The proposed Draft Guidelines on national provisional lists of the most representative services linked to a payment account and subject to a fee responds to the mandate given, according to Article 3(2) of the Payment Accounts Directive (hereafter “PAD”), to the European Banking Authority to ensure the sound application of the criteria for National Competent Authorities to establish the list (of at least 10 and no more than 20) of the most representative services which are common to a majority of Member States.
The European Banking Federation (EBF) believes the draft Guidelines developed by EBA responds for some points to the needs of setting down clearly and in a simple way:
- how competent authorities should apply the criteria set out in Article 3(2) of the PAD;
- what factors they should take into consideration;
- how they should report their list of the most representative services to the EBA and to the Commission;
- what supportive data should be obtained.
However, the EBF considers that further improvements are needed on certain points notably concerning the differentiation of costs by channel of usage, penalties and charges, the easy-friendliness of templates/table to be filled in by the competent authorities as well as more flexibility on the timeline to allow a correct and full implementation.
1. The EBF supports the following points:
• The EBF acknowledges that the two criteria proposed in the draft guidelines “service which are most commonly used by consumers in relation to their payment account” and “services that generate the highest cost for consumers, both overall as well as per unit” are aligned with the requirement of article 3(2) of the PAD.
• The proposed EBA Guidelines seem to leave a certain degree of flexibility to the competent authorities to take into account existing national market specificities. For the EBF and its members this flexibility should be preserved:
- The EBF welcomes EBA acknowledgment that differences in services and related pricing structures exist between PSPs and Member States and mentions when it notes that is appropriate that competent authorities apply the criteria in a way that is relevant to the “specificities of local markets” (Cumulatively or not, with other criteria if relevant).
- Different banking models in various Member States show there can be limited overlap between ‘services most commonly used’ and ‘services generating highest costs’. The EBF supports the EBA consideration at point 7 and 8 concerning ‘Exercising judgment when establishing the provisional list’ which permits some flexibility for competent authorities when both criteria are not met – since the criteria are not strictly cumulative.
2. However the EBF has some reservations on the following points:
• Differentiation of costs by channel of usage is unclear: At point 10 it is mentioned that The service should be considered as a single service, irrespective of the potential for providers to differentiate costs by channels of usage (…)". According to the EBF it is not clear how pricing differentiation due to different channels is represented in the Fee Information Document (FID) and the Statement of Fees. Prices following the different channels should be allowed to be taken into account, for example a SEPA credit transfer in on-line banking/at branch/ATM/mobile phone may have a different price (for the same service).
In addition, the EBF would like to point out that the example provided under 10 on page 12 of EBA’s draft guidelines is not about a “channel of usage” in the sense of “payment initiation channel” (e.g. paper - versus electronic instruction), but rather about an “on-us” (within the same bank/same PSP) versus “not on-us” execution of the payment.
• Penalties and charges that are levied based on the customer’s account behaviour or circumstances, including interest rates for overdraft facilities and overrunning should not be automatically included : According to the EBA Guidelines “Competent authorities should consider including as a service the provision of the account itself, payment or transactional services, or penalties and charges that are levied based on the customer’s account behaviour or circumstances, including interest rates for overdraft facilities and overrunning”. The EBF believes that penalties and charges that are levied based on the customer’s account behaviour or circumstances, including interest rates for overdraft facilities and overrunning should not necessarily automatically be included in the list. Indeed, the idea with this list is to make it as useful as possible for the consumer. It should reflect the offer and particularities of the financial market of the Member State where the consumer opens/holds his or her account. The addition of information of penalties does not always seem appropriate since according to our experience customers do not choose bank or service option in view of breaking the agreed conditions of the contract - in practice penalty fees only affect a small group of customers and since information on these fees is given at the time of concluding the agreement with the bank there is no reason to burden the form with facts of little relevance to the average consumer. It is important to note that the retail banking market varies considerably from one Member State to another, e.g. overdraft facilities hardly exist in some countries while it is common in certain other Member States. In addition, in some countries overdraft facility linked to payment account is a type of consumer credit and is under strict prudential regulation such as a “payment-to-income limits”.
• The templates/table to be filled in by the competent authorities might be difficult to understand and to use. The EBF fears that certain difficulties might occur when the competent authorities will respond due to varieties of interpretation. The EBF would suggest that EBA presents, as an example, some filled in templates for some popular EU wide services or failing that, some form of guidance to NCAs on the completion of the templates. These examples/guidance will make it easier to understand what information to provide in each column.
The EBF welcomes the recognition in the Directive that it is “vital for consumers to be able to understand fees so that they can compare offers from different payment service providers and make informed decisions as to which payment account is most suitable for their needs”. For that reason, there should be a requirement that the terminology used to describe services should be in plain language."
The EBF believes that some clarifications should be brought to the points developed above (see response to question 1).
As general remark, standardized price lists may be of limited value for consumers when comparing actual fees payable, as at least in several MS banks typically have dynamic and package pricing elements in addition to list prices. This means that the actual fees paid by customers cannot be compared simply by comparing price lists as they vary e.g. in relation to volume of other services used by the customer such as loans and savings.
A good example of comparison websites that takes into account customer profiles have been implemented in several Member States.
Flexibility should be left to competent authorities to consider the list as a whole to ensure the services listed are the most useful and meaningful for consumers. The Guidelines should allow competent authorities to take account of existing common terminology already implemented within Member States, and endeavour to maintain consistency with those terms.
In addition, as mentioned in question 1 point 2, the EBF welcomes the recognition in the Directive that it is “vital for consumers to be able to understand fees so that they can compare offers from different payment service providers and make informed decisions as to which payment account is most suitable for their needs”. For that reason, there should be therefore a requirement that the terminology used to describe services should be in plain language.
The EBF agrees partly with the result of the cost benefit analysis included in the Guidelines.
• Problem definition and baseline scenario (page 14): The EBF believes that the statements of EBA concerning the incompleteness of the EU internal market for payment account products are rather oversimplified. In many countries a payment account is a low-cost product, and consumers do not consider the potential cost saving as being large enough to actually switch from one AS PSP to another.
• The EBF agrees partly with the conclusion of the analysis and the selected options:
o (New option A): The practical implications of option A1 or A2 appear not entirely clear with the views to meet both objectives of reflecting national markets specificities and a certain standardization of the criteria based on the article 3 (2) of the directive. The EBF therefore believes it would be more appropriate to consider the following new option A:
“Deal primarily with the application of the criteria by competent authorities in order to derive the services that are most commonly used by consumers and / or generate the highest cost for consumers, and, when deemed relevant by competent authorities, to use other or additional criteria in order for them to take into account market specificities of their countries”.
The EBF believes that national list should indeed ‘primarily’ (by priority) take into account the criteria as set out by the Directive but that competent authorities should be able to use other criteria (and not ‘only exceptionally’ consider other criteria when market specificities justify it).
For instance, applying strictly policy option A1 could risk resulting in lists containing services which are irrelevant in some countries (e.g. cheques) and excluding some services that are important in others (e.g. e-invoicing).
The aim of the Directive is to make the list practically useful for the consumers and corresponds to their needs. PSPs should be able to present customers with a complete picture of applicable fees and charges at national level (including ones that are not subject to standardisation).
o (Option B2) Using available evidences and data from existing credible sources, avoiding collecting new data from firms (notably for competition reasons). Option B2 would allow competent authorities to decide for themselves what data is necessary for deciding which services merit inclusion in the provisional lists. Option B1 would create administrative burden.
o (Option C2) Relying on the standardised template proposed in Annex 6.2, in order to achieve homogeneity of the kind of collected features and information in different countries.
No further information/data is available.
The EBF understands that the EBA is launching consultations in order to give early indications to market participants about future requirements and to gather stakeholders’ views at an early stage of the process. However the EBF would like to emphasize that banks need several months to adapt their systems and processes to new legislation and routines. Banks will have to wait until the process of publication of the final list is completed at national level (as per art. 3(5) of the Directive within three months after the delegated act entered into force) to adapt to the new rules. If the directive is to be effectively implemented from 18 September 2016, EBA will need to present standardised terminology and presentation format well in advance, not by 18 September 2016 as set out in the directive and/or considering extending the deadline for implementation for the Member States to leave enough time for the industry to put in place the necessary measures.
Indeed, the EBF believes that the banking sector would have to face many requirements to ensure that the list is correctly and fully implemented. Banks will notably have to put in place an organisational structure for the implementation of the project, conduct a legal and business assessment of the new provisions, prepare specific implementation steps according to data availability and ensure IT requirements are fulfilled, program IT-Systems and test IT changes to ensure they are workable and are compliant. The EBF therefore considers that the lead-in time should be 12-18 months.
Sébastien de Brouwer, Executive Director at the EBF