Country of origin principle

15 December 2020

All providers of phone-paid services must comply with the PSA Code of Practice from 1 January 2021 regardless of the country in which they are established and services they provide

This Notice advises all providers of phone-paid services that from 1 January 2021, all providers participating in, or wishing to participate in, the provision of phone-paid services to UK consumers must register with the PSA and comply with the Code of Practice regardless of the country in which they are established and services they provide.

The new Communications Act (e-Commerce) (EU Exit) Regulations 2020, which will come into force at 11.00 pm on 31 December 2020, removes the application of the “country of origin” principle and other requirements of Article 3 of Directive 2000/31/EC from sections 120 to 124 of the Communications Act 2003. These sections govern the regulation of phone-paid services in the UK.

In practice, the new regulations do not represent a change for most providers that are active in the UK market. All UK-based companies, companies based outside the European Economic Area (EEA), and certain companies established in the EEA already have to comply with the Code of Practice. Most EEA-established companies that currently do not have to comply with the Code are already registered with the PSA on a voluntary basis. However, the requirement to comply with the Code of Practice, including registering with the PSA, becomes mandatory for all EEA-based phone-paid services companies from 1 January 2021 onwards and the PSA will be able to take enforcement action against such companies for non-compliance without first having to allow the EEA state they are established in to take measures.

Background

Registration

It is a general responsibility for all providers involved in the provision and operation of phone-paid services to register their organisation with the PSA prior to operating any phone-paid service and register services with the PSA within 48 hours of the service becoming accessible to consumers.  

There are limited exceptions to this general responsibility where providers are solely operating 087 services which are not deemed to be ”high risk” and therefore subject to Special conditions, or where an exemption applies. 

Registration is completed on the PSA website. The current registration fee is £155 plus VAT and registration must be renewed yearly. The Business Plan and Budget consultation for 2021-22 includes a proposal to increase the registration fee to £200 plus VAT from 1 April 2021.

The Country of Origin Principle and EU law

Directive 2000/31/EC is otherwise known as the eCommerce Directive (eCD).  Article 3 of the eCD sets out “country of origin” rules in relation to the regulation of “information society services”. Generally, these rules provide that certain services that fall within the definition of information society services (ISS) must be regulated by the law of the EEA state in which the provider of the services is established, rather than the law of the EEA state in which the services are received.

Currently the UK is not permitted to restrict the freedom of a person established in another EEA state to provide such ISS in the UK (Article 3(2)). It is, however, possible to derogate from Article 3(2) if certain conditions are met (Article 3(4)).  

In order to derogate from the country of origin principle, Member State Authorities have to notify the Commission and the relevant Member State using the Internal Market Information (IMI) System.

As a consequence of the UK having now left the European Union and the Single Market and the government’s introduction of the Communications Act (e-Commerce) (EU Exit) Regulations 2020 (which come into force at the end of the EU exit implementation period - 11.00 pm on 31 December 2021) the PSA will no longer be required to meet the conditions in the eCD when seeking to take enforcement action against phone-paid services providers that provide ISS and are established in the EEA.

This will allow the PSA to pursue enforcement action against EEA-established phone-paid service providers that provide ISS as it currently does for those EEA-established providers that do not provide ISS and UK and non-EEA based providers. All EEA-established providers of phone-paid services that are ISS must comply with the PSA Code of Practice with effect from 1 January 2021.

Compliance advice is available from the PSA free of charge – questions should be sent to the compliance email address – compliance@psauthority.org.uk.  We can also help with registration enquiries which should be addressed to registration@psauthority.org.uk

The Communications Act (e-Commerce) (EU Exit) Regulations 2020 (legislation.gov.uk)