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September 11, 2020

FCA registration and how Plaid can help

Keith Grose

In January of 2018, the revised Payment Services Directive (PSD2) went into effect across the UK and Europe. This opened up the banking industry to new players, promoting the development and use of Account Information Services (AIS) and the thousands of apps and services that help users manage their money.

Within the framework of PSD2, companies must be registered or authorised by the Financial Conduct Authority (FCA) in the UK to benefit from PSD2’s open access measures. These measures mandate that Account Servicing Payment Service Providers (ASPSPs), such as banks, allow access to users’ online payment accounts with their explicit consent.

Many of our customers aren’t ready to apply for their own AIS license. An alternative, known as the Agency Model, lets you become an agent of Plaid so that you can provide AIS to your users while satisfying legal and regulatory obligations.

In this Agency Model FAQ, we take a closer look at what it means to become an agent and offer a brief refresher of open banking and PSD2.

What is AIS?

AIS is an online service that provides consolidated information to a user on one or more payment accounts held by that user with other payment service providers. Think, a personal finance management app that shows payment account data to its users. Companies registered or authorised to provide AIS can access users’ payment accounts with their explicit consent.

Do I need to be registered or authorised to provide AIS?

Companies providing AIS require registration or authorisation by the UK’s FCA. This is because PSD2 only requires ASPSPs to give access to firms registered or authorised to provide AIS.

Do all companies need to be registered or authorised to provide AIS?

Not necessarily. In the UK, the FCA has provided guidance on the type of companies that require registration or authorisation to provide AIS. Businesses providing consolidated account information to users, such as personal finance management apps, will generally need to be registered or authorised.

Conversely, other businesses, such as those engaged in internal fraud detection or credit decisions will generally not need to be registered or authorised to provide AIS. This is because they don’t provide consolidated account information to users and so are not providing AIS.

Are there alternatives to AIS registration or authorisation?

If you’re not ready to apply for your own licencing, all is not lost. You can still provide AIS to your end users by becoming an agent of Plaid. To do so, you’ll need to first complete our agent application process. If approved, we’ll apply to the FCA to register you as our agent.

What’s the difference between becoming a registered or authorised AIS provider vs an agent of Plaid?

Mostly time and cost. Anyone wishing to become authorised or registered for AIS needs to complete the FCA’s application process and pay a non-refundable application fee. While the FCA is legally required to reach a decision on a complete application within three months of receipt, an application is only deemed “complete” once the FCA confirms it has all the information needed to make its decision. In short, if the application is deemed incomplete, the FCA’s statutory “clock” will stop until the missing information is provided. This means that the application process can stretch far beyond three months.

Becoming an agent of Plaid, or another AISP, is generally a quicker, more cost effective route to market for certain companies in the short term. Once you’ve completed our application process, Plaid will apply to register you as an agent with the FCA. The FCA has up to two months to review an agent registration application and reach its decision; however, we’ve seen many applications get approved much faster.

Why does the agency model exist?

Applying for registration or authorisation with the FCA to provide AIS can be a time-consuming process. In some cases, it can take upwards of six months to conclude if the submitted application is deemed incomplete by the FCA in the first instance, and entails both direct fees and ongoing costs, as well as key personnel requirements. For smaller companies not yet ready to take this on, becoming an agent of an already registered or authorised firm, such as Plaid, can be a sound interim solution.

What is the process to becoming an agent?

After contacting Plaid’s sales team, you'll be asked to complete our agent application process. If approved, we’ll then apply to register you as our agent with the FCA, at no cost, on your behalf.

Does Plaid have any other agents?

Yes. Our agents are listed on our FCA register.

Do I need to apply to become a registered AIS provider once I’m an agent of Plaid?

Yes. We require you to become registered or authorised to provide AIS within predefined timeframes, which we’ll be happy to discuss with you.

Who is eligible to be an agent of Plaid?

Plaid customers on our “Scale” plan are eligible to apply. To learn more about becoming an agent of Plaid and how we can support you through the process, please get in touch.

Also, make sure to check out the other posts in our Open Banking series: