have the same meaning as in these Regulations.

Exemption for certain bodies

3

(1) Subject to paragraph (2) and regulation 4(1)(f), these Regulations do not apply to the following persons—

(a) credit unions;

(b) municipal banks; and

(2) Where municipal banks provide or propose to provide payment services they must give notice to the FCA.

(3) In this regulation—

“credit union” means a credit union within the meaning of—the Credit Unions Act 1979 ;the Credit Unions (Northern Ireland) Order 1985 ;

“municipal bank” means a company which, immediately before 1st December 2001, fell within the definition of a municipal bank in section 103 of the Banking Act 1987 (municipal banks) .

PART 2 — Registration

The register

The register of certain payment service providers

4

(1) The FCA must maintain a register of—

(a) authorised payment institutions ...;

(b) small payment institutions;

(d) persons providing a service falling within paragraph 2(k)(i) to (iii) or (l) of Schedule 1 who have notified the FCA under regulation 38 or 39 (notification of use of limited network or electronic communications exclusion);

(e) agents of authorised payment institutions, small payment institutions and registered account information service providers, registered under regulation 34 (use of agents); and

(f) the persons specified in regulation 3(1) (exemption for certain bodies) where they provide payment services.

(2) The FCA may include on the register any of the persons mentioned in paragraphs (f) to (i) of the definition of a payment service provider in regulation 2(1) (interpretation) where such persons provide payment services.

(3) Where a person mentioned in paragraph (h), (i) or (j) of the definition of a payment service provider in regulation 2(1)—

(a) is not included on the register; and

(b) provides, or proposes to provide, payment services,

the person must give notice to the FCA.

(4) The FCA may—

(a) keep the register in any form it thinks fit;

(b) include on it such information as the FCA considers appropriate, provided that the register identifies the payment services for which an institution is authorised or registered under this Part; and

(5) The FCA must—

(a) publish the register online and make it available for public inspection;

(b) enter in the register any cancellation of an authorisation or registration;

(c) enter in the register a description of the service provided by a person included on the register by virtue of paragraph (1)(d);

(d) update the register without delay; and

(e) provide a certified copy of the register, or any part of it, to any person who asks for it—

(i) on payment of the fee (if any) fixed by the FCA; and

(ii) in a form (either written or electronic) in which it is legible to the person asking for it.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Authorisation as a payment institution

Application for authorisation as a payment institution or variation of an existing authorisation

5

(1) An application for authorisation as a payment institution must contain or be accompanied by the information specified in Schedule 2 (information to be included in or with an application for authorisation).

(2) An application for the variation of an authorisation as a payment institution must—

(a) contain a statement of the proposed variation;

(b) contain a statement of the payment services which the applicant proposes to carry on if the authorisation is varied; and

(3) An application under paragraph (1) or (2) must be made in such manner as the FCA may direct.

(4) At any time after receiving an application and before determining it, the FCA may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application.

(5) Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.

Conditions for authorisation as a payment institution

6

(1) The FCA may refuse to grant all or part of an application for authorisation as a payment institution only if any of the conditions set out in paragraphs (2) to (9) is not met.

(2) The application must comply with the requirements of, and any requirements imposed under, regulations 5 (application for authorisation) and 20 (duty to notify changes).

(3) The applicant must immediately before the time of authorisation hold the amount of initial capital specified in Part 1 of Schedule 3 (capital requirements).

(4) The applicant must be a body corporate constituted under the law of a part of the United Kingdom having—

(a) its head office, and

(b) if it has a registered office, that office,

in the United Kingdom.

(5) The applicant carries on, or will carry on, at least part of its payment service business in the United Kingdom.

(6) The applicant must satisfy the FCA that, taking into account the need to ensure the sound and prudent conduct of the affairs of the institution, it has—

(a) robust governance arrangements for its payment service business, including a clear organisational structure with well-defined, transparent and consistent lines of responsibility;

(b) effective procedures to identify, manage, monitor and report any risks to which it might be exposed;

which are comprehensive and proportionate to the nature, scale and complexity of the payment services to be provided by the institution.

(7) The applicant must satisfy the FCA that—

(a) any persons having a qualifying holding in it are fit and proper persons having regard to the need to ensure the sound and prudent conduct of the affairs of an authorised payment institution;

(b) the directors and persons responsible for the management of the institution and, where relevant, the persons responsible for the management of payment services, are of good repute and possess appropriate knowledge and experience to provide payment services;

(c) it has a business plan (including, for the first three years, a forecast budget calculation) under which appropriate and proportionate systems, resources and procedures will be employed by the institution to operate soundly;

(d) it has taken adequate measures for the purpose of safeguarding payment service users' funds in accordance with regulation 23 (safeguarding requirements);

(e) in the case of an applicant which proposes to carry on payment initiation services, it holds professional indemnity insurance or a comparable guarantee, which covers—

(i) the territories in which the applicant proposes to offer payment initiation services; and

(ii) the applicant's potential liability under regulations 76 (payment service provider's liability for unauthorised payment transactions) and 91 to 95 (non-execution or defective or late execution of transactions, liability for charges and interest and right of recourse), up to such amount as the FCA may direct; and

(f) in the case of an applicant which proposes to carry on account information services, it holds professional indemnity insurance or a comparable guarantee, which covers—

(i) the territories in which the applicant proposes to offer account information services; and

(ii) the applicant's potential liability to account servicing payment service providers and payment service users resulting from unauthorised or fraudulent access to, or use of, payment account information, up to such amount as the FCA may direct.

(8) The applicant must comply with a requirement of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to be included in a register maintained under those Regulations where such a requirement applies to the applicant.

(9) If the applicant has close links with another person (“CL”) the applicant must satisfy the FCA—

(a) that those links are not likely to prevent the FCA's effective supervision of the applicant; and

(b) if it appears to the FCA that CL is subject to the laws, regulations or administrative provisions of a territory outside the United Kingdom (“the foreign provisions”), that neither the foreign provisions, nor any deficiency in their enforcement, would prevent the FCA's effective supervision of the applicant.

(10) For the purposes of paragraph (9), an applicant has close links with CL if--

(a) CL is a parent undertaking of the applicant;

(b) CL is a subsidiary undertaking of the applicant;

(d) CL is a subsidiary undertaking of a parent undertaking of the applicant;

(e) CL owns or controls 20% or more of the voting rights or capital of the applicant; or

(f) the applicant owns or controls 20% or more of the voting rights or capital of CL.

Imposition of requirements

7

(1) The FCA may include in an authorisation such requirements as it considers appropriate.

(2) A requirement may, in particular, be imposed so as to require the person concerned to—

(a) take a specified action;

(b) refrain from taking a specified action.

(3) A requirement may be imposed by reference to the person's relationship with its group or other members of its group.

(4) Where—

(a) an applicant for authorisation as a payment institution intends to carry on business activities other than the provision of payment services; and

(b) the FCA considers that the carrying on of such other business activities will impair, or is likely to impair—

(i) the financial soundness of the applicant, or

(ii) the FCA's effective supervision of the applicant,

the FCA may require the applicant to establish a separate body corporate to carry on the payment service business.

(5) A requirement expires at the end of such period as the FCA may specify in the authorisation.

(6) Paragraph (5) does not affect the FCA's powers under regulation 8 or 12 (variation of authorisation).

Variation etc. at request of authorised payment institution

8

The FCA may, on the application of an authorised payment institution, vary that person's authorisation by—

(a) adding a payment service to those for which it has granted authorisation;

(b) removing a payment service from those for which it has granted authorisation;

(c) imposing a requirement such as may, under regulation 7 (imposition of requirements), be included in an authorisation;

(d) cancelling a requirement included in the authorisation or previously imposed under paragraph (c); or

(e) varying such a requirement,

provided that the FCA is satisfied that the conditions set out in regulation 6(4) to (9) (conditions for authorisation) and, if applicable, the requirement in regulation 22(1) (capital requirements) to maintain own funds, are being or are likely to be met.

Determination of application for authorisation or variation of authorisation

9

(1) The FCA must determine an application for authorisation or the variation of an authorisation before the end of the period of three months beginning with the date on which it received the completed application.

(2) The FCA may determine an incomplete application if it considers it appropriate to do so, and it must in any event determine any such application within 12 months beginning with the date on which it received the application.

(3) The applicant may withdraw its application, by giving the FCA notice, at any time before the FCA determines it.

(4) The FCA may grant authorisation to carry out the payment services to which the application relates or such of them as may be specified in the grant of the authorisation.

(5) If the FCA decides to grant an application for authorisation, or for the variation of an authorisation, it must give the applicant notice of its decision specifying—

(a) the payment services for which authorisation has been granted; or

(b) the variation granted,

described in such manner as the FCA considers appropriate.

(6) The notice must state the date on which the authorisation or variation takes effect.

(7) If the FCA proposes to refuse an application or to impose a requirement it must give the applicant a warning notice.

(8) The FCA must, having considered any representations made in response to the warning notice—

(a) if it decides to refuse the application or to impose a requirement, give the applicant a decision notice; or

(b) if it grants the application without imposing a requirement, give the applicant notice of its decision, stating the date on which the authorisation or variation takes effect.

(9) If the FCA decides to refuse the application or to impose a requirement the applicant may refer the matter to the Upper Tribunal.

(10) If the FCA decides to authorise the applicant, or vary its authorisation, it must update the register as soon as practicable.

Cancellation of authorisation

10

(1) The FCA may cancel a person's authorisation and enter such cancellation in the register where—

(a) the person does not provide payment services within 12 months beginning with the date on which the authorisation took effect;

(b) the person requests, or consents to, the cancellation of the authorisation;

(d) the person has obtained authorisation through false statements or any other irregular means;

(e) the person no longer meets, or is unlikely to continue to meet, any of the conditions set out in regulation 6(4) to (9) (conditions for authorisation) or, if applicable, the requirement in regulation 22(1) (capital requirements) to maintain own funds, or does not inform the FCA of a major change in circumstances which is relevant to its meeting those conditions or that requirement, as required by regulation 37 (duty to notify change in circumstance);

(f) the person has provided payment services other than in accordance with the authorisation granted to it;

(g) the person would constitute a threat to the stability of, or trust in, a payment system by continuing its payment services business;

(h) the cancellation is desirable in order to protect the interests of consumers; or

(i) the person's provision of payment services is otherwise unlawful, including where such provision of services is unlawful because the person's registration in a register maintained under regulation 54 or 55 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (duty and power to maintain registers) has been cancelled under regulation 60 of those Regulations (cancellation and suspension of registration).

(2) Where the FCA proposes to cancel a person's authorisation, other than at the person's request, it must give the person a warning notice.

(3) The FCA must, having considered any representations made in response to the warning notice—

(a) if it decides to cancel the authorisation, give the person a decision notice; or

(b) if it decides not to cancel the authorisation, give the person notice of its decision.

(4) If the FCA decides to cancel the authorisation, other than at the person's request, the person may refer the matter to the Upper Tribunal.

(5) Where the period for a reference to the Upper Tribunal has expired without a reference being made, the FCA must as soon as practicable update the register accordingly.

Request for cancellation of authorisation

11

(1) A request for cancellation of a person's authorisation under regulation 10(1)(b) (cancellation of authorisation) must be made in such manner as the FCA may direct.

(2) At any time after receiving a request and before determining it, the FCA may require the person making the request to provide it with such further information as it reasonably considers necessary to enable it to determine the request.

(3) Different directions may be given and different requirements imposed, in relation to different requests or categories of request.

Variation of authorisation on FCA's own initiative

12

(1) The FCA may vary a person's authorisation in any of the ways mentioned in regulation 8 if it appears to the FCA that—

(a) the person no longer meets, or is unlikely to continue to meet, any of the conditions set out in regulation 6(4) to (9) (conditions for authorisation) or, if applicable, the requirement in regulation 22(1) (capital requirements) to maintain own funds, or does not inform the FCA of a major change in circumstances which is relevant to its meeting those conditions or that requirement, as required by regulation 37 (duty to notify change in circumstance);

(b) the person has provided a particular payment service or payment services other than in accordance with the authorisation granted to it;

(c) the person would constitute a threat to the stability of, or trust in, a payment system by continuing to provide a particular payment service or payment services;

(d) the variation is desirable in order to protect the interests of consumers; or

(e) the person's provision of a particular payment service or payment services is otherwise unlawful, including where such provision of services is unlawful because the person's registration in a register maintained under regulation 54 or 55 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (duty and power to maintain registers) has been cancelled under regulation 60 of those Regulations (cancellation and suspension of registration).

(2) A variation under this regulation takes effect—

(a) immediately, if the notice given under paragraph (6) states that that is the case;

(b) on such date as may be specified in the notice; or

(3) A variation may be expressed to take effect immediately or on a specified date only if the FCA, having regard to the ground on which it is exercising the power under paragraph (1), reasonably considers that it is necessary for the variation to take effect immediately or, as the case may be, on that date.

(4) The FCA must as soon as practicable after the variation takes effect update the register accordingly.

(5) A person who is aggrieved by the variation of their authorisation under this regulation may refer the matter to the Upper Tribunal.

(6) Where the FCA proposes to vary a person's authorisation under this regulation, it must give the person notice.

(7) The notice must—

(a) give details of the variation;

(b) state the FCA's reasons for the variation and for its determination as to when the variation takes effect;

(c) inform the person that they may make representations to the FCA within such period as may be specified in the notice (whether or not the person has referred the matter to the Upper Tribunal);

(d) inform the person of the date on which the variation takes effect; and

(e) inform the person of their right to refer the matter to the Upper Tribunal and the procedure for such a reference.

(8) The FCA may extend the period allowed under the notice for making representations.

(9) If, having considered any representations made by the person, the FCA decides—

(a) to vary the authorisation in the way proposed, or

(b) if the authorisation has been varied, not to rescind the variation,

it must give the person notice.

(10) If, having considered any representations made by the person, the FCA decides—

(a) not to vary the authorisation in the way proposed,

(b) to vary the authorisation in a different way, or

it must give the person notice.

(11) A notice given under paragraph (9) must inform the person of their right to refer the matter to the Upper Tribunal and the procedure for such a reference.

(12) A notice under paragraph (10)(b) must comply with paragraph (7).

(13) For the purposes of paragraph (2)(c), paragraphs (a) to (d) of section 391(8) of the 2000 Act (publication) apply to determine whether a matter is open to review.

Registration as a small payment institution

Application for registration as a small payment institution or variation of an existing registration

13

(1) An application for registration as a small payment institution must contain, or be accompanied by, such information as the FCA may reasonably require.

(2) An application for the variation of a registration as a small payment institution must—

(a) contain a statement of the proposed variation;

(b) contain a statement of the payment services which the applicant proposes to carry on if the registration is varied; and

(3) An application under paragraph (1) or (2) must be made in such manner as the FCA may direct.

(4) At any time after receiving an application and before determining it, the FCA may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application.

(5) Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.

Conditions for registration as a small payment institution

14

(1) The FCA may refuse to register an applicant as a small payment institution only if any of the conditions set out in paragraphs (2) to (11) is not met.

(2) The application must comply with the requirements of, and any requirements imposed under, regulations 13 and 20.

(3) The monthly average over the period of 12 months preceding the application of the total amount of payment transactions executed by the applicant, including any of its agents in the United Kingdom, must not exceed 3 million euros.

(4) The business to which the application relates must not include the provision of account information services or payment initiation services.

(5) None of the individuals responsible for the management or operation of the business has been convicted of—

(a) an offence under Part 7 of the Proceeds of Crime Act 2002 (money laundering) or under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017;

(b) an offence under section 15 (fund-raising), 16 (use and possession), 17 (funding arrangements), 18 (money laundering) or 63 (terrorist finance: jurisdiction) of the Terrorism Act 2000 ;

(ca) an offence under any of regulations 11 to 16 of the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019;

(d) an offence under regulation 3, 4 or 6 of the Al-Qaida and Taliban (Asset-Freezing) Regulations 2010 , or regulation 10 of the ISIL (Da'esh) and Al-Qaida (Asset-Freezing) Regulations 2011 (contravention and circumvention of prohibitions) ;

(da) an offence under regulations 8 to 13, 25 or 26 of the ISIL (Da'esh) and Al-Qaida (United Nations Sanctions) (EU Exit) Regulations 2019 or regulations 11 to 16 of the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019;

(e) an offence under section 11, 12, 13, 14, 15 or 18 of the Terrorist Asset-Freezing etc Act 2010 (offences relating to the freezing of funds etc. of designated persons) ;

(f) an offence under these Regulations or the Electronic Money Regulations 2011 ; or

(g) any other financial crimes.

(6) Where the applicant is a partnership, an unincorporated association or a body corporate, the applicant must satisfy the FCA that any persons having a qualifying holding in it are fit and proper persons having regard to the need to ensure the sound and prudent conduct of the affairs of a small payment institution.

(7) The applicant must satisfy the FCA that—

(a) where the applicant is a body corporate, the directors;

(b) the persons responsible for the management of the institution; and

are of good repute and possess appropriate knowledge and experience to provide payment services.

(8) If the applicant is a body corporate which has close links with another person (“CL”) the applicant must satisfy the FCA—

(a) that those links are not likely to prevent the FCA's effective supervision of the applicant; and

(b) if it appears to the FCA that CL is subject to the laws, regulations or administrative provisions of a territory outside the United Kingdom (“the foreign provisions”), that neither the foreign provisions, nor any deficiency in their enforcement, would prevent the FCA's effective supervision of the applicant.

(9) Regulation 6(10) (conditions for authorisation: definition of close links) applies for the purposes of paragraph (8) of this regulation as it applies for the purposes of regulation 6(9).

(10) The applicant's head office, registered office or place of residence, as the case may be, must be in the United Kingdom.

(11) The applicant must comply with a requirement of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to be included in a register maintained under those Regulations where such a requirement applies to the applicant.

(12) For the purposes of paragraph (3) where the applicant has yet to commence the provision of payment services, or has been providing payment services for less than 12 months, the monthly average may be based on the projected total amount of payment transactions over a 12 month period.

(13) In paragraph (5) “financial crime” includes any offence involving fraud or dishonesty and, for this purpose, “offence” includes any act or omission which would be an offence if it had taken place in the United Kingdom.

Supplementary provisions

15

Regulations 7 to 12 apply to registration as a small payment institution as they apply to authorisation as a payment institution as if—

(a) references to authorisation were references to registration;

(b) in regulation 7 (imposition of requirements), paragraph (4) were omitted;

(i) for “an authorised payment institution” there were substituted “ small payment institution ”; and

(ii) for “provided that” to the end there were substituted—

provided that the FCA is satisfied that the conditions set out in regulation 14(4) to (11) are being or are likely to be met and that the monthly average over any period of 12 months of the total amount of payment transactions executed by the institution, including any of its agents in the United Kingdom, continues not to exceed 3 million euros (“the financial limit”).

(d) in regulation 10(1) (cancellation of authorisation) for sub-paragraph (e) there were substituted—

(e) the person does not meet, or is unlikely to meet, any of the conditions set out in regulation 14(4) to (11) (conditions for registration as small payment institution) or the financial limit referred to in regulation 8 or does not inform the FCA of a major change in circumstances which is relevant to its meeting those conditions or that requirement, as required by regulation 37 (duty to notify change in circumstance);

; and

(e) in regulation 12(1) (variation of authorisation on FCA's own initiative) for sub-paragraph (a) there were substituted—

(a) the person does not meet, or is unlikely to meet, any of the conditions set out in regulation 14(4) to (11) or the financial limit referred to in regulation 8;

Application for authorisation or registration if requirements cease to be met

16

If a small payment institution no longer meets a condition in regulation 14(3), (5) or (10) (conditions for registration as small payment institution) or intends to provide services other than those permitted by regulation 32 (additional activities), the institution concerned must, within 30 days of becoming aware of the change in circumstances, apply for authorisation as a payment institution under regulation 5 or registration as an account information service provider under regulation 17, as appropriate, if it intends to continue providing payment services in the United Kingdom.

Registration as an account information service provider

Application for registration as an account information service provider or variation of an existing registration

17

(1) An application for registration as an account information service provider or for the variation of a registration as an account information service provider must—

(a) contain or be accompanied by the information specified in paragraphs 1, 2, 5 to 8, 10, 12, 14 and 16 to 19 of Schedule 2 (information to be provided in or with an application for authorisation); and

(b) be made in such manner as the FCA may direct.

(2) At any time after receiving an application and before determining it, the FCA may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application.

(3) Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.

Conditions for registration as an account information service provider

18

(1) The FCA may refuse to register an applicant as an account information service provider if—

(a) any of the conditions set out in paragraphs (2) to (4) is not met; or

(b) any of the grounds in regulation 10(1) (as applied by regulation 19) would be met if the applicant were registered.

(2) The application must comply with the requirements of, and any requirements imposed under, regulations 17 (application for registration as an account information service provider) and 20 (duty to notify changes).

(3) The business to which the application relates must not include the provision of any payment service other than account information services.

(4) The applicant must hold professional indemnity insurance or a comparable guarantee, which covers—

(a) the territories in which the applicant proposes to offer account information services; and

(b) the applicant's potential liability to account servicing payment service providers and payment service users resulting from unauthorised or fraudulent access to, or use of, payment account information, up to such amount as the FCA may direct.

Supplementary provisions

19

Regulations 7 to 12 apply to registration as an account information service provider as they apply to authorisation as a payment institution, but as if—

(a) references to authorisation were references to registration;

(b) in regulation 7 (imposition of requirements), paragraph (4) were omitted;

(i) for “an authorised payment institution” there were substituted “ registered account information service provider ”;

(ii) paragraphs (a) and (b) were omitted; and

(iii) for “provided that” to the end there were substituted “ provided that the conditions set out in regulation 18(3) and (4) are being or are likely to be met. ”;

(d) in regulation 10(1) (cancellation of authorisation) for sub-paragraph (e) there were substituted—

(e) the person does not meet, or is unlikely to meet, the conditions set out in regulation 18(3) and (4);

; and

(e) in regulation 12(1) (variation of authorisation on FCA's own initiative) for sub-paragraph (a) there were substituted—

(a) the person does not meet, or is unlikely to meet, the conditions set out in regulation 18(3) and (4);

Common provisions

Duty to notify changes

20

(1) If at any time after an applicant has provided the FCA with any information under regulation 5(1), (2), or (4) (application for authorisation or variation of authorisation), 13(1), (2) or (4) (application for registration as a small payment institution or variation of registration) or 17(1) or (2) (application for registration as an account information service provider or variation of registration) and before the FCA has determined the application—

(a) there is, or is likely to be, a material change affecting any matter contained in that information; or

(b) it becomes apparent to the applicant that the information is incomplete or contains a material inaccuracy,

the applicant must provide the FCA with details of the change, the complete information or a correction of the inaccuracy (as the case may be) without undue delay, or, in the case of a material change which has not yet taken place, the applicant must provide details of the likely change as soon as the applicant is aware of such change.

(2) The obligation in paragraph (1) also applies to material changes or significant inaccuracies affecting any matter contained in any supplementary information provided pursuant to that paragraph.

(3) Any information to be provided to the FCA under this regulation must be in such form or verified in such manner as it may direct.

Authorised payment institutions, small payment institutions and registered account information service providers acting without permission

21

If an authorised payment institution, a small payment institution or a registered account information service provider carries on a payment service in the United Kingdom, or purports to do so, other than in accordance with an authorisation or registration granted to it by the FCA, it is to be taken to have contravened a requirement imposed on it under these Regulations.

PART 3 — Authorised Payment Institutions

Capital requirements

22

(1) An authorised payment institution must maintain at all times own funds equal to or in excess of the greater of—

(a) the amount of initial capital specified in Part 1 of Schedule 3 (capital requirements), or

(b) in the case of an authorised payment institution which does not fall within paragraph (2), the amount of own funds calculated in accordance with Part 2 of Schedule 3.

(2) An authorised payment institution falls within this paragraph if—

(a) it does not offer payment services specified in paragraph 1(a) to (f) of Schedule 1 (payment services other than payment initiation services or account information services); or

(i) it is included in the consolidated supervision of a parent credit institution in accordance with the capital requirements regulation and CRR rules (as defined in section 144A of the 2000 Act); and

(ii) all of the conditions specified in Article 7(1) of the capital requirements regulation are met in respect of it.

(3) The own funds maintained must meet the following requirements—

(a) the amount of Tier 2 capital must be equal to or less than one third of the amount of Tier 1 capital;

(b) at least 75% of the amount of Tier 1 capital must be in the form of Common Equity Tier 1 capital.

(4) An authorised payment institution must not include in its own funds calculation any item—

(a) used in an equivalent calculation by an authorised payment institution, credit institution, investment firm, asset management company or insurance undertaking in the same group; or

(b) in the case of an authorised payment institution which carries out activities other than providing payment services, is used in carrying out those activities.

Safeguarding requirements

23

(1) For the purposes of this regulation “relevant funds” comprise the following—

(a) sums received from, or for the benefit of, a payment service user for the execution of a payment transaction; and

(b) sums received from a payment service provider for the execution of a payment transaction on behalf of a payment service user.

(2) Where—

(a) only a portion of the sums referred to in paragraph (1)(a) or (b) is to be used for the execution of a payment transaction (with the remainder being used for non-payment services); and

(b) the precise portion attributable to the execution of the payment transaction is variable or unknown in advance,

the relevant funds are such amount as may be reasonably estimated, on the basis of historical data and to the satisfaction of the FCA, to be representative of the portion attributable to the execution of the payment transaction.

(3) An authorised payment institution must safeguard relevant funds in accordance with either—

(a) paragraphs (5) to (11); or

(b) paragraphs (12) and (13).

(4) An authorised payment institution may safeguard certain relevant funds in accordance with paragraphs (5) to (11) and the remaining relevant funds in accordance with paragraphs (12) and (13).

(5) An authorised payment institution must keep relevant funds segregated from any other funds that it holds.

(6) Where the authorised payment institution continues to hold the relevant funds at the end of the business day following the day on which they were received it must—

(a) place them in a separate account that it holds with an authorised credit institution or the Bank of England; or

(b) invest the relevant funds in such secure, liquid assets as the FCA may approve (“relevant assets”) and place those assets in a separate account with an authorised custodian.

(7) An account in which relevant funds or relevant assets are placed under paragraph (6) must—

(a) be designated in such a way as to show that it is an account which is held for the purpose of safeguarding relevant funds or relevant assets in accordance with this regulation; and

(b) be used only for holding those funds or assets , or for holding those funds or assets together with proceeds of an insurance policy or guarantee held in accordance with paragraph (12)(b).

(8) No person other than the authorised payment institution may have any interest in or right over the relevant funds or relevant assets placed in an account in accordance with paragraph (6)(a) or (b) except as provided by this regulation.

(9) Notwithstanding paragraphs (5), (6), (7)(b) and (8), where an authorised payment institution is a participant in a designated system and the institution holds an account at the Bank of England for the purposes of completing the settlement of transfer orders that have been entered into the designated system on behalf of payment service users—

(a) funds held in the account pending settlement in accordance with the rules or default arrangements of the designated system, in respect of transfer orders that have been entered into the designated system on behalf of payment service users, may continue to be held in the account with relevant funds;

(b) the account, or a specified amount of funds in the account, may be subject to an interest or right in favour of the Bank of England in order to ensure the availability of funds to complete the settlement of transfer orders in accordance with the rules or default arrangements of the designated system;

(c) subject to paragraph (10), funds received into the account by the authorised payment institution upon settlement are to be considered as having been appropriately safeguarded in accordance with this regulation from the time of receipt in the designated system until the time of receipt into the account.

(10) The FCA may direct that paragraph (9)(c) does not apply in relation to a designated system if, in the FCA's view, the rules and default arrangements of that system do not adequately insulate the funds of payment service users from the claims of other creditors of authorised payment institutions which are participants in the system.

(11) The authorised payment institution must keep a record of—

(a) any relevant funds segregated in accordance with paragraph (5);

(b) any relevant funds placed in an account in accordance with paragraph (6)(a);

(d) any funds held in an account as permitted by paragraph (9)(a);

(e) any funds expected to be received into an account as described in paragraph (9)(c) in respect of transfer orders that have been entered into the designated system;

(f) any funds received into an account as described in paragraph (9)(c).

(12) The authorised payment institution must ensure that—

(a) any relevant funds are covered by—

(i) an insurance policy with an authorised insurer;

(ii) a comparable guarantee given by an authorised insurer; or

(iii) a comparable guarantee given by an authorised credit institution; and

(b) the proceeds of any such insurance policy or guarantee are payable upon an insolvency event into a separate account held by the authorised payment institution which must—

(i) be designated in such a way as to show that it is an account which is held for the purpose of safeguarding relevant funds in accordance with this regulation; and

(ii) be used only for holding such proceeds , or for holding those proceeds together with funds or assets held in accordance with paragraph (7).

(13) No person other than the authorised payment institution may have any interest in or right over the proceeds placed in an account in accordance with paragraph (12)(b) except as provided by this regulation.

(14) Subject to paragraph (15), where there is an insolvency event (except payment institution special administration)—

(a) the claims of payment service users are to be paid from the asset pool in priority to all other creditors; and

(b) until all the claims of payment service users have been paid, no right of set-off or security right may be exercised in respect of the asset pool except to the extent that the right of set-off relates to fees and expenses in relation to operating an account held in accordance with paragraph (6)(a) or (b), (9) or (12)(b).

(15) The claims referred to in paragraph (14)(a) shall not be subject to the priority of expenses of an insolvency proceeding except in respect of the costs of distributing the asset pool.

(16) Paragraphs (14) and (15) apply to any relevant funds which a small payment institution voluntarily safeguards in accordance with either paragraphs (5) to (11) or paragraphs (12) and (13).

(17) An authorised payment institution (and any small payment institution which voluntarily safeguards relevant funds) must maintain organisational arrangements sufficient to minimise the risk of the loss or diminution of relevant funds or relevant assets through fraud, misuse, negligence or poor administration.

(18) In this regulation—

“asset pool” means—any relevant funds segregated in accordance with paragraph (5);any relevant funds held in an account in accordance with paragraph (6)(a);where paragraph (9) applies, any funds that are received into the account held at the Bank of England upon settlement in respect of transfer orders that have been entered into the designated system on behalf of payment service users, whether settlement occurs before or after the insolvency event;any relevant assets held in an account in accordance with paragraph (6)(b); andany proceeds of an insurance policy or guarantee held in an account in accordance with paragraph (12)(b);

“authorised insurer” means a person authorised for the purposes of the 2000 Act to effect and carry out a contract of general insurance as principal ..., other than a person in the same group as the authorised payment institution;

“authorised credit institution” means a person authorised for the purposes of the 2000 Act to accept deposits or an approved foreign credit institution (see paragraph (19)), but does not include a person in the same group as the authorised payment institution;

“authorised custodian” means a person authorised for the purposes of the 2000 Act to safeguard and administer investments ...;

“default arrangements” has the meaning given in regulation 2(1) of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (interpretation);

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