Over recent years the payment sector has developed rapidly, as we move towards a digital economy. The FCA has confirmed that this sector is a priority area and it will act swiftly where firms fail to meet regulatory requirements.
The FCA regulates payment services firms (such as authorised payment institutions (‘APIs’)) and electronic money institutions (‘EMIs’). There are similarities between both of these types of firms and the FCA’s guidance usually covers both together. The Payment Services Regulations (PSRs) and Electronic Money Regulations (EMRs) set out the requirements for when these firms that need to appoint auditors (see below). The requirements in these regulations are broadly similar.
A common misconception is that the UK company law requirements are also similar, in respect of statutory audits. These actually differ significantly between each type of entity. We have clarified these differences below.
Payment services firms (that are not EMIs)
Firms regulated under the PSRs are not automatically required, by UK company law, to have an audit. The usual size criteria applies (on a group-wide basis). This article linked provides a useful guide to the size criteria.
Even if the worldwide group is small and an audit would not normally be required, the owners of a firm may decide to request that the firm has its financial statements audited. This scenario is commonplace where a counterparty would like to see audited financial statements before doing business with a company.
There is no requirement for payment services firms to submit financial statements to the FCA. These will need to be submitted in accordance with the normal Companies House deadline. If these financial statements are audited, the PSRs stipulate that the auditor must communicate certain matters to the FCA.