FCA to phase in Strong Customer Authentication implementation

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The Financial Conduct Authority (FCA) has agreed a plan that gives the payments and e-commerce industry extra time to implement Strong Customer Authentication (SCA).

From 14 September 2019, new European Union (EU) rules will start to apply that impact the way in which banks or payment services providers verify their customers identity and validate specific payment instructions. The new rules, called Strong Customer Authentication (SCA), are intended to enhance the security of payments and limit fraud during this authentication process.

The FCA has today agreed an 18-month plan to implement SCA with the e-commerce industry of card issuers, payments firm and online retailers. The plan reflects the recent opinion of the European Banking Authority (EBA) which set out that more time was needed to implement SCA given the complexity of the requirements, a lack of preparedness and the potential for a significant impact on consumers.

Jonathan Davidson, Executive Director for Supervision – Retail and Authorisations, said:

‘The FCA has been working with the industry to put in place stronger means of ensuring that anyone seeking to make payments is not a fraudster. While these measures will reduce fraud, we want to make sure that they won’t cause material disruption to consumers themselves; so we have agreed a phased plan for their timely introduction’.

The FCA will not take enforcement action against firms if they do not meet the relevant requirements for SCA from 14 September 2019 in areas covered by the agreed plan, where there is evidence that they have taken the necessary steps to comply with the plan. At the end of the 18-month period, the FCA expects all firms to have made the necessary changes and undertaken the required testing to apply SCA.

 
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The FCA will also continue to monitor the extent to which banks and payment service providers are meeting its expectation that they consider the impact of SCA on different groups of consumers, and provide alternative means of authentication where needed.

Strong Customer Authentication

From 14 September 2019, the way in which your bank or payment services provider verifies your identity or validates a specific payment instruction will change. These European Union (EU) rule changes are designed to reduce the risk of a fraudster pretending to be you to steal your money.

This process to establish that it is really you is called ‘authentication’. The aim is to make sure your bank or payment services provider knows that the person requesting access to your account or trying to make a payment is either you or someone to whom you have given your consent.

 
strong customer authentication implementation - coinbase - FCA to phase in Strong Customer Authentication implementation

The new rules, called Strong Customer Authentication (SCA), are intended to enhance the security of payments and limit fraud. The FCA working with firms to implement this in a way that protects consumers while minimising disruption, while attempting to ensure that authentication methods are available for all groups of consumers.

For online banking, the changes will be phased in from 14 September 2019 and completed by 14 March 2020.

The implementation of SCA is European-wide. The current plans to leave the EU will not affect this process.

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