Changes in the PSD II
While the previous EU Directive on Payment Services has provided for the legal foundation of an EU single market in the area of payment services and has established a safer and more innovative payment services across the EU, the new Payment Services Directive II (the “Directive”) modernised the field of payment services by extending its scope to cover more forms of payment services, which were previously unregulated, which should stimulate innovation, bring more competition for the benefit of the consumers and restore an equal level playing field for payment service providers (“PSPs”). This Directive has set out high standards of transparency, innovation, security in the market, consumer protection and consumer rights. It also extended the investigative and supervisory powers of the competent authorities through regulating enhanced cooperation and exchange of information between authorities of member states. In brief the major changes in the Directive can be categorised in the following:
Extended Definition of ‘Payment Services’;
Consumer Rights; and
Enhanced investigative and supervisory powers of the competent authorities.
The Directive became applicable on the 13th January 2018 but since this Directive requires transposition by the member states for it to be effective, the Malta Financial Service Authority (“MFSA”) has launched a consultation process to present to the industry the proposed amendments to the Financial Institutions Act and the Banking Act. The major stakeholders were invited to submit their feedback by the 7th February 2018. These proposed amendments include the following areas:
Amendments to the text and definitions in order for further clarification to the Financial Institutions Act and the Banking Act;
Introduction of registration requirement for new payment services which are newly regulated under the PSD II;
Amendments relating to the list of exclusions where license is not required;
Removal of the possibility for MFSA to grant a waiver to small E-money institutions;
Insertion of criteria which must be fulfilled to be granted registration;
Amendments to the Own Funds requirement where certain services need not be required to hold own funds at all times;
Additional requirement to hold a professional indemnity;
Amendments to the MFSA’s powers to restrict, withdraw or suspend license or registration;
Amendments to the powers of the competent authority and the powers of the Minister of Finance in line with the Directive; and
Other amendments in line with the Directive relating to;
ii. Consumer Protection and rights of Consumers.
iii. Public register.
Although, not addressed in the consultation paper, the MFSA will also be revising the Financial Institutions Rules and changes will be made to subsidiary legislations.
Please feel free to contact us should you require any additional information on the changes in the Payment Services Directive II and the MFSA’s consultation paper.