Mobile Banking And Payments – FCA Industry Review

Author:Ms Jacqui Hatfield and Daniel Weiner
Profession:Reed Smith
 
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A fast developing market There have been dramatic developments in the mobile banking and payments sphere in recent years. Customers of the UK's largest retail banks made more than 18 million mobile transactions per week in 2013 - twice as many as in the previous year. We expect these numbers to continue to increase.

Although innovations in this field have the potential to provide great benefits to consumers, the Financial Conduct Authority (FCA) is keen to ensure that consumers' interests are protected. It has therefore conducted a thematic review of the industry to determine whether market participants are achieving good outcomes for consumers when delivering mobile payment and banking products. The FCA published the findings of its review (document TR 14/15) in September 2014 (the Review).

Key findings of the Review It is encouraging that the FCA did not find any evidence of consumer harm in the mobile banking and payments arena. The Review also does not prioritise issues in relation to fraud prevention and anti money laundering measures. Although these are important considerations, and they were raised in the the FCA's interim report in August 2013 on which the Review builds, the FCA was satisfied that firms were addressing these areas, although it encouraged firms to continue to do so as products and services develop in popularity and complexity.

The FCA identified five areas that were important in influencing consumer outcomes for firms developing mobile banking products and services.

Consumers' understanding of their rights and obligations

Consumers must understand that they have the same protection when using mobile banking technology as they do when using traditional payment mechanisms. Firms have an important role to play in helping their customers know when and how to report unauthorised transactions.

Key decision-makers having the most up-to-date understanding

Considering the speed with which mobile banking has taken off in recent years, with consumers increasingly using mobile technology to perform simple banking transactions, it is vital that senior managers in firms have the depth of knowledge to understand how their products and services can best be delivered to consumers.

The FCA has suggested that examples of firms achieving good outcomes include the conducting of thorough research into how consumers interact with their mobile devices, and more specifically their behaviour when using mobile banking services.

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