Paragraph 36 Exemption from prohibitionF1

United Kingdom

(1)

A person to whom this paragraph applies is exempt from the prohibition in regulation 138(1) of PSR 2017, for a period of five years beginning with F2IP completion day, but only to the extent that it is necessary for the person to provide payment services in the United Kingdom to perform a pre-existing contract.

(2)

This paragraph applies to an EEA authorised payment institution or an EEA registered account information service provider 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.

(F32A)

A person to whom this paragraph applies is exempt from the prohibition in regulation 138(1) of the PSR 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 article 3(1) of Directive 2009/110/EC as in force immediately before IP completion day.

(3)

The FCA may cancel the exemption of a person to whom this paragraph applies, or direct that paragraph 26 is to apply to the person, if it considers that doing so is necessary—

(a)

for the prevention, detection, investigation or prosecution of a criminal offence;

(b)

for the protection of payment service users; or

(c)

for the protection of trust in, or the stability of, a payment system.

(4)

In exercising the power in paragraph (3), the FCA must take into account—

(a)

the person’s conduct,

(b)

the practicality of supervision by the FCA,

(c)

the size of the person’s undertaking, and

(d)

the nature or the services person provides.

(5)

Paragraph 4 of Schedule 5 to PSR 2017 has effect in relation to the exercise of the FCA’s powers under this paragraph.

F4(6)

Where a person (“A”) to whom this paragraph applies provides payment services 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—

(a)

that A is exempt from the prohibition in regulation 138(1) of PSR 2017 by virtue of sub-paragraph (1) and is not authorised by the FCA under PSR 2017;

(b)

that, as a result of the United Kingdom's withdrawal from the European Union—

(i)

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;

(ii)

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;

(c)

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—

(i)

the protection afforded to B's assets held by A in relation to the performance of the pre-existing contract; or

(ii)

the availability to B of an alternative dispute resolution procedure or compensation scheme under the pre-existing contract.

(7)

If at any time after A has provided B with any information under sub-paragraph (6)—

(a)

there is, or is likely to be, a material change affecting that information; or

(b)

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.

(8)

The FCA may issue guidance in respect of compliance with an obligation under sub-paragraph (6) or (7).

Annotations

Textual amendments

F1: Sch. 3 Pts. 3, 4 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(3)
F2: Words in Sch. 3 para. 36 substituted (31.1.2020 immediately before exit day) by The Financial Services (Consequential Amendments) Regulations 2020 (S.I. 2020/56), regs. 1, 8(2)(v)
F3: Sch. 3 para. 36(2A) 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(17)
F4: Sch. 3 para. 36(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(5) (as amended by S.I. 2020/1301, regs. 1, 3, Sch. para. 44(b)(ii)); 2020 c. 1, Sch. 5 para. 1(1)