Small Payment Institution
Registration

Introduction

This guide explains the core FCA conditions for Small Payment Institution registration, the evidence applicants need to prepare and the common issues that can delay or weaken an SPI application.

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Understanding FCA Requirements for SPI Registration

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What is an SPI?

A Small Payment Institution (SPI) is a payment services provider that conducts limited payment transactions, specifically not exceeding an average of €3 million per month over the preceding 12 months. Unlike authorised payment institutions (APIs), SPIs have simpler regulatory requirements but must still comply with key regulations.

 

Key Conditions for SPI Registration

To become an SPI, your firm must meet the following conditions:

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• Transaction Limits: Your average monthly payment transactions must not exceed €3 million. If you’ve been providing payment services for less than 12 months, your projected average monthly payment transactions mustn’t exceed €3 million.

• Service Restrictions: You must not provide account information services (AIS) or payment initiation services (PIS).

• Managerial Integrity: Your managers must not have been convicted of money laundering, terrorist financing, or other financial crimes.

• Location: Your head office, registered office, or place of residence must be in the UK.

• Fit and Proper Owners: Ensure that anyone with a qualifying holding is fit and proper.

• Reputable Management: Your directors and managers must be of good repute, with appropriate skills to provide payment services.

• Compliance with MLRs: You must comply with the Money Laundering Regulations (MLRs).

• Effective Supervision: You must not have close links that prevent effective FCA supervision of your business.

 

Application Process for SPI Registration

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Preparing Your Application

To apply for SPI registration, you will need to complete and submit the application form through the FCA’s Connect system. Here’s a breakdown of the essential documents and information required:

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1. Programme of Operations: Outline the specific payment services your business will provide, including financial information.

2. Business Organisation: Describe your firm's structure, including key roles and responsibilities.

3. Initial Capital Evidence: Although no initial capital is required for SPIs, provide evidence of financial health.

4. Fund Safeguarding: Explain how you will safeguard client funds, although this is optional for SPIs.

5. Compliance and Governance Arrangements: Detail your internal controls, risk management, and compliance frameworks.

6. Security Measures: Describe your procedures for monitoring, handling, and following up on security incidents and customer complaints.

7. Data Management: Outline processes for managing sensitive payment data, collecting statistical data, and ensuring business continuity.

8. Financial Crime Policies: Include your policies for anti-money laundering (AML) and counter-terrorist financing (CTF).

9. Qualifying Holders: Provide details of shareholders holding or controlling 10% or more of the firm.

10. Outsourcing Arrangements: If applicable, detail any outsourced services and controls in place.

11. MLR Registration: Provide your MLR registration number if registered with HMRC, or your application number if currently applying.

 

Registering Key Personnel

You must submit individual forms for each person responsible for the management of your SPI, including the Money Laundering Reporting Officer (MLRO) and other senior function holders. Inform the FCA of any changes to these roles using the Connect system.

 

Registering Agents

If you intend to use agents to provide payment services, you must register them with the FCA. As the principal firm, you are responsible for ensuring your agents comply with relevant regulations.

 

Compliance and Ongoing Requirements

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Compliance Framework Development

SPIs need proportionate compliance arrangements covering financial crime, complaints, governance, reporting, outsourcing, security incidents and customer communications. The FCA will expect the application to show how these arrangements fit the firm’s actual payment services model.

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Ongoing Compliance Monitoring

Regulatory compliance is an ongoing process. Regular audits and assessments help identify areas for improvement and ensure continuous adherence to FCA regulations. Implementing a system for ongoing compliance monitoring is vital for staying on top of regulatory changes and requirements.

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FCA Threshold Conditions

To maintain SPI registration, your firm must meet the FCA’s threshold conditions, including:

• Effective Supervision: Ensuring your business is structured and operated in a way that allows effective FCA supervision.

• Appropriate Resources: Having adequate financial and non-financial resources to conduct your business.

• Suitability: Ensuring that your firm and its management are fit and proper to carry out regulated activities.

• Business Model: Operating a viable business model that meets the FCA’s requirements.​

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Payment Services Regulations 2017 (PSR 2017)

Compliance with PSR 2017 is essential for SPI registration, covering areas such as:

• Authorisation and Registration: Requirements for becoming an authorised or registered payment institution.

• Conduct of Business: Rules on how payment services should be provided to ensure transparency and fairness.

• Information Requirements: Obligations to provide clear and accurate information to customers.

 

Application Fees and Processing Time

The application fee for SPI registration is £500. The FCA aims to process complete applications within three months. However, it’s important to submit a comprehensive and accurate application to avoid delays.

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Conclusion

A strong SPI application should clearly evidence the payment services model, transaction volumes, management capability, financial crime controls, governance arrangements and operational controls. Buckingham Capital Consulting helps firms prepare credible submissions and respond to FCA questions through the registration process.