Financial Services (Banking Reform) Bill (HL Bill 62)

(b) the markets for services provided by payment systems,

in the interests of those who use, or are likely to use, services provided by
payment systems.

(2) The reference in subsection (1) to promoting effective competition includes, in
5particular, promoting effective competition—

(a) between different operators of payment systems,

(b) between different payment service providers, and

(c) between different infrastructure providers.

(3) The matters to which the Payment Systems Regulator may have regard in
10considering the effectiveness of competition in a market mentioned in
subsection (1) include—

(a) the needs of different persons who use, or may use, services provided
by payment systems;

(b) the ease with which persons who may wish to use those services can do
15so;

(c) the ease with which persons who obtain those services can change the
person from whom they obtain them;

(d) the needs of different payment service providers or persons who wish
to become payment service providers;

(e) 20the ease with which payment service providers, or persons who wish
to become payment service providers, can provide services using
payment systems;

(f) the ease with which payment service providers can change the
payment system they use to provide their services;

(g) 25the needs of different infrastructure providers or persons who wish to
become infrastructure providers;

(h) the ease with which infrastructure providers, or persons who wish to
become infrastructure providers, can provide infrastructure for the
purposes of operating payment systems;

(i) 30the needs of different operators of payment systems;

(j) the ease with which operators of payment systems can change the
infrastructure used to operate the payment systems;

(k) the level and structure of fees, charges or other costs associated with
participation in payment systems;

(l) 35the ease with which new entrants can enter the market;

(m) how far competition is contributing to the development of efficient and
effective infrastructure for the purposes of operating payment systems;

(n) how far competition is encouraging innovation.

44 The innovation objective

(1) 40The innovation objective is to promote the development of, and innovation in,
payment systems in the interests of those who use, or are likely to use, services
provided by payment systems, with a view to improving the quality, efficiency
and economy of payment systems.

(2) The reference in subsection (1) to promoting the development of, and
45innovation in, payment systems includes, in particular, a reference to
promoting the development of, and innovation in, infrastructure to be used for
the purposes of operating payment systems.

45 The service-user objective

The service-user objective is to ensure that payment systems are operated and
developed in a way that takes account of, and promotes, the interests of those
who use, or are likely to use, services provided by payment systems.

46 5Regulatory principles

The regulatory principles referred to in section 42(3)(c) are as follows—

(a) the need to use the resources of the Payment Systems Regulator in the
most efficient and economic way;

(b) the principle that a burden or restriction which is imposed on a person,
10or on the carrying on of an activity, should be proportionate to the
benefits, considered in general terms, which are expected to result from
the imposition of that burden or restriction;

(c) the desirability of sustainable growth in the economy of the United
Kingdom in the medium or long term;

(d) 15the general principle that those who use services provided by payment
systems should take responsibility for their decisions;

(e) the responsibilities of the senior management of persons subject to
requirements imposed by or under this Part, including those affecting
persons who use services provided by payment systems, in relation to
20compliance with those requirements;

(f) the desirability where appropriate of the Payment Systems Regulator
exercising its functions in a way that recognises differences in the
nature of, and objectives of, businesses carried on by different persons
subject to requirements imposed by or under this Part;

(g) 25the desirability in appropriate cases of the Payment Systems Regulator
publishing information relating to persons on whom requirements are
imposed by or under this Part, or requiring such persons to publish
information, as a means of contributing to the advancement by the
Payment Systems Regulator of its payment systems objectives;

(h) 30the principle that the Payment Systems Regulator should exercise its
functions as transparently as possible.

Regulatory and competition functions

47 Directions

(1) The Payment Systems Regulator may give directions in writing to participants
35in regulated payment systems.

(2) A direction given to a participant in a regulated payment system may—

(a) require or prohibit the taking of specified action in relation to the
system;

(b) set standards to be met in relation to the system.

(3) 40A direction under this section may apply—

(a) generally,

(b) in relation to—

(i) all operators, or every operator of a regulated payment system
of a specified description,

(ii) all infrastructure providers, or every person who is an
infrastructure provider in relation to a regulated payment
system of a specified description, or

(iii) all payment service providers, or every person who is a
5payment service provider in relation to a regulated payment
system of a specified description, or

(c) in relation to specified persons or persons of a specified description.

(4) The Payment Systems Regulator must publish any direction given under this
section that applies as mentioned in subsection (3)(a) or (b).

(5) 10A direction under this section that applies as mentioned in subsection (3)(a) or
(b) is referred to in this Part as a “general direction”.

48 System rules

(1) The Payment Systems Regulator may require the operator of a regulated
payment system—

(a) 15to establish rules for the operation of the system;

(b) to change the rules in a specified way or so as to achieve a specified
purpose;

(c) to notify the Payment Systems Regulator of any proposed change to the
rules;

(d) 20not to change the rules without the approval of the Payment Systems
Regulator.

(2) A requirement under subsection (1)(c) or (d) may be general or specific.

(3) A requirement under this section that is imposed on—

(a) all operators of regulated payment systems, or

(b) 25every operator of a regulated payment system of a specified
description,

is referred to in this Part as a “generally-imposed requirement”.

49 Power to require granting of access to payment systems

(1) This section applies where a person (“the applicant”) applies for an order
30under this section.

(2) The Payment Systems Regulator may by order require the operator of a
regulated payment system to enable the applicant to become a payment service
provider in relation to the system.

(3) The Payment Systems Regulator may by order require any payment service
35provider with direct access to a regulated payment system to enter into an
agreement with the applicant to enable the applicant to become a payment
service provider in relation to the system.

(4) An order under this section may provide for the applicant to become a
payment service provider in relation to a payment system—

(a) 40for a period specified in the order;

(b) on terms and conditions specified in the order.

50 Variation of agreements relating to payment systems

(1) This section applies to the following agreements—

(a) any agreement made between the operator of a regulated payment
system and a payment service provider;

(b) 5any agreement made between a payment service provider with direct
access to a regulated payment system and another person for the
purpose of enabling that other person to become a payment service
provider in relation to the system;

(c) any agreement concerning fees or charges payable in connection
10with—

(i) participation in a regulated payment system, or

(ii) the use of services provided by a regulated payment system.

(2) The Payment Systems Regulator may, on the application of a party to an
agreement to which this section applies, vary the agreement by—

(a) 15varying any of the fees or charges payable under the agreement, or

(b) in the case of an agreement within subsection (1)(a) or (b), varying any
other terms and conditions relating to the payment service provider’s
participation in the payment system.

(3) In the case of an agreement within subsection (1)(b), the reference in subsection
20(2)(b) to the payment service provider is to the payment service provider which
does not have direct access to the payment system.

(4) The power under this section to vary any fee or charge includes power to
specify a maximum fee or charge.

(5) If the Payment Systems Regulator varies an agreement under this section, the
25agreement has effect subject to the variation.

51 Power to require disposal of interest in payment system

(1) The Payment Systems Regulator may require a person who has an interest in
the operator of a regulated payment system to dispose of all or part of that
interest.

(2) 30The power conferred by subsection (1) may be exercised only if the Payment
Systems Regulator is satisfied that, if the power is not exercised, there is likely
to be a restriction or distortion of competition in—

(a) the market for payment systems, or

(b) a market for services provided by payment systems.

(3) 35The Payment Systems Regulator may not exercise the power conferred by
subsection (1) without the consent of the Treasury.

(4) If the Payment Systems Regulator decides to exercise the power conferred by
subsection (1) in relation to a person who has an interest in the operator of a
regulated payment system—

(a) 40the Payment Systems Regulator must notify the relevant competition
authorities (see subsection (5)), and

(b) the relevant competition authorities may not take any action in relation
to the person that would require the person to dispose of all or part of
that interest.

(5) 45The relevant competition authorities are—

(a) the Secretary of State,

(b) the Competition and Markets Authority, and

(c) the FCA.

52 The Regulator’s functions under Part 4 of the Enterprise Act 2002

(1) 5The functions to which this subsection applies are to be concurrent functions
of the Payment Systems Regulator and the Competition and Markets
Authority (“the CMA”).

(2) Subsection (1) applies to the functions of the CMA under Part 4 of the
Enterprise Act 2002 (market investigations), so far as those functions—

(a) 10are exercisable by the CMA Board (within the meaning of Schedule 4 to
the Enterprise and Regulatory Reform Act 2013), and

(b) relate to participation in payment systems.

(3) But subsection (1) does not apply to functions under the following sections of
the Enterprise Act 2002—

(none) 15section 166 (duty to maintain register of undertakings and orders);

(none) section 171 (duty to publish guidance).

(4) So far as is necessary for the purposes of, or in connection with, subsections (1)
and (2)—

(a) references in Part 4 of the Enterprise Act 2002 to the CMA (including
20references in provisions of that Act applied by that Part) are to be read
as including references to the Payment Systems Regulator,

(b) references in that Part to section 5 of that Act are to be read as including
references to section 57 of this Act, and

(c) references in that Part to consumers are to be read as including
25references to any person who uses, or is likely to use, services provided
by payment systems in the course of a business carried on by the
person.

(5) But subsection (4) does not apply—

(a) in relation to section 166 or 171 of that Act, or

(b) 30where the context otherwise requires.

(6) Section 130A of the Enterprise Act 2002 is to have effect in relation to the
Payment Systems Regulator by virtue of subsections (1) and (2) as if—

(a) in subsection (2)(a) of that section, the reference to the acquisition or
supply of goods or services of one or more than one description in the
35United Kingdom were a reference to the participation in payment
systems used to provide services in the United Kingdom, and

(b) in subsection (2)(b) of that section, the reference to the extent to which
steps can and should be taken were a reference to the extent to which
steps that might include steps under Part 4 of that Act can and should
40be taken.

53 Restrictions on exercise of functions under Part 4 of the Enterprise Act 2002

(1) Before the CMA or the Payment Systems Regulator first exercises any of the
concurrent functions in relation to any matter, it must consult the other.

(2) Neither the CMA nor the Payment Systems Regulator may exercise any of the
concurrent functions in relation to any matter if any of those functions have
been exercised in relation to that matter by the other.

(3) In subsections (1) and (2) “the concurrent functions” means the functions
5which by virtue of section 52 are concurrent functions of the Payment Systems
Regulator and the CMA.

(4) Before the FCA or the Payment Systems Regulator first exercises any of the
concurrent functions in relation to any matter, it must consult the other.

(5) Neither the FCA nor the Payment Systems Regulator may exercise any of the
10concurrent functions in relation to any matter if any of those functions have
been exercised in relation to that matter by the other.

(6) In subsections (4) and (5) “the concurrent functions”—

(a) in relation to the Payment Systems Regulator, means the functions
which by virtue of section 52 are concurrent functions of the Payment
15Systems Regulator and the CMA, and

(b) in relation to the FCA, means the functions which by virtue of section
234I of FSMA 2000 are concurrent functions of the FCA and the CMA.

(7) In this section “the CMA” means the Competition and Markets Authority.

54 The Regulator’s functions under the Competition Act 1998

(1) 20The functions to which this subsection applies are to be concurrent functions
of the Payment Systems Regulator and the Competition and Markets
Authority (“the CMA”).

(2) Subsection (1) applies to the functions of the CMA under the provisions of Part
1 of the Competition Act 1998, so far as relating to any of the following that
25relate to participation in payment systems—

(a) agreements, decisions or concerted practices of the kind mentioned in
section 2(1) of that Act,

(b) conduct of the kind mentioned in section 18(1) of that Act,

(c) agreements, decisions or concerted practices of the kind mentioned in
30Article 101(1) of the Treaty on the Functioning of the European Union,
and

(d) conduct which amounts to abuse of the kind mentioned in Article 102
of the Treaty on the Functioning of the European Union.

(3) But subsection (1) does not apply to functions under the following sections of
35that Act—

(none) section 31D(1) to (6) (duty to publish guidance);

(none) section 38(1) to (6) (duty to publish guidance about penalties);

(none) section 40B(1) to (4) (duty to publish statement of policy on penalties);

(none) section 51 (rules).

(4) 40So far as necessary for the purposes of, or in connection with, the provisions of
subsections (1) and (2), references to the CMA in Part 1 of the Competition Act
1998 are to be read as including references to the Payment Systems Regulator.

(5) But subsection (4) does not apply—

(a) in relation to sections 31D(1) to (6), 38(1) to (6), 40B(1) to (4), 51, 52(6)
45and (8) and 54 of that Act, or

(b) where the context otherwise requires.

55 Duty to consider exercise of powers under Competition Act 1998

(1) Before exercising any power within subsection (2), the Payment Systems
Regulator must consider whether it would be more appropriate to proceed
5under the Competition Act 1998.

(2) The powers referred to in subsection (1) are—

(a) its power to give a direction under section 47 (apart from the power to
give a general direction);

(b) its power to impose a requirement under section 48 (apart from the
10power to impose a generally-imposed requirement);

(c) its powers under sections 49, 50 and 51.

(3) The Payment Systems Regulator must not exercise the power if it considers
that it would be more appropriate to proceed under the Competition Act 1998.

56 Provision of information and assistance to a CMA group

(1) 15For the purpose of assisting a CMA group in carrying out a relevant
investigation, the Payment Systems Regulator must give the CMA group—

(a) any relevant information which it has in its possession, and

(b) any other assistance which the CMA group may reasonably require in
relation to any matters falling within the scope of the investigation.

(2) 20A “relevant investigation” is an investigation carried out on a reference made
by the Payment Systems Regulator under section 131 of the Enterprise Act 2002
by virtue of section 52.

(3) “Relevant information”, in relation to a relevant investigation, is information—

(a) which relates to matters falling within the scope of the investigation,
25and

(b) which—

(i) is requested by the CMA group for the purpose of the
investigation, or

(ii) in the opinion of the Payment Systems Regulator, it would be
30appropriate to give to the CMA group for that purpose.

(4) A CMA group, in carrying out a relevant investigation, must take into account
any information given to it under this section.

(5) In this section “CMA group” has the same meaning as in Schedule 4 to the
Enterprise and Regulatory Reform Act 2013.

57 35Function of keeping markets under review

(1) For the purpose of the functions conferred on it by sections 51 to 56 the
Payment Systems Regulator is to have the function of keeping under review—

(a) the market for payment systems, and

(b) the markets for services provided by payment systems.

(2) 40The function conferred by subsection (1) is to be carried out with a view to
(among other things) ensuring that the Payment Systems Regulator has

sufficient information to take informed decisions and to carry out its other
functions effectively.

58 Exclusion of general duties

(1) Section 42 (the Payment Systems Regulator’s general duties) does not apply in
5relation to anything done by the Payment Systems Regulator in the carrying
out of its functions by virtue of sections 52 to 56.

(2) But in the carrying out of any functions by virtue of sections 52 to 56, the
Payment Systems Regulator may have regard to any of the matters in respect
of which a duty is imposed by section 42 if it is a matter to which the
10Competition and Markets Authority is entitled to have regard in the carrying
out of those functions.

59 Concurrent competition powers: supplementary provision

(1) If any question arises as to whether, by virtue of section 52 or 54, any functions
fall to be, or are capable of being, carried out by the Payment Systems
15Regulator in relation to any particular case, that question is to be referred to,
and determined by, the Treasury.

(2) No objection is to be taken to anything done under the Competition Act 1998
or Part 4 of the Enterprise Act 2002 by or in relation to the Payment Systems
Regulator on the ground that it should have been done by or in relation to the
20Competition and Markets Authority.

60 Amendments relating to Regulator’s competition powers

(1) In section 9E of the Company Directors Disqualification Act 1986
(interpretation of sections 9A to 9D), in subsection (2), after paragraph (f)
insert—

“(g) 25the Payment Systems Regulator established under section 33 of
the Financial Services (Banking Reform) Act 2013.”

(2) In section 54 of the Competition Act 1998 (regulators), in subsection (1), omit
the “and” at the end of paragraph (g) and after paragraph (h) insert—

“(i) the Payment Systems Regulator established under section 33 of
30the Financial Services (Banking Reform) Act 2013.”

(3) In section 136 of the Enterprise Act 2002 (investigations and reports on market
investigation references)—

(a) in subsection (7), at the end insert—

“(j) in relation to the Payment Systems Regulator, section 52
35of the Financial Services (Banking Reform) Act 2013.”;

(b) in subsection (8), for “or Monitor” substitute “, Monitor or the Payment
Systems Regulator.”;

(c) at the end insert—

“(10) In this section “the Payment Systems Regulator” means the
40body established under section 33 of the Financial Services
(Banking Reform) Act 2013.”

(4) In section 52(4) of the Enterprise and Regulatory Reform Act 2013 (power to
remove concurrent competition functions of sectoral regulators), after

paragraph (f) insert—

“(g) the Payment Systems Regulator established under section 33 of
the Financial Services (Banking Reform) Act 2013.”

(5) In Schedule 4 to the Enterprise and Regulatory Reform Act 2013 (the
5Competition and Markets Authority), in paragraph 16 (concurrency report), at
the end of sub-paragraph (7) insert—

“(h) the Payment Systems Regulator established under section 33
of the Financial Services (Banking Reform) Act 2013.”

Complaints

61 10Complaints by representative bodies

(1) A designated representative body may make a complaint to the Payment
Systems Regulator that a feature, or combination of features, of a market in the
United Kingdom for services provided by payment systems is, or appears to
be, significantly damaging the interests of those who use, or are likely to use,
15those services (“service-users”).

(2) “Designated representative body” means a body designated by the Treasury
by order.

(3) The Treasury—

(a) may designate a body only if it appears to them to represent the
20interests of service-users of any description, and

(b) must publish in such manner as they think fit (and may from time to
time vary) criteria to be applied by them in determining whether to
make or revoke a designation.

(4) The reference in subsection (1) to a feature of a market in the United Kingdom
25for services provided by payment systems is a reference to—

(a) the structure of the market concerned or any aspect of that structure,

(b) any conduct (whether or not in the market concerned) of one or more
than one person who supplies or acquires services in the market
concerned, or

(c) 30any conduct relating to the market concerned of customers of any
person who supplies or acquires services,

and “conduct” includes any failure to act (whether or not intentional) and any
other unintentional conduct.

(5) In this section “market in the United Kingdom” includes a market which
35operates only in a part of the United Kingdom.

(6) In section 234C of FSMA 2000 (complaints by consumer bodies), after
subsection (1) insert—

“(1A) But a complaint may not be made to the FCA under this section if it is
a complaint which could be made to the Payment Systems Regulator by
40a designated representative body under section 61 of the Financial
Services (Banking Reform) Act 2013 (complaints by representative
bodies).

“Designated representative body” and “the Payment Systems
Regulator” have the same meaning in this subsection as they have in
45that section.

“Designated representative body” and “the Payment Systems
Regulator” have the same meaning in this subsection as they have in
that section.”

62 Response by Regulator

(1) The Payment Systems Regulator must within 90 days after the day on which it
receives a complaint under section 61 publish a response stating how it
proposes to deal with the complaint, and in particular—

(a) 5whether it has decided to take any action, or to take no action, and

(b) if it has decided to take action, what action it proposes to take.

(2) The response must—

(a) include a copy of the complaint, and

(b) state the Payment Systems Regulator’s reasons for its proposals.

(3) 10The Treasury may by order amend subsection (1) by substituting any period
for the period for the time being specified there.

63 Complaints: guidance

(1) The guidance given by the Payment Systems Regulator under section 89—

(a) must include guidance about the presentation of a reasoned case for a
15complaint under section 61, and

(b) may include guidance about any other matters that appear to the
Payment Systems Regulator to be appropriate for the purposes of that
section.

(2) Guidance given in accordance with subsection (1) is to be treated as general
20guidance for the purposes of this Part.

Enforcement and appeals

64 Meaning of “compliance failure”

In this Part “compliance failure” means a failure by a participant in a regulated
payment system to—

(a) 25comply with a direction given under section 47, or

(b) comply with a requirement imposed under section 48 or 49.

65 Publication of compliance failures etc

(1) The Payment Systems Regulator may publish details of a compliance failure by
a participant in a regulated payment system.

(2) 30The Payment Systems Regulator may publish details of a sanction imposed
under section 66.

66 Penalties

(1) The Payment Systems Regulator may require a participant in a regulated
payment system to pay a penalty in respect of a compliance failure.

(2) 35A penalty—

(a) must be paid to the Payment Systems Regulator, and

(b) may be enforced by the Payment Systems Regulator as a debt.

(3) The Payment Systems Regulator must prepare a statement of the principles
which it will apply in determining—