Ensuring Compliance In The Digital Age: ECE Audits

The electronic communications industry has grown rapidly in recent years, and with it, the regulatory requirements have become more complex and challenging.

In general, the Payment Services Regulations 2017 (PSRs) require that anyone who provides payment services as a regular occupation or business activity needs to be authorised or registered by the FCA. However, certain activities are excluded and certain bodies are exempt or otherwise entitled to provide payment services. This exclusion includes firms that provide electronic communications networks or services for digital content and voice-based services, tickets or donations to charity which are charged to a subscriber’s bill, subject to transaction limits.

Despite the importance of the Electronic Communications Exclusion (ECE), many firms are unaware of their obligations and the risks associated with non-compliance. Under regulation 39 of the Payment Services Regulations, if a service provider provides, or intends to provide, a service for payment transactions for activities involving electronic communications networks which do not constitute payment services, the service provider must:

(a) notify the FCA, including with such notification a description of the service; and

(b) provide an annual audit opinion testifying that the transactions for which the service is provided comply with the limits mentioned in paragraph 2(l) of Schedule 1 to the Payment Services Regulations 2017.

The annual compliance audit provides a systematic and objective evaluation of a firm's systems, processes, and controls, to determine whether it is in compliance with the ECE. The audit can help identify areas of non-compliance, risk, and opportunity for improvement, and provide recommendations for addressing these issues.

The benefits of an annual compliance audit are numerous. By conducting an annual compliance audit, payment services firms can:

1. Ensure compliance by ensuring that they are in compliance with the ECE and other relevant regulations, and therefore avoid regulatory scrutiny.
2. Identify risks associated with their operations and help identify ways of mitigating or managing these risks via enhanced systems and controls.
3. Identify areas for process improvement, including ways in which operations can be streamlined, systems can be optimised, and controls can be enhanced to improve efficiency, effectiveness, and customer satisfaction.
4. Strengthen their reputation; by demonstrating their commitment to compliance and regulatory best practices, firms can enhance their reputation and credibility with customers, stakeholders, and regulatory authorities.

In short, an ECE annual compliance audit is a critical component of a firm's risk management and regulatory compliance programme. It can help ensure that your firm remains compliant with the ECE, identify risks and opportunities for improvement, and enhance the reputation and credibility of the firm.

How can we help you?

Thistle Initiatives has supported firms for over 10 years as a trusted compliance and regulatory advisor. In addition to providing assistance as and when needed, our team of specialists can serve as your right hand in meeting and complying with the Payment Services Regulations. We understand the importance of staying up-to-date and compliant and we are dedicated to providing the guidance and support needed to do so.

Are you looking for help with Electronic Communications Exclusion Audits? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 0207 436 0630 or sending an email to info@thistleinitiatives.co.uk.