The Payment Accounts Directive (the Directive) recently came into force and EU member states will have until August 2016 to introduce it into their own domestic legal systems. Although the Directive only concerns personal accounts held by consumers (so-called ‘Payment Accounts’) and offered by payment service providers (‘PSPs’) such as banks, the Directive is still likely to have far-reaching consequences for both consumers and PSPs.
1. Fees: comparison and clarity
The Directive aims to see standardised wording and terminology used in the most common payment services for which PSPs charge a fee. To achieve this, a list of the 20 most common payment services on offer across the EU as a whole will be prepared; this will be supplemented by guidelines on terms and wording to be used in documentation across all member states.
PSPs will then have to provide details of this list, their fees for the listed services, and a glossary of the EU standard terms, to all consumers before allowing them to open an account.
If a Payment Account is offered as part of a package containing other products, the PSP will have to tell the consumer whether the Payment Account is available as a stand-alone product and provide a breakdown of the separate fees charged for each element of the package.
Consumers will have to be provided with details of at least one accredited fee comparison website operating in their jurisdiction to allow direct comparison of fees and penalties charged by different PSPs.
2. Switching accounts
Following a recent trend towards making it easier for the consumer to switch service provider (for example, switching between utility suppliers), the Directive sets out a similar framework for PSPs.
Where a consumer wishes to switch, the new PSP will be required to instigate the transfer of accounts from the old PSP when required by the consumer. The new PSP will also be obliged to provide details of the new account to any third parties who have been drawing money out of the consumer’s old account through direct debits or standing orders.
The old PSP will not be allowed to charge a fee to the new PSP or the consumer for providing information about the consumer’s account during the switch. The Directive also imposes time limits to complete the transfer – 15 days for switches between PSPs in the same Member State, rising to 30 days if they are in different Member States (in the UK, the Current Account Switch Service in operation since September 2013 aims for a switch period of seven working days).
3. Access to Payment Accounts
The Directive’s third aim is to provide a near-universal right for consumers to access a Basic Payment Account. The credit history or circumstances of the prospective customer cannot be used as a reason for a PSP to refuse to open a Basic Payment Account. Basic Payment Accounts will only need to serve as a basic current account tied to a payment card where money can be paid in and withdrawn (PSPs will be allowed to charge a ‘reasonable fee’ for these services). It will not be a requirement that credit (such as an overdraft) be made available on such an account.
The impact of the Directive
The Directive aims to ensure that anyone living in the EU will have access to a Basic Payment Account (provided that they have not committed fraud or failed anti-money laundering tests). In addition, it will give them the ability to compare fees and services offered by different PSPs. However, this is likely to come at the cost of increased complexity for both the consumer and the PSP. Consumers will be faced with more detailed pre-contract documentation; PSPs will have to incur the financial cost of introducing changes to documents and procedures, together with the increased administrative expense of complying with the new regime.
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