Financial Conduct Authority (FCA) addressed a Dear CEO letter to supervised entities in the payments sector.
The FCA set 3 outcomes for the entities.
- The top priority is to ensure that the customers’ money is safe.
- The firms must not compromise financial system integrity.
- It is important to ensure high quality products and services, maintaining competition and innovation, and to ensure robust implementation of the FCA Consumer Duty[1].
Innovation and competition in the payments sector are translated into convenience for customers and a better choice of services. However, many payments firms do not have robust controls and that generates risk of harm to their customers and to financial system integrity. The risk of harm to customers is exacerbated by the current economic situation related to higher costs of living.
The FCA expects that supervised entities in the payments sector will take prompt effective actions to eliminate the threats. This includes, in particular, implementing robust controls to safeguard against the risk of payments firms being used for money laundering and fraud, ensuring high operational resilience of payments firms, implementing the FCA Consumer Duty and taking actions to implement the ESG policies.
The addressees of the letter will have to explain, at the FCA’s request, what actions they have taken in response to the supervisor’s expectations outlined in the FCA’s document. The full text of the FCA’s letter is available here:
https://www.fca.org.uk/publication/correspondence/priorities-payments-firms-portfolio-letter-2023.pdf
[1] Find out more about the FCA Consumer Duty: https://www.fca.org.uk/publications/policy-statements/ps22-9-new-consumer-duty