21 June 2024
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Impact of the upcoming general election on the payments regulatory reform

To The Point
(5 min read)

With the announcement of an early general election on 4th July, the future of some of the regulatory changes in train has become somewhat uncertain. In this section we discuss some of the legislative instruments that did not make it through the parliamentary process in time.

With the announcement of an early general election on 4th July, the future of some of the proposed regulatory changes has become somewhat uncertain. The prorogation of Parliament means that any bills and draft secondary legislation not enacted, fall away unless passed in the last few days of a Parliament before dissolution. In the past some bills have been lost completely, while others have progressed quickly but in a much shortened form.

The following legislative instruments impacting the payments industry now hang in the balance:

The outlook for these now ranges from the new government not picking them back up, to them going ahead as before (which is unusual if we get a change of administration). More likely is that we are going to see further consultations.

So what?


The DPDI Bill was intended to update and simplify the UK’s data protection framework and pave the way for introducing a cross-sector re-usable Digital Identity framework. In addition, it was going to introduce a smart data scheme, which in turn would have paved the way for a more sustainable framework for the development of Open Banking and even Open Finance in the UK.

The DPDI Bill also included the legal powers for the Secretary of State to introduce smart data schemes in different industries, beyond the financial services sector.

With the discontinuation of the DPDI Bill it is not clear when the UK will progress its plans to deliver a foundational framework for the future of Open Banking, which would have enabled further developments and the creation of a future entity. In addition, the future development of Open Finance is left uncertain.

What we can be sure about, as we heard from the recent Money 20/20 event, is that the rest of the world is forging ahead with developing standards for Open Banking payments and Open Finance. Open Banking is seen as the next frontier for payments, providing greater choice for customers, potentially lower costs for merchants and consequently increasing competition in the retail payments market. All of which is considered good for the economy. This hiatus in the UK could become quite damaging to the UK's position on the world stage as a centre of Fin Tech and leader in Open Banking solutions.

We wait with bated breath for more news.

Draft Payment Services and Payment Accounts (Contract Terminations) (Amendment) Regulations 2024

Following its review of the Payment Services Regulations 2017 (PSRs), the government committed to bringing forward legislative reforms to toughen requirements in the PSRs concerning framework contract terminations. In March 2024 HM Treasury published a near-final version of the Payment Services and Payment Accounts (Contract Terminations) (Amendment) Regulations 2024, together with a policy note.

The draft legislation set out the changes to regulation 51 of the PSRs, which contains the existing rules governing provider-initiated framework contract terminations. These changes would have required PSPs to provide 90 days' notice of their intention to end an agreement instead of 2 months' notice and to give payment service users clear reasons for that action.

Following the draft legislation some PSPs may have already started to make changes to their provider-initiated termination processes and update relevant policies to implement the requirements. As it is now uncertain whether this legislation will be laid in the next Parliament, it is difficult to assess and plan next steps for adopting the proposed changes.

Draft Payment Services (Amendment) Regulations 2024 to delay the processing of payments for potentially fraudulent payments

The Draft Payment Services (Amendment) Regulations 2024 was published earlier this year with an aim to further tackle Authorised Push Payment (APP) fraud. This would have amended the PSRs to enable PSPs, such as banks, to adopt a risk-based approach to payments by delaying the execution of an outbound payment transaction by up to four business days to allow further time to investigate potentially fraudulent payments.

These proposals were subject to mixed views from industry participants and therefore, so is the uncertainty being met with mixed feelings. However, what is clear is that those who started making changes to terms and conditions and processes to accommodate the proposals will now need to re-think plans and next steps.

Next steps

If you would like to discuss anything raised in this article, feel free to contact our payments team.

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