New Technical Standards on payment account fees: more work for firms, better deals for consumers?

Following consultation in September 2016, the European Banking Authority (EBA) has now published a report containing the final draft Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS) relating to enhancing the transparency and comparability of payment account fees under the Payment Accounts Directive (PAD). It is hoped that the RTS and ITS will help to increase competition and create better deals for consumers. The additional requirements under both will mean more work for firms, necessitating wide-scale changes to terms and conditions and other customer facing documentation.

What's in the draft new Technical Standards?

PAD sets out the obligation for Member States to supply consumers with a standardised fee information document (FID) before they enter into the agreement. In addition, a statement of fees document (SoF) must be provided free of charge on an annual basis. Alongside this, a list of the most representative services linked to a payment account had to be provided to the European Commission to enable the development of a common list of terminology across Member States.

The ITS set out the 8 standardised terms that firms must use in their contractual, commercial and marketing information, as well as making them available to customers in a glossary.

The RTS finalise the templates and common symbols of both the FID and the SoF. Firms must provide consumers with a FID that meets prescribed criteria before entering into a contract for a payment account with consumers and must provide their payment account customers with an annual SoF that sets out prescribed information.


What does this mean for firms?

Clearly the new requirements will require firms in the UK to make large-scale changes to customer terms and conditions, marketing information, websites etc. Firms must ensure that they begin to plan for the incorporation of standardised wording and templates into the relevant documentation and processes as soon as possible. Wholesale changes such as this will take time to implement and timeframes are already limited, so implementation projects will need to move forward rapidly.

Firms should pay particular attention to the new terminology set out in the RTS, which they will be required to incorporate into any customer communications. Some of the definitions may not be the same as the definitions they currently use. For example, the standardised definition of "Overdraft" refers to the customer and account provider agreeing in advance that the customer may borrow money. This does not reflect the position for unarranged overdrafts.

A review of the FID and the SoF will also be necessary. The ITS require payment service providers to use the templates that the EBA has created for the FID and the SoF and their respective common symbols. In particular, they prescribe the order of information, headings and sub-headings laid down in the templates – so again this will have an impact on documentation.


What next?

The RTS and the ITS must now be adopted by the European Commission, after which they will enter into force. Following that, Member States will have to integrate the standardised terms into their provisional lists of the most representative services and publish their final national lists.

In the UK, the FCA is required by the PARs to publish the final list at the latest within 3 months of the entry into force of the RTS and the ITS.

Payment service providers will have to use the terms on the final list 6 months after the FCA publishes its final list. They will also have to provide consumers with a pre-contractual FID and an annual SoF within 9 months of the ITS entering into force. Based on these timelines, it is therefore currently anticipated that this will be in early 2018.

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