Paragraph 12L Exemption from prohibitionF1
United Kingdom
A person to whom this paragraph applies is, subject to sub-paragraph (6), exempt from the prohibitions in regulation 138(1) of the Payment Services Regulations 2017 and in regulation 63(1) of EMR 2011 for a period of five years beginning with the F3IP completion day, but only to the extent that it is necessary for the person to provide payment services or electronic money services in the United Kingdom to perform a pre-existing contract or to redeem outstanding electronic money.
This paragraph applies to an EEA authorised electronic money institution exercising its passport rights in the United Kingdom immediately before IP completion day other than through a branch in the United Kingdom or a UK-based agent.
The FCA may cancel the exemption of a person to whom this paragraph applies, or direct that paragraph 12B is to apply to the person, if it considers that doing so is necessary—
for the prevention, detection, investigation or prosecution of a criminal offence;
for the protection of electronic money holders or payment service users; or
for the protection of trust in, or the stability of, a payment system.
In exercising the power in paragraph (3), the FCA must take into account—
the person’s conduct,
the practicality of supervision by the FCA,
the size of the person’s undertaking, and
the nature of the services the person provides.
Paragraph 3 of Schedule 3 to EMR 2011 has effect in relation to the FCA’s exercise of its powers under this paragraph.
A person to whom paragraph applies is exempt from the prohibition in regulation 138(1) of the Payment Services Regulations 2017 only to the extent that it was providing the payment service in the United Kingdom immediately before IP completion day in accordance with the exercise of an EEA passport right under Title 5 of Directive (EU) 2015/2366 as in force immediately before IP completion day.
Where a person (“A”) to whom this paragraph applies issues electronic money to a person (“B”) in pursuance of a pre-existing contract in reliance on the exemption in sub-paragraph (1), A must, as soon as it is reasonably practicable to do so, notify B—
that A is exempt from the prohibition in regulation 63(1) of EMR 2011 by virtue of sub-paragraph (1) and is not authorised by the FCA under EMR 2011;
that, as a result of the United Kingdom's withdrawal from the European Union—
it is possible that B's assets held by A in relation to the performance of the pre-existing contract no longer attract the same protection afforded to them immediately before IP completion day;
it is possible that recourse to an alternative dispute resolution procedure or compensation scheme that was available to B under the pre-existing contract immediately before IP completion day is no longer available;
in so far as it is practicable to do so, of any changes arising as a result of the United Kingdom's withdrawal from the European Union to—
the protection afforded to B's assets held by A in relation to the performance of the pre-existing contract; or
the availability to B of an alternative dispute resolution procedure or compensation scheme under the pre-existing contract.
If at any time after A has provided B with any information under sub-paragraph (6)—
there is, or is likely to be, a material change affecting that information; or
it becomes apparent to the applicant that the information is incomplete or contains a material inaccuracy,
A must provide B with details of the change, the complete information or a correction of the inaccuracy (as the case may be) as soon as it is reasonably practicable to do so.
The FCA may issue guidance in respect of compliance with an obligation under sub-paragraph (6) or (7).
Annotations
Textual amendments
- F1
Sch. 3 Pt. 1A inserted (1.3.2019) by The Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019 (S.I. 2019/405), regs. 1(2), 10(2)
- F2
Sch. 3 para. 12L(1) substituted (6.9.2019) by The Financial Services (Electronic Money, Payment Services and Miscellaneous Amendments) (EU Exit) Regulations 2019 (S.I. 2019/1212), regs. 1(2), 7(10)(a)
- F3
Words in Sch. 3 para. 12L substituted (31.1.2020 immediately before exit day) by The Financial Services (Consequential Amendments) Regulations 2020 (S.I. 2020/56), regs. 1, 8(2)(k)
- F4
Sch. 3 para. 12L(6) inserted (6.9.2019) by The Financial Services (Electronic Money, Payment Services and Miscellaneous Amendments) (EU Exit) Regulations 2019 (S.I. 2019/1212), regs. 1(2), 7(10)(b)
- F5
Sch. 3 para. 12L(6)-(8) inserted (31.1.2020) by The Financial Services (Miscellaneous) (Amendment) (EU Exit) (No. 2) Regulations 2019 (S.I. 2019/1010), regs. 1(3), 7(3) (as amended by S.I. 2020/1301, regs. 1, 3, Sch. para. 44(b)(i)); 2020 c. 1, Sch. 5 para. 1(1)