Payment Services (Amendment) Regulations 2024 come into force

The Payment Services (Amendment) Regulations 2024 came into force on 30 October 2024, amending the Payment Services Regulations 2017 to let a payer's payment service provider delay executing certain payment orders where it suspects fraud¹. The regulations were made on 8 October 2024 and laid before Parliament on 9 October 2024, and extend to England and Wales, Scotland and Northern Ireland¹.

Under the new regulation 86(2A), the delay power applies where the payer's provider "has established that there are reasonable grounds to suspect a payment order from a payer has been placed subsequent to fraud or dishonesty perpetrated by a person other than the payer", and those grounds are established by the end of the business day following receipt of the order¹. The delay is for contacting the payer or another relevant third party to make further enquiries before deciding whether to execute the order¹.

The delay "must be no longer than necessary to achieve the purpose described, and in any event, no longer than the end of the fourth business day following the time of receipt of the payment order"¹. The power applies only to transactions authorised under regulation 67, executed wholly within the United Kingdom in sterling, and not initiated by or through a payee¹.

Where a provider delays a payment, it must notify the payer of the fact of the delay, the reasons for it, and any information or action required of the payer, in an agreed manner and as soon as possible, and in any event by the end of the business day following receipt of the order¹. That notification duty does not apply to the extent that complying with it would be otherwise unlawful¹.

A new regulation 94A makes the provider liable to its payment service user for any charges for which the user is responsible, and any interest the user must pay, as a consequence of a delay under regulation 86(2B), whether or not the order is ultimately executed¹.

The Treasury made the regulations under sections 3(1) and 84(2) of the Financial Services and Markets Act 2023, and consulted the regulators as required by section 3(6) of that Act¹. The explanatory note states the amendments give a payer's provider the ability to delay execution where it establishes reasonable grounds to suspect the order was made after fraud or dishonesty by a third party, which may include the payee¹. The 2017 regulations are amended from 30 October 2024, including the insertion of regulation 86(2A) to (2D)².

Why it matters for households

The change affects people sending sterling payments within the UK, typically faster payments from a bank account, where the provider suspects the payment was prompted by fraud. From 30 October 2024, such a payment can be held for up to the end of the fourth business day after the order was received, rather than being executed within the usual timescales¹. During that period the money has not reached the payee.

The provider must tell the payer about the delay, the reasons for it and anything needed from them, by the end of the next business day at the latest, unless doing so would be unlawful¹. If the delay causes the payer to incur charges or interest, the provider is liable for those amounts whether or not the payment is eventually made¹.

The power does not cover payments initiated by or through a payee, such as direct debits, or payments not executed wholly within the UK in sterling¹. The regulations do not set out how a provider decides that grounds for suspicion exist beyond the wording in regulation 86(2A), and no further detail on that test appears in the instrument¹. The Payment Services Regulations 2017 set the wider framework for execution times and liability, and the Payment Systems Regulator oversees payments and fraud refunds.

What happens next

The regulations are in force from 30 October 2024¹. No further commencement dates or transitional arrangements are set out in the instrument¹.