The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025: impact assessment - RPC opinion (green-rated)
Regulatory Policy Committee opinion on His Majesty’s Treasury’s impact assessment (IA) in respect of the regulations
Documents
Details
The Payment Services Regulations 2017 provide protection for payment service users by making provision for at least two months’ notice when payment service providers (PSPs) decide to terminate a payment service contract concluded for an indefinite period. The regulations propose amendment to the regulations, to enhance customer protections when PSPs terminate contracts with service users. These enhancements are to apply to framework contracts for payment services concluded for an indefinite period and entered into on or after 28 April 2026. They include extending the minimum notice period for contract terminations to 90 days, mandating PSPs to provide sufficiently-detailed and specific reasons for contract termination, so that users can understand why their contract is being terminated and inform them of any right they may have to complain to the Financial Ombudsman Service.
The RPC had, on first submission of the IA for RPC scrutiny, concerns about the equivalent annual net direct cost to business (EANDCB) figure, and also that the impacts on small and micro businesses, including whether they may be disproportionately affected, had not been considered adequately. Revisions to the IA have addressed these concerns satisfactorily. There remained, however, some weaknesses that needed to be addressed.
The IA now identifies and quantifies the main costs of the proposals as the initial familiarisation and transitional costs of updating contract templates. Additionally, the IA discusses potential costs relating to ongoing compliance with the requirements and the knock-on effects of customers having increased time to contest their account terminations. The IA notes that there will be benefits to customers from an improved customer experience. It estimates the EANDCB figure for the proposals to be £6.7 million, with the net present value being estimated at -£57.3 million.