PSD2 is being implemented against the backdrop of growing uncertainty about the progress of the UK's negotiations with the European Union.

Financial services regulation is particularly at risk given the very high degree of harmonisation in laws, including in relation to payment services.

At first sight, the UK Government's intention simply to convert EU laws into UK domestic law on Exit Day provides a panacea. However, legal uncertainties lie just below the surface. PSD2 takes effect under UK law on 13 January 2018, well before the UK formally leaves the European Union in March 2019. However, the RTS on Strong Customer Authentication will only apply 18 months after its adoption and publication in the Official Journal which is currently expected to take place this autumn. This 18 month period is now likely to end after the UK has left the EU in March 2019, under the current timetable.

The European Union (Withdrawal) Bill will convert European Union laws into UK law to carry across existing EU laws and regulations. However, the Bill provides that only laws and regulations that have both entered into force and apply before Exit Day will be converted into UK domestic law. If so, this would mean that the RTS on Strong Customer Authentication would not be converted into UK domestic law as under the current timetable the RTS would not apply by Exit Day.

The Government will need to address this issue as the Bill progresses through Parliament. However, this illustrates the legal complexities that will arise as we approach Exit Day.