The Payment Systems Regulator (PSR) is consulting on changes to its penalty statements. The proposed changes will help firms more easily understand how the regulator determines the amount of any penalty it imposes.
The PSR’s enforcement work is important in making sure firms are following the rules and that people and businesses are protected. If firms do break the rules, the PSR has the power to impose penalties, which could include issuing fines. During 2022, the PSR concluded investigations which saw a total of £44 million issued in penalties.
The regulator’s penalty statements set out the principles which are applied in determining whether to impose a penalty and the amount of that penalty. They are a key tool in incentivising firms to comply with the rules the PSR enforces, so it’s crucial that the right framework is in place for imposing penalties.
The regulator currently has three penalty statements in place. The PSR is proposing the following five main changes to its statements:
- To combine its three penalty statements into one.
- To change the way in which it considers the duration of a compliance failure and how it takes account of revenue when calculating penalties.
- To clarify what it means by senior management.
- To add further clarity when it considers a compliance failure is deliberate or reckless.
- To reinforce the principle that penalties should disincentivise compliance failures.
Chris Hemsley, the PSR’s Managing Director, said:
“Enforcement action is a key tool we use to reduce non-compliance and improve outcomes for people and businesses across the UK. Last year we imposed fines up to a value of £44 million. This also secured improvements at the firms in question and sent an important signal to all payment firms of the need to comply with the obligations placed on them.
“This updated penalty statement will provide greater clarity to payment firms about what to expect if we find they have broken our rules or not followed our directions.”
This consultation is open until 27 April 2023. The PSR expects to publish a final penalty statement in Q3 2023.
- The full consultation document, which includes the proposed revised penalty statement, can be found here.
- The PSR’s three current penalty statements are: FSBRA Penalties Guidance, IFR Guidance, and PSRs 2017 Guidance. These penalty statements do not apply to Competition Act 1998 (CA98) investigations. Our CA98 Guidance describes how we exercise our concurrent competition enforcement powers, including our approach to imposing penalties under CA98.
- The PSR’s enforcement cases can be viewed here. The investigation into the supply of prepaid cards, which resulted in fines of more than £33m, was a CA98 investigation, and therefore not subject to the penalty statements. The PSR’s two investigations into non-compliance with the Interchange Fee Regulation (IFR), which resulted in fines of over £10m, were subject to the penalty statements.