European developments and consumer protection

The Sending money home? survey3 found less than half of
UK banks and only one in five MTOs had a customer
service charter.

The European Commission is currently drafting a directive to
provide a new legal framework for payments in the internal
market (the draft Payment Services Directive or PSD). If
implemented, the PSD will introduce an
authorisation/registration regime for payment service
providers. All payment service providers will be subject to
conduct of business regulations, and payment service
providers that are not credit institutions or e-money issuers
will also be subject to prudential regulation. The conduct of
business provisions may include a requirement to provide
information to consumers about the conditions that will apply
to a service in words that are easy to understand and are in a
clear and readable form. The US recently introduced
consumer protection information of this nature in a bill to
Congress (17th February 2005). The provision of money
transfer services is expected to fall within scope of the PSD.
The European Commission is expected to adopt a legislative
proposal later in 2005. This would suggest that the PSD could
be implemented in 2008/09. It has yet to be decided who will
be made the UK Competent Authority or Authorities for the
PSD.
The Third Money Laundering Directive (expected to be
implemented by the end of 2007) will require member states to
have a licensing/registration system for MSBs, which includes
a fit and proper test for those who direct or beneficially own the
business. At present, the registration system for MSBs
operated by HMRC does not include such a test.