We agree that the objectives are generally plausible. However, we question whether these guidelines alone will be able to create the situation in which no advantages or disadvantages arise as a result of applying in one Member State over another but appreciate that the guidelines are a step towards achieving that aim.
We recommend that the level playing field objective should be clarified to confirm that the level and detail of the information expected is proportionate to the size and complexity of the applicant and the risk the applicant poses to consumers. A hefty and overly-demanding application process will act as a deterrent to new applicants and increase the cost of authorisation to applicants and competent authorities.
Presumably, competent authorities will take a risk-based approach to reviewing the information but of course, there is a risk that in receiving vast amounts of information, the competent authorities will be unable to process the data in a meaningful way and important details will be overlooked. Equally, there is a risk that applicants will assume that aspects of their application that have been unquestioned by the competent authority are ipso facto approved.
Identification of payment services – while it is reasonable to require applicants to identify and justify their choice of payment services permission, it is essential that the EBA provide guidance that confirms its understanding of the permissions in order to create consistency throughout the EEA. The current guidance is limited and has been open to interpretation by and in each Member State.
The way information is to be submitted – we agree that the list of information, rather than template application forms, is more flexible and is therefore welcome.
Four-part structure of the Guidelines and inclusion of authorisation for electronic money institutions – we agree that separating the guidelines by type of applicant makes the guidelines more user-friendly because applicants can refer directly to the relevant section.
We welcome the inclusion of Guideline 1.4: “Institutions should take into account their size, internal organisation and the nature, scale, and complexity of their activities when developing and implementing policies and processes”. However, in line with our comment above, it is our view that the prescriptive guidelines risk requiring of applicants information that is unnecessary and disproportionate given the complexity of the operation and risk to consumers. An overly-onerous application will discourage new entrants due to unnecessary complexity and cost. We therefore recommend that the Guidelines advise of the expectation that the depth of the information provided should be proportionate to the size and complexity of the business and the risk the business model poses to consumers.
The Guidelines require the submission of detailed information, some of which it is not immediately clear why the information is necessary and the level and type of analysis that will be undertaken on it by the Competent Authority. For example, is it necessary to provide the exact number of prospective establishments or could a rounded number be provided in recognition that there may be a level of flux for either an established or start up business. It would be helpful to know the type of assessment the Competent Authority is expected to make of each requirement in order to understand whether exact or rounded numbers is more useful.
Another example is the analysis of the payments market; is this in respect of the specific niche area or the wider market?
A further example is the applicants’ analysis of its competitive advantage; what assessment will be made of this commercially sensitive and subjective information?
Yes, we agree that this part of the Guidelines is helpful.