Speaking at the Chartered Institute for Securities and Investment’s financial planning conference yesterday (27 September), Ian McKenna warned that advisers could have to apply for authorisation under the Payment Services Directive 2.
The introduction of PSD2 in January 2018 will require all payment account providers across the European Union to provide third party access.
It is similar, but different, to Open Banking which is being introduced in the UK by the Competition and Markets Authority by early 2018.
This will require the nine largest current account providers to allow their customers to consent to allow third parties secure access to their transaction data or to initiate payments on the customers behalf.
Mr McKenna said these changes could affect advisers and they should look into getting any permissions they might need.
He said: “The banks are going to use Open Banking. I know certain banks are getting ready to provide information about their customer’s life and pensions information alongside banking information.
“The latest information I am seeing is that if you don’t have permissions you will not be able to offer a pensions dashboard.”
Under PSD2 firms offering payment accounts accessible on-line must allow third-party providers to access users’ accounts with these users' explicit consent.
These third parties – providers of account information services and payment initiation services (PISPs) - will be regulated under PSD2 and can apply from next month.
Mr McKenna said advisers might have to register as an account information service provider in order to access a client’s information under PSD2.
Whether a firm will have to apply or not will depend on their business model and while it is understood the Financial Conduct Authority does not anticipate most financial advisers will need authorisation it will come down to whether they are providing a payment service as a "regular occupation or business activity".
It is understood that if an adviser is not providing consolidated account information to their clients they will not need authorisation but if they are providing a dashboard of a customer's accounts, for example, they might do.
Financial advisers may need to seek legal advice on whether their business model will mean they need to lodge an application with the FCA.
But Mr McKenna said that financial advisers should consider offering such a service if they don't currently, even if it means seeking these new permissions.
He said: “Open Banking is coming in January and if you are not ready to offer similar services to your clients, banks will be targeting them.
“It is regrettable that Open Banking is getting to market a good two years before the pensions dashboard.
“I think we need to stop talking about the pensions dashboard and start talking about open pensions and open savings.
“This is about the liberation of information and we need to learn what we can leverage from Open Banking.”
damian.fantato@ft.com
