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Payment Matters No. 3

    • Financial institutions

    19-09-2013

    European

    Europe’s banks show concern over proposal for EU bank account Directive
    On 12 April 2013, the European Commission announced details of its forthcoming legislative proposal for a new Directive relating to access to basic payment accounts, transparency and comparability of bank account fees and bank account switching. The European Banking Federation (EBF) has expressed serious concerns over the European Commission’s proposal to introduce.  One aim of the Directive is to ensure that customers are able to switch bank account from one country to another. The EBF argues that the banking industry has already put in place a code that allows bank account switching at domestic level, and so the EBF questions the need for cross-border account switching mechanisms.

    With regard to transparency and comparability of bank account fees, the EBF believes that existing EU legislation such as the PSD, coupled with national and self-regulatory measures, already provides solid grounds for these requirements.

    What this means for you:
    From April 2013, the European Parliament and Council of the EU have negotiated the proposal and an Economic and Monetary Affairs Committee vote will take place on 14 October 2013. On 9 December 2013 a European Parliament vote is scheduled on the proposal, which could then come into effect in 2014, if accepted.

    United Kingdom

    HMRC to access information from card payment processors
    As part of a new crackdown on tax evasion, HMRC can now access information from UK merchant acquirers (entities that process card payments). While HMRC cannot access any personal data that identifies the card owner or the card numbers, they will be able to access the numbers and value of transactions made by a specific merchant. HMRC have started to send requests to businesses and can request data on card payments for the previous four years. In the future, these requests will be made on an annual basis. The idea is that HMRC will use the data, as well as data from other sources, to ascertain whether income is being declared by merchants.

    What this means for you:
    A by-product of this new investigatory channel might be that merchants who want to avoid paying tax will simply look to use other payment solutions, in addition to cash and cheque. Merchant acquirers will need to respond to requests from HMRC and be prepared to share information as far back as four years. This will require merchant acquirers to implement procedures to ensure that appropriate information is retained securely, is appropriately accessible, and is archived in accordance with applicable laws and regulations. That approach would minimise the risk of being unable to retain and locate relevant information required for a data-holder notice.

    FCA: Thematic Review on mobile banking and payments
    The FCA has published an interim report summarising their initial findings of their thematic review on mobile banking. The report identifies several key areas which the FCA considers that all regulated firms, operating in the mobile payments arena, need to consider. These include concerns around fraud and security, use of third party contractors, consumer understanding, technological risk and AML concerns.

    What this means for you:
    The FCA will now move to produce a more detailed assessment for the remainder of the year and report back to the market in the first half of 2014. They will test a wide sample of firms who provide mobile banking services to check for robustness and how such firms tackle the risks identified in the interim report. It is clear that the FCA has noted both the real benefits to consumers of the development technology, but also the real risks faced by both providers and users in an ever developing market.

    Current account switch service announced by UK Payments Council
    On 16 September 2013, the UK Payments Council announced in a press release the launch of a current account switch service. The service will be free for consumers and small charities and businesses, and will allow customers to switch a current account between a bank or a building society via a simple process taking seven days. Until then, transferring an account to a new provider has taken up to 30 days. The switch service is currently offered by 33 banks and building societies with more expected to follow next year.

    What this means for you:
    The ability to switch current accounts more easily may increasingly test the loyalty of customers.  In anticipation of the new scheme, two banks have already offered customers an incentive of up to £125 to switch their current accounts to them. Customers that have put off switching accounts in the past due to lack of confidence in the system may find the new switch service too appealing to resist.

    Payments credited to wrong account or released to the wrong person
    The FOS has highlighted some best practice guidelines (produced by UK Payments Administration in 2007) for dealing with payments which are mistakenly credited to an account they were not intended for, or released to the wrong person. The guidelines state that businesses should make it clear to consumers that the sort code and account number ("unique identifiers") are used to process a payment – rather than the name of the payee, which most businesses don’t check.

    What this means for you:
    The guidelines suggest that a short prominent warning should be included on the payment form; on the screen for electronic payments; or another method according to the institution's risk policy. That means that in cases where the problem has been caused by the consumer's mistake, the FOS will consider whether the business made it clear to the consumer that only the "unique identifiers" would be used to process the payment.

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