SUP 16 Annex 27D Notes on completing FSA056 (Authorised Payment Institution Capital Adequacy Return – SUP 16 Annex 27CD)

G

1FSA056 Authorised Payment Institution Capital Adequacy Return

Valuation

Firms should follow their normal accounting practice wherever possible.

Currency

Some questions require you to answer in GBP, whilst some require you to answer in EUR. The exchange rate entered at Element 53 should be used throughout the return to convert GBP to EUR where required.

  1. • Elements 67-69, 90-107, and 52, must be completed in GBP.

    • Element 77 must be answered in GBP and EUR.

    • All other monetary answers must be in EUR

Type of payment service: special instructions

• Registered account information service providers Registered account information service providers (as defined in the Payment Services Regulations 2017, “PSRs 2017”) should only answer Elements 67-69 (income), and 79 - 83 (AIS).

• Authorised payment institutions that only provide payment initiation services Authorised payment institutions (APIs) that ONLY provide payment initiation services (PIS) should only answer Elements 67-69 (income), Element 3 (initial capital), Part Two (capital resources), Element 66 (Agents), 70-75 (payment systems) and 84-89 (PIS).

• APIs that provide PIS / AIS and/or other payments services should answer all Elements, including the relevant sections of Part 4 (depending on whether they provide AIS / PIS or both).

Data elements

These are referred to by row first, then by column, so data Element 2B will be the element numbered 2 in column B.

Figures should be entered in single units in the currency specified. For example, €1,234,567.50 should be entered as 1234567

INTRODUCTORY MATTERS

Element 1B: You must only answer ‘Yes’ to this question if both parts of the question apply to the API required to submit this report (i.e. if the API falls within paragraph 2(b) of regulation 22: (a) the API is included in the consolidated supervision of a parent credit institution pursuant to the Capital Requirements Directive 2013/36/EU and (b) that all of the conditions in Article 7(1) of the Capital Requirements Regulations (EU) 575/2013 are met in respect of the API and its parent. If either part of this question does not apply, you should enter “no”.

Element 2B: If you have answered “yes” to ‘Element 1B’ then please enter the Firm Reference Number of your firm’s parent credit institution. If you have answered “yes” to ‘Element 2B’then you do not need to answer Elements 4 to 33 (own funds requirement).

Element 67B: State, in GBP, the total income of the whole legal entity, across all activity, for the reporting period. Follow your firm’s normal accounting practice when answering this question (i.e. this should be the same figure as the total income figure in your annual accounts).

Element 68B: State, in GBP, the total income for the reporting period derived from payment services. Follow your normal accounting practice when answering this question.

Element 69B: State, in GBP, the total operating profit or loss of the whole legal entity for the reporting period. Operating profit or loss is calculated after ordinary operating expenses are deducted from the gross profit, but before interest, tax, dividend payments and any extraordinary items are deducted.

Part One: CAPITAL REQUIREMENT

Initial capital requirement

Element 3B: State, in EUR the firm’s initial capital requirement at authorisation (Part 1, Schedule 3 of the PSRs 2017).

Own Funds Requirement

Elements 4B – 6B: Firms should indicate which of the three methods they use to calculate their own funds requirement, as described in Part 2 of Schedule 3 of the PSRs 2017

Firms only need to complete those parts of the form that apply to their chosen method of calculating own funds.

If your firm has not completed a full financial year of business, then, in lieu of the figure for the “preceding year” or the “previous financial year”, you must use the projected figure(s) that your firm submitted to the FCA when applying for authorisation (subject to any adjustments that the FCA required or may require).

Please refer to Chapter 9 (Capital resources and requirements) of our Payment Services and Electronic Money Approach Document for further detail on how to calculate the own funds requirement.

Method A Calculation

Element 7B: State, in EUR, the total fixed overheads for the preceding year. Please refer to Chapter 9 of our Approach Document for further guidance on fixed overheads.

Element 8B: State, in EUR, the figure equal to 10% of the figure you have reported in ‘Element 7B’.

Element 9B: State, the larger of the two figures you have reported in ‘Element 3B’ and ‘Element 8B’.

Method B Calculation

Element 10B: “Payment volume” means the total amount (i.e. value) of payment transactions executed by the API in the preceding financial year divided by the number of months in that year (paragraph 9(3), Part 2, Schedule 3 of the PSRs 2017). This figure should include transactions executed by agents of the API.

Element 11B: State, in EUR, the figure that equals 4% of the first €5m of payment volume.

Element 12B: State, in EUR, the figure that equals 2.5% of payment volume between €5m and €10m. If your firm has undertaken less than €5m in payment volume, insert a zero in this box.

Element 13B: State, in EUR, the figure that equals 1% of payment volume between €10m and €100m. If your firm has undertaken less than €10m in payment volume, insert a zero in this box.

Element 14B: State, in EUR, the figure that equals 0.5% of payment volume between €100m and €250m. If your firm has undertaken less than €100m in payment volume, insert a zero in this box.

Element 15B: State, in EUR, the figure that equals 0.25% of all payment volume over €250m. If your firm has undertaken less than €250m in payment volume, insert a zero in this box.

Element 16B: State, in EUR, the sum of the values from ‘Elements 11B to 15B’ above.

Element 17B: The “scaling factor” is:

  1. • 0.50 for a payment institution that is authorised to provide only the payment service specified in paragraph 1(f) of Schedule 1 PSRs 2017 (money remittance); and

    • 1.00 for a payment institution that is authorised to provide any other payment service specified in paragraph 1(a) to (e) of Schedule 1 PSRs 2017.

The scaling factor should be entered to 2 decimal places.

Element 18B: This figure is calculated using the following equation: ‘Element 16B x Element 17B’.

Element 19B: Insert the larger of the two figures you have reported in ‘Element 3B’ and ‘Element 18B’.

Method C calculation

Relevant Indicator

Element 20B – Element 23B: these figures should be entered in EUR and should cover the expenses or income generated over the reporting period. Please refer to Chapter 9 (Capital resources and requirements) of our Payment Services and Electronic Money Approach Document for further detail on the Elements that make up the relevant indicator.

Firms should have regard to paragraphs 10(4)(a)-(d), Part 2, Schedule 3 of the PSRs 2017 for the purposes of calculating the relevant indicator:

  1. • each element must be included in the sum with its positive or negative sign;

    • income from extraordinary or irregular items must not be used;

    • expenditure on the outsourcing of services rendered by third parties may reduce the relevant indicator if the expenditure is incurred from a payment service provider;

    • the relevant indicator is calculated on the basis of the twelve-monthly observation at the end of the previous financial year;

    • the relevant indicator must be calculated over the previous financial year; and

    • audited figures must be used unless they are not available in which case business estimates may be used.

Element 24B: This should be the sum of the amounts stated in ‘Elements 20B to 23B’ above.

Multiplication Factor

Element 25B: State, in EUR, the figure that equals 10% of the first €2.5m of the “total relevant indicator of income” in ‘Element 24B’.

Element 26B: State, in EUR, the figure that equals 8% of the “total relevant indicator of income” in ‘Element 24B’ between €2.5m and €5m. If your firm's total relevant indicator of income is less than or equal to €2.5m, you should enter zero in this box.

Element 27B: State, in EUR, the figure that equals 6% of the “total relevant indicator of income” in ‘Element 24B’ between €5m and €25m. If your firm's total relevant indicator of income is less than or equal to €5m, you should enter zero in this box.

Element 28B: State, in EUR, the figure that equals 3% of the “total relevant indicator of income” in ‘Element 24B’ between €25m and €50m. If your firm's total relevant indicator of income is less than or equal to €25m, you should enter zero in this box.

Element 29B: State, in EUR, the figure that equals 1.5% of the “total relevant indicator of income” in ‘Element 24B’ over €50m. If your firm's total relevant indicator of income is less than or equal to €50m, you should enter zero in this box.

Element 30B: State, in EUR, the sum of the values of ‘Elements 25B to 29B’ above.

Element 31B: The “scaling factor” is:

  1. • 0.50 for a payment institution that is authorised to provide only the payment service specified in paragraph 1(f) of Schedule 1 PSRs 2017 (money remittance); and

    • 1.00 for a payment institution that is authorised to provide any other payment service specified in paragraph 1(a) to (e) of Schedule 1 PSRs 2017.

The scaling factor should be entered to 2 decimal places.

Element 32B: This figure is calculated by multiplying ‘Element 24B’ by Element 30B and ‘Element 31B’.

Element 33B: Insert the larger of the two figures you have reported in ‘Element 3B’ and ‘Element 32B’.

Part Two: TOTAL CAPITAL RESOURCES

For the purposes of Part Two – Elements of Own Funds, please provide a value for Common Equity Tier 1, Additional Tier 1 and Tier 2 capital items. You will also need to provide values for adjustments, deductions, exemptions, and temporary waivers (entering zero where not relevant). You should enter these items in GBP.

To understand the items that may be used to form ‘own funds’, APIs should consult the PSRs 2017, the Capital Requirements Regulation (EU) 575/2013 (CRR), and the Payment Services and Electronic Money Approach Document.

Regulation 2 of the PSRs 2017 sets out that own funds has the definition given in the CRR Article 4(1)(118). Own funds consist of Tier 1 and Tier 2 items. Tier 1 is formed of Common Equity Tier 1 and Additional Tier 1. At least 75% of Tier 1 capital must be held as Common Equity Tier 1 capital and Tier 2 capital must be equal to or less than one third of Tier 1 capital. The return will take into account these limits when automatically calculating figures for eligible amounts in elements 104B-107B – these do not need to be manually entered.

Element 52B: This should be the sum of the capital items listed at 106B-107B.

Element 53B: Please provide the EUR equivalent value for 1 GBP to 4 decimal places. This should be the market rate as quoted by the European Central Bank in place at the end of the reporting period. The InforEuro website provides historical exchange rates on a month-by-month basis:

http://ec.europa.eu/budget/contracts_grants/info_contracts/inforeuro/index_en.cfm

Element 54B: State the EUR equivalent of ‘Element 52B’ above.

Element 55B: State, in EUR, the same figure as you have reported in ‘Element 9B’, ‘Element 19B’ or ‘Element 33B’ (depending on the method your firm uses to calculate its capital requirement). If you answered “yes” to question 1, you must enter the figure reported in ‘Element 3B’ (initial capital requirement).

Element 56B: State, in EUR, the total capital surplus / deficit for your firm. This is calculated by subtracting the total capital requirement in ‘Element 55B’ above, from the total net capital resources in ‘Element 54B’ above (i.e. Element 54B – Element 55B = total capital surplus / deficit).

Part three: SUPPLEMENTARY INFORMATION

SAFEGUARDING OF RELEVANT FUNDS

You must select the relevant box(es) to identify the method(s) used by the firm to safeguard relevant funds. At least one of the boxes in ‘Elements 61 to 65’ must be selected.

NUMBER OF AGENTS

Element 66B: State the number of agents that you have registered to undertake payment services.

PAYMENT SYSTEMS

Element 70B: If your firm is a member of any sterling interbank payment systems, select the appropriate system(s) from the drop-down list. This means where you have a direct relationship with the operators of the payment system.

Element 72B: If your firm accesses, on an indirect basis, any sterling interbank payment systems, select the appropriate system(s) from the drop-down list. This means where the PSP indirectly accesses payment systems through the services of another PSP that is a direct participant or member of that payment system.

Element 74B: If your firm accesses any sterling interbank payment systems on an indirect basis select the institution that is the primary provider of that indirect access.

TRANSACTION AND USER INFORMATION

Element 75B: Enter the full number of months during the reporting period that your firm was FCA authorised or registered. For example, if you are completing this return for the period ending 31 December and you were authorised or registered by the FCA on 15 October then you should enter “2”.

Element 76B: State the number of payment transactions executed by your firm during the reporting period. This includes payment transactions executed by agents of your firm.

Element 77B: State, the total amount (i.e. value) of all payment transactions executed during the reporting period. This includes payment transactions executed by agents of your firm. Note that you should enter the total gross value of the payment transactions, not the income generated by them. This figure should be provided in EUR and GBP.

Element 78B: State the number of new users / customers who have used your firm’s payment services during the reporting period. This means those users that have entered into framework contracts or (where known) single payment service contracts during the reporting period and includes all customer types, including individual consumers and any corporate customers.

Part Four: PROVIDERS OF ACCOUNT INFORMATION AND/OR PAYMENT INITIATION SERVICES

Account information services (AIS)

Elements 79 – 83 should only be answered by firms providing account information services

Element 79B: State the number of payment accounts that the AIS provider has accessed for the purposes of providing AIS during the reporting period. You should count each individual payment account once, even where it has been accessed multiple times.

Element 80B: State the number of customers that have used the provider’s AIS in the reporting period. Each customer should be counted once (including where the customer has used the AIS multiple times).

Element 81B: State the minimum monetary (in EUR) amount of the professional indemnity insurance (or comparable guarantee) (“PII”) calculated in accordance with the European Banking Authority Guidelines on Professional Indemnity Insurance under PSD2.

Element 82B: Please enter the amount of coverage of the PII that is held by the AIS provider. This should be entered in EUR. Please use the same conversion rate entered at ‘Element 53B’.

Element 83B: If the terms of the AIS provider’s PII have changed in any respect since its authorisation or registration (if this is the first return), or since the last time this report was submitted, please explain here. This includes the insurance cover (i.e. the monetary amount), what the insurance covers (i.e. the losses or circumstances in which the insurance is payable), the terms and conditions, any limits or exclusions or any other change to the policy.

Payment initiation services (PIS)

Elements 84 – 89 should only be answered by firms providing account information services

Element 84B: Please enter number of payment accounts that the PIS provider

Element 85B: This should be the total number of payment transactions initiated using the provider’s PIS in the reporting period.

Element 86B: This should be the total value (in EUR) of the payment transactions initiated using the provider’s PIS in the reporting period.

Element 87B: State the minimum monetary amount (in EUR) of the professional indemnity insurance (or comparable guarantee) (“PII”) calculated in accordance with the European Banking Authority Guidelines on Professional Indemnity Insurance under PSD2

Element 88B: Please enter the amount of coverage of the PII that is held by the PIS provider. This should be entered in EUR. Please use the same conversion rate entered at ‘Element 53B’.

Element 89B: If the terms of the PIS provider’s PII have changed in any respect since its authorisation or registration (if this is the first return), or since the last time this report was submitted, please explain here. This includes the insurance cover (i.e. the monetary amount), what the insurance covers (i.e. the losses or circumstances in which the insurance is payable), the terms and conditions, any limits or exclusions or any other change to the policy.