Recent regulatory developments of interest to financial institutions.

Contents

• COVID-19: FCA update on strong customer authentication under PSRs 2017
• PSR annual plan and budget for 2020/21

COVID-19: FCA update on strong customer authentication under PSRs 2017

On 31 March 2020, the FCA updated its webpage on strong customer authentication (SCA) under the Payment Services Regulations 2017. The FCA explains that, during the COVID-19 outbreak, it expects firms to protect consumers from risks, including the risk of unauthorised transactions and fraud. More specifically, firms are expected to monitor their fraud rates and take swift action if they see their fraud rates rising or new patterns of fraud.

The FCA understands that firms are likely to be under significant pressure during this period, so it is bringing in some changes to help in relation to:

• contactless payments – the FCA is very unlikely to take enforcement action if a firm does not apply SCA when the cumulative amount of transaction values has exceeded EUR 150 or there are five contactless transactions in a row. However, this is only as long as the firm sufficiently mitigates the risk of unauthorised transactions and fraud by having the necessary fraud monitoring tools and systems in place, and taking swift action where appropriate;
• e-commerce – the FCA recognises that COVID-19 challenges are likely to affect the planned implementation of SCA for e-commerce. It welcomes the progress so far and the industry's continuing effort to meet milestones ahead of 14 March 2021. The FCA will work closely with the industry to agree any changes to the milestones and timelines that may be needed;
• online banking – the SCA requirements for online banking have applied since 14 September 2019 (with an adjustment period until 14 March 2020). For firms that have not met the requirements, and are facing further delays due to COVID-19, the FCA will consider the appropriate further measures on a case-by-case basis. In doing so, it will consider:
  • firms' security around authentication to access online banking and when making payments;
  • their controls and processes to reduce fraud; and
  • whether that impact is likely to be exacerbated given the current circumstances.

The FCA will continue to monitor the situation and is keeping its decisions under review.

PSR annual plan and budget for 2020/21

The Payment Systems Regulator (PSR) has published its annual plan and budget, setting out its key aims and activities for the year 2020/21 alongside its expected costs. It has also published a related factsheet.

The PSR's annual plan was drafted before the uncertainty caused by COVID-19. It sets out the regulator's prior expectations about its priorities and planned work. Much of the work described will continue, perhaps in different ways and to a revised timetable. The PSR will continuously review its work to ensure that it is focusing on the right things and adapting its approach to meet the challenges presented by COVID-19.

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