Response to consultation on Regulatory Technical Standards on passporting under PSD2
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From the consultation document it is clear that Member States will move away from a “notification only” process to a clear authorization / approval process when it comes to notifying cross-border services into other Member States.
Our company is a payment institution, offering payment services in a B2B environment. We mainly service large multinational businesses with payment solutions for specific procurement needs (e.g. business travel solutions, purchasing accounts or other niche products).
As a customer driven organization, the need for passporting into new markets come from sudden – unplanned – customer demands as our services are fully embedded in corporate administrative processes. Until now we were able to handle such customer requests from new markets flexibly and efficiently under the frameworks of PSD1.
The new regulations and procedures in regard to passporting will not improve competition in that arena as the updated procedures requires a level of detail that could oftentimes not be met at an early stage of expansion (see question 3). Since the defined 3 month period for processing notifications is preconditioned on the common understanding that all submitted information is complete, we believe that compliance with this section in particular will be hinged on discussions between Member States’ authorities. We believe that the rules will leave a lot of room for interpretation, and as suchthe new RTS will effectively keep payment institutions like ours in unnecessary waiting positions until positive assessment by host Member State authorities results in a final entry in the registry being effected (referring to Article 28 (3) PSD2).
While we understand that interference from host Member States is to be expected in case of concerns in the area of money laundering / terrorist financing (cf. Art. 28 (2) PSD2), we would, however, appreciate to see more flexibility for “properly organized” payment institutions. This could for example be by providing such payment insititutions the ability to commence business on an earlier milestone, e.g. as soon as home Member State authorities confirm that upon their judgement the notification documents were complete and ready to be forwarded to host Member State, subject to the rights reserved for host Member State to express concerns or any other effects linked to negative assessment.
Article 2 / General Requirements
We would highly appreciate if there was a practical agreement that notwithstanding the language definitions laid out in this article, a resolution for one or more commonly accepted languages was adopted. For efficiency purposes it should be possible that any communication and any supporting document could be submitted e.g. in English language, which would expressly ease cross referencing in the communication triangle ‘institution <-> home Member state <->host Member state’. Within the notification procedures in our PSD1 authorization process we did have logistical challenges to find competent translators for some Member States accepted languages and were for example not in a position to easily proof-read or amend such documents on short notice – whereas on the legal side we can interact with our B2B customers in language of our choice, which would typically be English. So the language criteria potentially brings in barriers.
Article 5 (1)
Our company provided either branch or service passport notifications to all Member States. Our products, processes and respective governance arrangements are set up on a common foundation as to provide services on a cross-border basis without any kind of local structure. Based on customer needs we, from time to time, decide to employ single resources in Member States to cater for customer proximity in regards to client education or product implementation with local language skills. Hiring one single resource may sometimes trigger the need to register a branch although (from our internal perspective) no single step in regards to the provision of the service would materially change. Therefore the level of detail requested here and in Annex II is in a lot of cases too high and creates unnecessary hurdles.
From our point of view all of the requirements to branch passport notifications should cater for such “small scale” or “very limited scope” branch office organizations. We would appreciate if the relevant bodies could discuss that for such specific cases the focus should be on the same set of mandatory information as per Article 13, yet enriched by further key details of the branch office. A lot less information should be sufficient in order for host Member State to determine concerns in the area of money laundering / terrorist financing (cf. Art. 28 (2) PSD2). We rather preferred if in such justified case for concern a detailed discussion was about to be started, yet providing for a “slim” notification procedure in the beginning.
Our serious concerns about the level of detail requested in Annex II (esp. questions no. 21,22,23) come in when looking at some of our branch offices with a size / setup where we employ one or two single employees for the above purposes.
We comment in particular as follows:
k: For small scale / dependant branches it is not common nor feasible to undertake a thorough budget planning. Small branches are typically simply remunerated on the commonly adopted Cost-Plus Method (OECD model), figures audited on a headquarter level in home Member State. Specific need for otherwise non-necessary budget forecast would not provide any specific value neither to host Member State nor home Member State authorities.
Therefore such business plan requirement should – at a maximum from our perspective - focus on getting a feeling for the intended overall scale of business (e.g. projected transaction volume).
l: As per the above explanation of our specific setup, we would in most cases provide a generic overview of our overall governance, the ICS setup or all AML procedures and processes. Especially for requirements like these, common language definition (English) would be highly appreciated for possibility of easier referral within documents provided to home Member State authorities and for general efficiency and speed of processing such requests.
Article 7
In connection with Art. 28 (4) PSD2 we do not agree with the need for the specific referral to Art. 28 (3) PSD2. Usually we face only minor changes in the branch organization, e.g. the change of physical location (i.e. office move) or change of responsible branch manager. What level of detail would constitute a “relevant change” remains unanswered.
We strongly disagree with the need for change notifications to a lot of points that would in the course of time deviate from the initial notification as per Annex II, e.g. question 21.
Article 8
We do not see any practical need or explanation for using a separate form as per Annex V in order to inform of the start of activities of a branch office, when such information is / could easily be included in any first time submitted notification form as laid out in Annex II, e.g. referring to question 22c.
Article 11
We do not have practical experience in the engagement of agents, however we are worried about the level of detail requested on the agents to be appointed, especially in combination with the need to file for updates of relevant changes in third parties.
In connection with all details laid out in Article 9 and Annex III we are wondering if the communication of changes to an agent’s internal organization or setup should not rather be in the responsibility of the agent itself, especially in case authorities aim for timely notification of any such changes?
Article 12
See our comments to Art. 8.
General remarks:
We are concerned that the newly laid out RTS for notifications will reduce speed-to-market and have an indirect effect on competition while creating additional bureaucratic burdens on institutions like ours.
As the goal is to create more efficiency in the notification process, we would appreciate more clarity on what is a “relevant change” with a focus on really relevant information that could effectively alter host Member States initial assessment as per Article 28.
While we do not expect large effects for notification updates as per Article 15, from our experience we see the risk for regular notification updates as per Article 7 and do not fully understand the intention of the Member States authorities to re-iterate the processes linked to Article 29 (3) PSD2 for any minor updates such as changes in branch location, branch management or internal structure. Therefore, the level of detail requested in the Annexes may be acceptable for any first time notification, we are definitely opposed to the need to file for simply any change in comparison to the initial data submitted!
Given the RTS’ target for the definition of a common language we were disappointed to learn that this only related to technical terms. We would highly appreciate if EBA could steer the process in such a direction so that on all communication levels English language communication would be accepted. It is already a practical challenge today to meet host Member States authorities document requests when their demand comes for sophisticated guidelines or audit reports, yet they would only specifically accept the documents to be translated into a foreign languages other than our home language or English.
Questions 15 & 16 would in some cases relate to contact persons in other countries than the host Member State, yet question 17 specifically refers to “the contact person within the branch”. Please specify for number 17 whether you aim for either “the telephone number of the person responsible for the branch” or “the telephone number of [any contact within] the branch”
Question 22: In cases of small scale / limited scope organizations or in very early stages prior to branch setup, it must be clear that these questions cannot be answered elaborately.
Question 23:
We are worried and disagree about the level of detail requested. In small scale / limited scope branches where we employ single employees for training or implementation purposes only, we do not believe that the level of detail requested is appropriate. We also disagree with the proposed requirement to disclose any information on the branch’s accounting procedures due as this does not create any value for host Member State authorities.
As per the above explanation of our specific setup, we could at maximum in most cases provide a generic overview of our overall corporate governance, the ICS setup or all AML procedures and processes without specific referral to the branch itself. Especially for requirements like these, common language definition (English) would be highly appreciated for possibility of easier referral within documents provided to home Member State authorities and for general efficiency and speed of processing such requests.
1) Do you agree with the draft RTS on passport notifications under the PSD2? If not, outline why you disagree and how the RTS could be improved?
We do not fully agree with the draft RTS because we are concerned that the newly laid out RTS for notifications will reduce speed-to-market and have an indirect effect on competition. The RTS for notifications, we are concerned, will also create additional bureaucratic burdens on payment institutions like ours.From the consultation document it is clear that Member States will move away from a “notification only” process to a clear authorization / approval process when it comes to notifying cross-border services into other Member States.
Our company is a payment institution, offering payment services in a B2B environment. We mainly service large multinational businesses with payment solutions for specific procurement needs (e.g. business travel solutions, purchasing accounts or other niche products).
As a customer driven organization, the need for passporting into new markets come from sudden – unplanned – customer demands as our services are fully embedded in corporate administrative processes. Until now we were able to handle such customer requests from new markets flexibly and efficiently under the frameworks of PSD1.
The new regulations and procedures in regard to passporting will not improve competition in that arena as the updated procedures requires a level of detail that could oftentimes not be met at an early stage of expansion (see question 3). Since the defined 3 month period for processing notifications is preconditioned on the common understanding that all submitted information is complete, we believe that compliance with this section in particular will be hinged on discussions between Member States’ authorities. We believe that the rules will leave a lot of room for interpretation, and as suchthe new RTS will effectively keep payment institutions like ours in unnecessary waiting positions until positive assessment by host Member State authorities results in a final entry in the registry being effected (referring to Article 28 (3) PSD2).
While we understand that interference from host Member States is to be expected in case of concerns in the area of money laundering / terrorist financing (cf. Art. 28 (2) PSD2), we would, however, appreciate to see more flexibility for “properly organized” payment institutions. This could for example be by providing such payment insititutions the ability to commence business on an earlier milestone, e.g. as soon as home Member State authorities confirm that upon their judgement the notification documents were complete and ready to be forwarded to host Member State, subject to the rights reserved for host Member State to express concerns or any other effects linked to negative assessment.
Article 2 / General Requirements
We would highly appreciate if there was a practical agreement that notwithstanding the language definitions laid out in this article, a resolution for one or more commonly accepted languages was adopted. For efficiency purposes it should be possible that any communication and any supporting document could be submitted e.g. in English language, which would expressly ease cross referencing in the communication triangle ‘institution <-> home Member state <->host Member state’. Within the notification procedures in our PSD1 authorization process we did have logistical challenges to find competent translators for some Member States accepted languages and were for example not in a position to easily proof-read or amend such documents on short notice – whereas on the legal side we can interact with our B2B customers in language of our choice, which would typically be English. So the language criteria potentially brings in barriers.
Article 5 (1)
Our company provided either branch or service passport notifications to all Member States. Our products, processes and respective governance arrangements are set up on a common foundation as to provide services on a cross-border basis without any kind of local structure. Based on customer needs we, from time to time, decide to employ single resources in Member States to cater for customer proximity in regards to client education or product implementation with local language skills. Hiring one single resource may sometimes trigger the need to register a branch although (from our internal perspective) no single step in regards to the provision of the service would materially change. Therefore the level of detail requested here and in Annex II is in a lot of cases too high and creates unnecessary hurdles.
From our point of view all of the requirements to branch passport notifications should cater for such “small scale” or “very limited scope” branch office organizations. We would appreciate if the relevant bodies could discuss that for such specific cases the focus should be on the same set of mandatory information as per Article 13, yet enriched by further key details of the branch office. A lot less information should be sufficient in order for host Member State to determine concerns in the area of money laundering / terrorist financing (cf. Art. 28 (2) PSD2). We rather preferred if in such justified case for concern a detailed discussion was about to be started, yet providing for a “slim” notification procedure in the beginning.
Our serious concerns about the level of detail requested in Annex II (esp. questions no. 21,22,23) come in when looking at some of our branch offices with a size / setup where we employ one or two single employees for the above purposes.
We comment in particular as follows:
k: For small scale / dependant branches it is not common nor feasible to undertake a thorough budget planning. Small branches are typically simply remunerated on the commonly adopted Cost-Plus Method (OECD model), figures audited on a headquarter level in home Member State. Specific need for otherwise non-necessary budget forecast would not provide any specific value neither to host Member State nor home Member State authorities.
Therefore such business plan requirement should – at a maximum from our perspective - focus on getting a feeling for the intended overall scale of business (e.g. projected transaction volume).
l: As per the above explanation of our specific setup, we would in most cases provide a generic overview of our overall governance, the ICS setup or all AML procedures and processes. Especially for requirements like these, common language definition (English) would be highly appreciated for possibility of easier referral within documents provided to home Member State authorities and for general efficiency and speed of processing such requests.
Article 7
In connection with Art. 28 (4) PSD2 we do not agree with the need for the specific referral to Art. 28 (3) PSD2. Usually we face only minor changes in the branch organization, e.g. the change of physical location (i.e. office move) or change of responsible branch manager. What level of detail would constitute a “relevant change” remains unanswered.
We strongly disagree with the need for change notifications to a lot of points that would in the course of time deviate from the initial notification as per Annex II, e.g. question 21.
Article 8
We do not see any practical need or explanation for using a separate form as per Annex V in order to inform of the start of activities of a branch office, when such information is / could easily be included in any first time submitted notification form as laid out in Annex II, e.g. referring to question 22c.
Article 11
We do not have practical experience in the engagement of agents, however we are worried about the level of detail requested on the agents to be appointed, especially in combination with the need to file for updates of relevant changes in third parties.
In connection with all details laid out in Article 9 and Annex III we are wondering if the communication of changes to an agent’s internal organization or setup should not rather be in the responsibility of the agent itself, especially in case authorities aim for timely notification of any such changes?
Article 12
See our comments to Art. 8.
General remarks:
We are concerned that the newly laid out RTS for notifications will reduce speed-to-market and have an indirect effect on competition while creating additional bureaucratic burdens on institutions like ours.
As the goal is to create more efficiency in the notification process, we would appreciate more clarity on what is a “relevant change” with a focus on really relevant information that could effectively alter host Member States initial assessment as per Article 28.
While we do not expect large effects for notification updates as per Article 15, from our experience we see the risk for regular notification updates as per Article 7 and do not fully understand the intention of the Member States authorities to re-iterate the processes linked to Article 29 (3) PSD2 for any minor updates such as changes in branch location, branch management or internal structure. Therefore, the level of detail requested in the Annexes may be acceptable for any first time notification, we are definitely opposed to the need to file for simply any change in comparison to the initial data submitted!
Given the RTS’ target for the definition of a common language we were disappointed to learn that this only related to technical terms. We would highly appreciate if EBA could steer the process in such a direction so that on all communication levels English language communication would be accepted. It is already a practical challenge today to meet host Member States authorities document requests when their demand comes for sophisticated guidelines or audit reports, yet they would only specifically accept the documents to be translated into a foreign languages other than our home language or English.
2) Do you agree with the format of the relevant unique identification number in each Member State set out in Annex I? If not, please outline which content you disagree with, why you disagree and how the format could be improved.
N/A3) Do you agree with the draft notification form for branch passporting set out in Annex II? If not, please outline which content you disagree with, why you disagree and how the notification form could be improved.
We partly disagree. See answers above regarding Article 5 and our general remarks above.Questions 15 & 16 would in some cases relate to contact persons in other countries than the host Member State, yet question 17 specifically refers to “the contact person within the branch”. Please specify for number 17 whether you aim for either “the telephone number of the person responsible for the branch” or “the telephone number of [any contact within] the branch”
Question 22: In cases of small scale / limited scope organizations or in very early stages prior to branch setup, it must be clear that these questions cannot be answered elaborately.
Question 23:
We are worried and disagree about the level of detail requested. In small scale / limited scope branches where we employ single employees for training or implementation purposes only, we do not believe that the level of detail requested is appropriate. We also disagree with the proposed requirement to disclose any information on the branch’s accounting procedures due as this does not create any value for host Member State authorities.
As per the above explanation of our specific setup, we could at maximum in most cases provide a generic overview of our overall corporate governance, the ICS setup or all AML procedures and processes without specific referral to the branch itself. Especially for requirements like these, common language definition (English) would be highly appreciated for possibility of easier referral within documents provided to home Member State authorities and for general efficiency and speed of processing such requests.