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Home > Prudential Regulation Authority > Ring-fenced bodies – indirect participation in inter-bank payment systems
 

Ring-fenced bodies – indirect participation in inter-bank payment systems

Structural reform | Ring-fencing transfer schemes | Written statements to the PRA on RFTS | Inter-bank payment systems

​This page provides information about applying to the Prudential Regulation Authority (PRA) for permission to indirectly access inter-bank payment systems under one of the conditions set out for ring-fenced bodies (RFBs) in the secondary legislation, the Financial Services and Markets Act 2000 (Excluded Activities and Prohibitions) Order 2014 (the Order).
 

Rules governing the participation of RFBs in inter-bank payment systems

Article 13 of the Order prohibits an RFB from entering into any transaction that requires the use of services provided through an inter-bank payment system unless it is a direct participant in the system, or where it is not a direct participant in the system, at least one of the conditions set out in Article 13(2) of the Order is satisfied. One of these conditions is that the PRA has, following an application made by an RFB, granted permission for it to access the payment system through an intermediary proposed by the RFB.
 

Granting permission for an RFB to access the payment system through an intermediary

Article 13(2)(d) of the Order sets out the condition that the PRA may only grant permission ‘where it considers that the RFB needs to be able to access the services provided by the inter-bank payment system in question due to exceptional circumstances’.
 
The PRA considers that relevant ‘exceptional circumstances’ may include: 
 
  • where being a direct participant in the system would result in a disproportionate level of cost, risk or other burden for the RFB, its customers or the system, having regard to the PRA’s general safety and soundness objective in relation to ring-fencing under the Financial Services and Markets Act 2000; and
  • where an RFB is not a direct participant in the system and joining the system during a particular period would result in a level of cost, risk or other burden for the RFB, its customers or the inter-bank payment system significantly greater than would be the case if it becomes a direct participant at a later planned specified date and the PRA considers that granting permission is consistent with its general safety and soundness objective in relation to ring-fencing 
An RFB must also show that the granting of the application would result in it continuing to be able to operate in a way consistent with the group ring-fencing purposes and not so as to adversely affect the ability of the PRA to meet its general safety and soundness objective in relation to ring-fencing.

Further information and examples of relevant 'exceptional circumstances' can be found in Supervisory Statement 8/16 ‘Ring-fenced bodies’ – see Related Links.

How to apply

An RFB seeking permission to indirectly access a payment system under the ‘exceptional circumstances’ criteria should apply to the PRA. The application form and accompanying notes are available below under ‘Key resources’.
 
The application should be sent directly to paymentsystems@bankofengland.co.uk.

The application should be made by the RFB (the applicant). In submitting the application, the RFB is verifying that the information provided within the application is complete and accurate.
 
Prior to submitting the application, the RFB should ensure that it has considered the application form notes, which describe the information that the PRA would expect to receive in support of the application. If, after reviewing the notes, the RFB has any questions concerning the application form, it may contact the PRA by emailing paymentsystems@bankofengland.co.uk.

Key Resources

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