Who assesses whether a non-bank PSP is suitable for access to a settlement account and payment scheme?

The Financial Conduct Authority (<a href="/glossarycollection/financial-conduct-authority" style="color:#48277C;" target="_blank" title="Financial Conduct Authority">FCA</a>). The FCA’s supervisory assessment will assess compliance with existing regulatory requirements for Payment Service Providers (<a href="/glossarycollection/payment-service-provider" style="color:#48277C;" target="_blank" title="Payment Service Provider">PSP</a>) - as laid out in the Payment Services Regulations 2017 (<a href="/glossarycollection/payment-services-regulations" style="color:#48277C;" target="_blank" title="Payment Service Regulations">PSR</a>), the E-Money Regulations 2011 (<a href="/glossarycollection/electronic-money-regulations" style="color:#48277C;" target="_blank" title="Electronic Money Regulations">EMR</a>), the Money Laundering Regulations 2007 and other relevant legislation. 

This assessment will include the following areas: 

∙ governance and risk management arrangements; 

∙ safeguarding of customer funds; 

∙ financial crime (this will usually be a separate assessment). 

The FCA will engage with the non-bank Payment Service Provider (<a href="/glossarycollection/payment-service-provider" style="color:#48277C;" target="_blank" title="Payment Service Provider">PSP</a>) before starting the supervisory assessment, to explain the process in more detail and what will be covered under the separate general and AML assessments. Each supervisory assessment will normally include an information request and a subsequent visit to the non-bank PSP. The visits will include interviews with relevant staff and file reviews for the AML assessment. 

The assessment process should take around nine months in total. Following the completion of its initial assessment (i.e. after the firm visit), the FCA will give the non-bank PSP feedback. This feedback may include specific areas the non-bank PSP will need to address. The FCA will need to confirm to the Bank that it is satisfied that these areas have been addressed, before the Bank and payment scheme can agree access to a settlement account and the relevant payment scheme respectively. 

Non-bank PSPs holding a settlement account at the Bank will be subject to on-going, strengthened supervisory oversight to assess their continuing compliance with the regulatory requirements. This will typically include monitoring the completion of any outstanding areas of feedback, which were not required to be completed prior to the non-bank PSP gaining direct access. And taking steps to understand how the non-bank PSP’s business model and strategy is evolving, including identifying where new risks of harm may be forming. This is likely to include requiring the non-bank PSP periodically to commission independent audits covering key risk areas. 

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