Keeping afloat with the Payment Services (Amendment) Regulations 2024

Apr 4th '24

Payment Services (Amendment) Regulations 2024.


On March 12, 2024, HM Treasury heralded the advent of the Payment Services (Amendment) Regulations 2024. This innovative legislative measure introduces a paradigm shift, permitting the deferment of payment processes on the plausible suspicion of fraudulency or malfeasance. What modifications are being proposed?


This legislative evolution extends the bandwidth for payment service entities to meticulously scrutinize potentially fraudulent activities, allowing for a postponement of outbound transactions by a maximum of four business days subsequent to the issuance of the payment command. This development augments the extant framework established by the Payment Services Regulations of 2017, which mandates the crediting of transactions to the beneficiary’s service provider by the ensuing business day.


The recalibration of payment regulation underscores the governmental resolve to enhance the scrutiny of outbound payment undertakings. The unveiling of this legislation is timely, aligning seamlessly with the payment systems regulators’ forthcoming mandate on Authorised Push Payment (APP) fraud indemnity set for October 7, 2024, thereby serving the industry’s interests optimally.


This legislative progression is embedded within the government’s broader strategic intent to forge a formidable fraud countermeasure fabric, emphasizing a robust stance against APP Fraud. Although the four-day extension is not a panacea for the fraud pandemic, it significantly aids firms in refining customer-centric decisions and delineating their liability spectra.


Who stands to benefit?

The legislative fabric is exclusively tailored for entities engaged in the execution of authorised push payments domestically, in sterling currency, with a stipulated exemption for businesses necessitated to execute prompt payments to vendors, conditional upon their payment service provider’s concurrence.


The legislative proposition is a boon to impacted firms for a multitude of reasons, enabling:


  • Enhanced dominion over payment trajectories, fostering an environment where transaction authenticity is judiciously appraised.
  • The adoption of a risk-calibrated approach towards customer and transactional engagement, ensuring judicious and effective decision-making paradigms.
  • Provision of ample temporal space for conducting exhaustive due diligence, thereby reinforcing the foundation for transaction rejection or approval.
  • Amplification of fraud management mechanisms, ensuring that firms are equipped to judiciously repudiate dubious transactions.
  • Assurance of sufficient engagement windows with ancillary parties and law enforcement to make informed execution decisions.
  • Enhanced scrutiny of transactions of significant volume or value, thereby mitigating potential fiscal and reputational fallout.
  • An in-depth analysis of customer transactions and related documentation, thereby enhancing the quality of scrutiny provided.
  • Elevation of the evidentiary threshold in APP Fraud reimbursement discourses, emphasizing customer negligence over institutional fault.
  • Illustration of Consumer Duty’s impact at pivotal junctures within the payment processing timeline, thereby minimizing consumer detriment, particularly among the vulnerable demographic.


This legislative framework offers a tangible benefit in the combat against APP Fraud, providing firms with the leverage to halt fraudulent transactions in their inception. As the FCA transitions to a more data-centric regulatory stance, the imposition of additional reporting mandates on firms underscores the commitment to legislative efficacy, albeit introducing an administrative layer to compliance.


The legislative enactment, slated for the summer of 2024, underscores the government’s commitment to supporting firms in navigating the APP Fraud mitigation landscape. While firms are encumbered with reimbursement obligations, the provisioned four-day deliberation window is instrumental in fraud discernment efforts.


However, a prudent note: firms are mandated to communicate any transactional delays to their clientele, delineating the rationale behind such decisions and soliciting requisite actions or information. This transparency, while fostering trust, may inadvertently influence customer service perceptions, particularly where transaction immediacy is valued.


In essence, the Payment Services (Amendment) Regulations 2024 heralds a significant pivot in the payment services domain, offering firms a fortified stance against financial malfeasance, thereby underpinning a secure transactional environment for all stakeholders involved.


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At LS Consultancy, our consultants are industry experts that interpret the rules, regulations and spirit of the industry guidelines by assisting you “the client” in implementing a compliance programme that you can be confident is mitigating the risk of financial crime. What we can do:


  • We analyse the relevant jurisdictions legislation, regulation and industry guidance to ensure that your controls adopt the highest standard possible
  • Analyse and/ or Enhance your Business Wide Risk Assessment to ensure we consider money laundering and relevant predicate crimes
  • Assessment of your Customer Onboarding and/ or Periodic KYC reviews rely on independent documentation and supported by credible information from your customer – as this is key to your compliance programme.
  • Robust Transaction Monitoring and Screening whilst utilising your up-to-date KYC documentation/ information are fundamental.
  • Greater emphasis on training – why not go through live examples with your RM’s, Operational Teams and Compliance – discuss the areas of concern and come up with compliant solutions.
  • Ensuring your Compliance Monitoring Programme is conducted on a regular basis
  • Engagement with senior management through relevant committees


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