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PSR Proposes Setting ‘High Bar’ for Extensions and Exemptions for Requirements for Financial Firms

The Payment Systems Regulator (PSR) is consulting on a new proposal on how it makes decisions on whether or not to grant extensions or exemptions to a specific direction or requirement. 

Specific directions and requirements are tools the PSR uses to require firms to implement changes which improve payments for people and businesses across the UK; such as the Confirmation of Payee name checking service, and authorised push payment (APP) fraud reimbursement measures.

The PSR recognises, however, that there may be circumstances when an extension or exemption may be appropriate. The proposed guidance provides firms with clarity on how and when to engage with the PSR to find an effective way forward in these situations.

The consultation period, which is open until 3 June 2024, asks for opinions on the PSR’s proposal to ensure that the bar for granting an extension or exemption is high, to incentivise firms to comply with the regulator’s directions so that everyone who uses payment systems sees improved outcomes as quickly as possible.

Oliver Hanmer, head of supervision and compliance monitoring at the PSR
Oliver Hanmer, head of supervision and compliance monitoring at the PSR

Oliver Hanmer, head of supervision and compliance monitoring at the PSR, said: “This proposed guidance aims to increase transparency for firms around the factors we look at when considering exemption or extension requests, and ultimately supports the delivery of our objectives.

“To be clear, by consulting on this guidance we are not facilitating a route to non-compliance. We propose the bar for exemptions and extensions as a high one because we want as many people and businesses as possible to benefit from the action we take.

“We will always start from a position that we expect all directed firms to have taken the necessary steps towards achieving compliance by the set deadlines.”

PSR proposals

The PSR also explained that it expects to grant extensions and exemptions only in limited circumstances. The guidance proposes four key factors for the PSR to use as a starting point when considering an extension or exemption request:

  1. Whether granting an exemption or extension would adversely impact payment systems users, undermine any of the PSR’s statutory objectives, or undermine the priorities set out in the PSR’s five-year Strategy. If granting the request undermined these objectives, the PSR would be unlikely to grant it.
  2. The context in which the specific direction or requirement arose, including the underlying policy aims and the key factors set by the specific direction or requirement.
  3. The burden that not granting the request would place on the regulated firm, as well as any impact on businesses or consumers more widely.
  4. In relation to extension requests, the steps the regulated party has taken to ensure that it will comply with the rules in a timely manner and that any risks to service users and/or markets have been mitigated.

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