Law of Bank Payments, 5th edition published 13 December 2017

law of bank payments title pageRaymond is the co-editor of Law of Bank Payments. First published in 1996 the 5th edition was published on 13 December 2017.

Here is an extract from the preface to the 2017 edition.

“The practice and law relating to payment services is undergoing an unprecedented period of upheaval which shows no signs of diminishing.  The provision of payment services and payment infrastructure in the UK was recognised for the first time in 2013 as requiring separate regulation from other financial services. Consequently, as we have noted in chapter 1, the Payment Systems Regulator was established as a subsidiary of the FCA, and is now responsible for overseeing the provision of payment services within the UK.  The PSR may be expected to highlight problems with payment services, but it is also concerned with developing improvements. One of the PSR’s first actions was to establish the Payment Systems Forum, an advisory body of industry and other experts, which recommended the consolidation of the main retail interbank payments systems (BACS, cheques and paper credits, and Faster Payments) under one ownership (which will take place by the end of 2017), and has recommended the development of a New Payments Architecture (NPA) consisting of a structure within which the functions of those familiar payment systems, and future retail payment systems, will operate, starting with push payments in 2021. Essentially, the structure proposed involves different parts of the payment process (such as processing payment instructions, use of different platforms or channels, clearing, and settlement) being separated into discrete “layers”, with each based on an agreed standard. The aim is that the structure will make it easier for new entrants to enter the market, and the innovation of new overlying payment systems, as well as reducing risk and costs. The PSR has also responded to criticism of the law where customers are induced to authorise payments by fraud, and proposed a new compensation regime allocating responsibility between the customer and the paying and receiving banks.

Payment cards have been developed that serve as a replacement for cash itself by way of “electronic money” as defined by the Electronic Money Regulations 2011 or other digital cash. Some versions of electronic money or other digital cash involve the storing of value in a remote account operated by a payment service provider and are considered in chapter 5. Other types of digital cash involve the storing of monetary value as digital information on a smart card or electronic purse, independent of a bank account (often known as prepaid cards) and are considered in chapter 4.

At the time of the last edition, it had been decided that cheques would be phased out  by 2018.  Not only has that decision now been reversed, but from October 2017 the industry has implemented a new system for images of paper cheques to be presented and cleared which will allow paper cheques to be cleared by the end of the next working day after presentment of the image.  As noted in chapter 6, this is nothing less than a separate clearing system operating in parallel with the existing physical clearing system for cheques from which it may in due course take over.

European regulation has continued to flow unabated.  Among the more important changes dealt with here is the introduction of the Second Payment Services Directive (to be implemented by the Payment Services Regulation 2017) which is noted in chapter 5 and extends the scope of the existing EU regime for regulation of authorisation and conduct of business in relation to payment services. As revised, the directive now extends to transactions with providers outside the EU (so as to apply to those parts of the transactions within the EU) and to payments in any currency. The Payments Accounts Regulations 2015 impose measures designed to improve the transparency of fee charges and to ease comparison.

Recent cases of note include Tidal v HBOS [2014] EWCA Civ 1107; Wuhan Guoyu Logistics v Emporiki Bank of Greece and Simon Carves Ltd v Ensus UK Ltd  [2014] 1 Lloyd’s Rep 266; Alternative Power Solution Ltd v Central Electricity Board [2014] UKPC 31 [2014] UKPC 31; and Taurus Petroleum Limited v State Oil Marketing Co of the Ministry of Oil, Iraq [2015] EWCA Civ 835.”

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