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Responses to Consultation Paper PSR CP14/1 – a New Regulatory Framework for Payment Systems in the UK

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Responses to Consultation Paper PSR CP14/1 – a New Regulatory Framework for Payment Systems in the UK Responses to Consultation Paper PSR CP14/1 – A new regulatory framework for payment systems in the UK Respondents - R to Y Respondent (non-confidential responses) Raphaels Bank RBS Ripple Labs Santander UK Secure Trust Bank PLC SWIFT TechUK Tesco Bank The Investment Association TISA Transpact.com TSB Bank PLC UK Cards Association Virgin Money Visa Europe VocaLink Which Yorkshire Building Society YourCash Europe March 2015 Payment Systems Regulator RAPHAELS BANK RAPHAELS BANK RAPHAELS BANK Page 2 of 10 Question in relation to our proposed regulatory approach (see Part B of our Consultation Paper and Supporting Paper 1: The PSR and UK payments industry for more details) SP1-Q1: Do you agree with our regulatory approach? If you disagree with our proposed approach, please give your reasons. We broadly support your approach but we are concerned that regulation needs to be joined up between yourselves, the PRA, FCA, CMA and BoE. We have heard and read that this will be the case, however, we have seen major disruption through withdrawal of banking support in the market for payments providers in the past two years which appears to be continuing without any apparent regulatory intervention. You have rightly identified access to payment systems as an important area for your involvement, however, if indirect access is to work, there has to be a range of sponsoring banks providing such services. This market is limited and apparently contracting, exacerbated by the closure and non-availability of bank accounts from clearing banks to the sector. Some sponsoring banks have made significant moves to close bank accounts on policy grounds to UK payments providers and this is continuing today partly, we believe, in response to increased regulation. Unless there is a significant shift in the regulatory approach to this issue, then competition and innovation will be diminished in UK payments. The proposed powers and positioning of the PSR looks like a positive step to us, of course implementation and application of the principles laid out will be key to the impact that you have. Questions in relation to our proposed approach to payments industry strategy (see Part D of our Consultation Paper and Supporting Paper 2: Payments industry strategy and areas for collaboration for more details) SP2-Q1: Do you agree with our proposed approach (Option 1) to set up a Payments Strategy Forum, as opposed to Option 2 (maintaining the Payments Council’s or a successor body’s role in setting industry strategy) or Option 3 (we develop high-level priorities for the industry ourselves), as described in Supporting Paper 2: Payments industry strategy and areas for collaboration? If you disagree with our proposed approach, please give your reasons. We agree with your approach as opposed to the alternatives, but would like to understand the steps you intend to take to ensure effectiveness of the Forum. We support your approach in administering the Forum, but would like to understand more what will be your approach if it takes decisions you don’t agree with or the industry fails to adopt or implements too slowly. SP2-Q2: Do you have any comments on the design of the Payments Strategy Forum? RAPHAELS BANK Page 3 of 10 In particular, please comment on how the Forum could meet the need for broad stakeholder representation while still being effective. Broad representation is essential and it must be possible for representatives to own and control the agenda. We believe the agenda should be based on strategy and be holistic. There needs to be input into the way payment systems integrate with each other and the services they provide, as well as identification and solution-finding on related issues such as sponsorship and settlement. We believe the Forum will need to have around 20 members to incorporate all the necessary representation which should definitely include an independent chair, the regulated payment systems, end user representatives for consumers, SMEs and major corporates as well as the smaller banks / building societies, EMI, PI and emerging payments provider sectors. Some form of futurist to look across emerging channels would also be helpful. SP2-Q3: Do you have any comments on our indicative model for how the Payments Strategy Forum could operate in practice? As we state elsewhere in this response, the issues around the UK payments systems are made up of a complex jigsaw of issues on which, we believe, no one is taking a holistic view. This would seem a good agenda for the Forum as opposed to tactical and short term issues driven by other agendas. SP2-Q4: Are there any additional infrastructure-related themes you believe we, or the Payments Strategy Forum, should consider? If yes, please provide a description of why the additional themes are important to you. We have had some difficulty in accessing a bank offering sponsorship for Euro payments (particularly Euro denominated direct debits and credits) originated in the UK which has limited our ability to provide payments services in Europe on a cross border basis, forcing us to (attempt to) open accounts elsewhere in Europe rather than in the UK as we would wish. We believe this should form part of your considerations. It appears that the whole UK domestic payments structure was built by the big banks and operated largely by them and their nominees for their own benefit. We believe the long term future for payments should not be based on historical systems but more on current, emerging and future payment methods. Questions in relation to our proposed approach to the ownership, governance and control of payment systems (see Part E of our Consultation Paper and Supporting Paper 3: Ownership, governance and control of payment systems for more details) SP3-Q1: Do you agree with our proposed direction requiring all Interbank and Card Operators to ensure that there is appropriate representation of the interests of service‑users in discussions and decision-making at board level? If you RAPHAELS BANK Page 4 of 10 disagree with our proposed approach, please give your reasons. We support this approach and will be interested to see what you believe “good” looks like in this respect and what will be made public in the disclosures and your responses. SP3-Q2: Do you agree with the costs and benefits identified for our proposed direction on Operators to ensure there is appropriate representation of the interests of service‑users? Can you provide any data that might further inform our analysis of the likely impact of our proposed direction? Yes to the first question; no to the second. SP3-Q3: Do you agree with our proposed direction on Interbank Operators requiring the Interbank Operator to take all reasonable steps to ensure that any individual acting as a director of that Operator must not simultaneously act as a director of an actual or potential Central Infrastructure Provider to that payment system? If you disagree with our proposed approach, please give your reasons. Whilst we do not object to this approach, or think that it is without merit, the key is in the behaviour of individuals and the instructions they are working under from their employers. For example, your rule could be followed, but representatives from one big bank on multiple bodies could still coordinate their activity or work to their bank’s policy. SP3-Q4: Do you agree with our proposed approach not to issue directions at this time in relation to the other types of conflicts of interest identified by stakeholders? If you disagree with our proposed approach, please give your reasons. Yes, but we believe you should be vigilant in looking out for behaviour arising from possible conflicts. SP3-Q5: Do you agree with the costs and benefits identified for our proposed direction requiring the Interbank Operators to take all reasonable steps to ensure that any individual acting as a director of that Operator must not simultaneously act as a director of an actual or potential Central Infrastructure Provider to that payment system? Can you provide any data that might further inform our analysis of the likely impact of our proposed direction? Yes to the first question; no to the second. SP3-Q6: Do you agree with our proposed direction to require all Operators to publish board minutes in a timely manner? In particular, do you agree with our proposal for the published minutes to include a record of votes and reasons for decisions made? If you disagree with our proposed approach, please give your reasons. Yes, minutes will need to be carefully reviewed and interpreted in detail by the PSR. SP3-Q7: Do you agree with the costs and benefits identified for our proposed direction to require all Operators to publish board minutes in a timely manner? Can you RAPHAELS BANK Page 5 of 10 provide any data that might further inform our analysis of the likely impact of our proposed direction? Yes to the first question; no to the second. SP3-Q8: Do you agree with our proposed approach not to issue a direction at this time in relation to Payments Council reserved matters? If you disagree with our proposed approach, please give your reasons. Yes. Questions in relation to our proposed approach to access to payment systems (see Part F of our Consultation Paper and Supporting Paper 4: Access to payment systems for more details) SP4-Q1: Do you agree with our preferred option that an Access Rule, aligned with Principle 18 of the CPSS-IOSCO Principles, should be applied to those pan-GB Operators not subject to Regulation 97 of the PSRs 2009 (i.e. Bacs, C&CC, CHAPS and FPS)? If you disagree with our proposed approach, please give your reasons.
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