ESBG addresses to Commissioner McGuinness on the review of the second Payment Services Directive
On 26 May, ESBG, in cooperation with other banking associations, sent a joint letter to Commissioner McGuinness regarding the ongoing review of the second Payment Services Directive (PSD2) in order to draw her attention to two crucially important matters for the banking sector, namely combating authorised push payment scams and fraud and ensuring a fair distribution of value and risk in open banking.
In the letter, the three European Credit Sector Associations – the European Savings and Retail Banking Group (ESBG), the European Association of Cooperative Banks (EACB) and the European Banking Federation (EBF) argue that for addressing the important issue of fraud, a number of measures should be taken as part of the PSD2 review.
The signatories believe that all relevant actors must come under legal obligations to fight scams – this should not be limited to the banking sector only. Also, the associations believe that a generalised refund right would increase scams, as a more comprehensive reimbursement policy would support the ‘criminal business model’ and therefore make EU citizens more vulnerable to scams.
Moreover, a refund right for authorised transactions would bring significant uncertainty in the payment system and to payment finality by essentially considering all payments non-final – it would conflict with an underlying principle and cornerstone of the legal framework to the detriment of PSPs, consumers and businesses alike. Further, the signatories argue that consumer awareness on fraud is key and together with resilience this need joint efforts, and that targeted measures are needed for prevention and mitigation of fraud.
A second crucial aspect of the PSD2 review is the opportunity to create an ‘open banking’ framework with fair distribution of value and risk that corrects the imbalances resulting from the approach taken in PSD2. A key lesson learnt from the assessment of the PSD2 implementation is that a competitive ecosystem only works when there are benefits for all.
The reviewed legislation should guarantee that both sides of the market can draw benefits from open banking, which is the only way to create a thriving and healthy open banking ecosystem. Therefore, the possibility for banks to charge others for the access to payment accounts should be allowed.
The letter contains some amendments that are needed in the PSD2 review to help banks to fight scams and fraud.
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Joint Statement on the Review of the Distance Marketing of Financial Services Directive
On 25 May, ESBG, in cooperation with other financial service associations including the European Banking Federation, Eurofinas, Leaseurope, European Association of Co-operative Banks and the European Mortgage Federation - European Covered Bond Council, issued a joint statement in the context of the negotiations of the Distance Marketing in Financial Services Directive (DMFSD).
ESBG, with the co-signatories expressed support for high-level consumer protection and the preservation of the “safety net” feature in the proposed Directive. However, we also identified several issues which should be of particular consideration.
We specifically voiced our apprehensions as regards the potential application of DMFSD rules to financial services already governed by EU financial legislation, which do not provide for the provisions for the right of withdrawal, pre-contractual information, or adequate explanations. This application could result in confusion and legal uncertainty, which goes against the EU better regulation principles.
In addition, the co-authors of the statement call for the removal of the reminder of the right of withdrawal. Such an obligation has no added value since the possibility of withdrawal is already mentioned in the pre-contractual information and the contract itself.
We raised our concerns about the unequal treatment between financial services concluded at a distance on an occasional basis and those provided by banks. The fellow signatories argue that some provisions may favour FinTech companies.
Also, the co-signed statement recommends deleting provisions related to online advertising in the DMFSD, as this subject is already covered by the Unfair Commercial Practices Directive.
Your Contact:
Marta Kajda-Legal Advisor ESBG
e.: marta.kajda@wsbi-esbg.org
t.:+32 2 211 11 69
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Joint statement on the Data Act-Access to data by public bodies
In times of crisis, companies stand ready to do their part and help public bodies by sharing data to tackle public emergencies, as evidenced during the Covid-19 pandemic. However, to function, mandatory data sharing between private companies and governments needs clear and transparent conditions for all parties involved.
Chapter V of the Data Act proposal was developed on this basis, setting an obligation for companies to make any data available to public bodies, but does so by loosely referring to various cases of ‘exceptional need.’ The proposed framework includes collecting data to prevent, respond to, and recover from a public emergency but also fulfilling one of the public sector body’s tasks where the lack of data would prevent it from doing so. The latter can be interpreted as any activity carried out by a public institution.
The proposed rules would mean that any public body, at EU, national, regional or local level, could request any type of data, including personal data, from any data holder, for any reason. We believe these rules do not respect the requirements set out in the EU’s Charter of Fundamental Rights. With such a broad scope, there is a risk that personal or sensitive data will be leaked or misused.
Public emergencies are by nature time sensitive. They require a clear and structured legal framework to prepare for secure transfers that fully respect data protection. However, contrary to other parts of the Data Act, Chapter V covers any type of data, without any differentiation, limitation or exception. The data’s intended use and its duration are also left to be defined by the public bodies themselves. The proposal also fails to recognise existing frameworks for data sharing and reporting obligations.
We strongly encourage Council and Parliament to implement the necessary safeguards and limits to protect the rule of law in Europe. We welcome the Parliament’s attempts to set certain limits, such as restricting Chapter V to non-personal data, limiting public authorities’ power to freely ask for data when it is simply convenient and regardless of proportionality, and by setting rules for certain information to be specified in the requests. But this will not be enough.
We recommend – at least – the following:
• Only public emergencies can give rise to data access. Article 15(c) must be deleted.
• Personal data cannot be in scope of Chapter V. No exceptions.
• Categories of public bodies that can request data must be expressly designated.
• Access requests conditions must be strengthened, with transparency regarding data use and protective measures.
We trust that EU policymakers will take the time to build a clear and proportionate framework that does not allow unrestricted access to any data on shaky grounds, but will on the contrary protect fundamental rights and the rule of law.
Your Contact:
Janine Barten
Advisor Digital Finance and Innovation
e.:janine.barten@wsbi-esbg.org
t.:+32 2 211 11 27
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ESBG responds to the EBA consultation on IRRBB supervisory reporting
ESBG submitted its response to the consultation launched by the European Banking Authority (EBA) on 2 May 2023 on its draft Implementing Technical Standards (ITS) on supervisory reporting with respect to interest rate risk in the banking book (IRRBB). The consultation paper proposes new, harmonised reporting requirements for the assessment and monitoring of institutions’ IRRBB across the EU. This new reporting will provide supervisors the necessary data to monitor IRRBB risks in credit institutions, taking into careful consideration the concept of proportionality.
Since ESBG supports the introduction of more proportionality in reporting, we pointed out that the proposed the design of templates does not properly embrace this principle. In our view, the foreseen proportionality applied in practice does not really reduce the complexity of populating the templates, bearing in mind especially banking groups with large number of banking subsidiaries.
What is more, ESBG believes the level of detail in the data requests provides limited additional information about the IRRBB exposure of a bank, and it doesn’t improve the quality of internal management of IRRBB. The rationale and added value of requesting additional calculations besides supervisory outlier test (SOT) on economic value of equity (EVE), net interest income (NII) and standard repricing schedule is not clear.
Some examples of additional calculations whose purpose is unclear, especially for small entities, and which need to be provided on a quarterly basis are: i) the repricing schedule with contractual features; ii) PV01 with eliminating optionality; or iii) EVE and NII according to contractual features. ESBG also supports that some metrics should be reported at group level only and with lower frequency
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ESBG submits its response to ESAs on the exchange of information relevant to fit and proper assessment
On 28 April, ESBG submitted its response to the European Supervisory Authorities’ (ESAs’) consultation on joint draft Guidelines concerning the system established by the ESAs for the exchange of information relevant to the assessment of the fitness and propriety of holders of qualifying holdings, directors and key function holders of financial institutions and financial market participants by competent authorities.
In its response, ESBG expressed its concern about proposed guidelines that could interfere with the distribution of responsibilities between ESAs and the national competent authorities in some Member States. ESBG members argue that the envisaged obligation to query a centrally organised database violates the competence of national competent authority and that the database is not necessary for efficient supervision. They also raise concerns about using data from the database by the ESAs and suggest that the purpose for accessing and evaluating data should be specified in the guidelines.
ESBG proposes essential modifications that should be made if the ESA’s guidelines on information exchange are introduced.
ESBG proposes including a general obligation that queries of the database must have a legitimate reason and be logged, informing the data subject when a query is made and establishing minimum standards for data security.
ESBG also suggests specific clarifications and attention to statutory deadlines, as well as ensuring that the exchange of information does not alter, suspend or elongate the deadlines applicable to the assessment at stake.
Finally, ESBG also highlights the importance of data protection when competent authorities exchange information on members of the management body.
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ESBG sends a letter to the EBA and EC to address the proposed changes to the EBA RTS on IRRBB SOT
On 25 April, ESBG sent a letter to the European Banking Authority (EBA) and the European Commission (EC) regarding the EC proposed changes to the EBA RTS on interest rate risk in the banking book (IRRBB) supervisory outlier test (SOT), specifically for the net interest income (NII) metric. A first ESBG letter on this topic had already been submitted to these institutions in December 2022 to signal the problems with the proposed 2,5% SOT for NII threshold in light of the evolving interest rates environment.
During the adoption period, the Commission suggested introducing a new definition of “large decline” (which triggers the identification of a bank as outlier) based on two elements: 1) a ranking of banks elaborated by competent authorities, and 2) a NII decline higher than 2.5% of a bank’s Tier 1 capital.
ESBG’s letter stressed that the Commission’s suggested approach would not remediate the concerns raised by the industry regarding the calibration of the SOT NII threshold, and it would instead add more complexity, uncertainty and a lack of clarity. Instead, we recommended postponing the calibration of the SOT NII threshold to allow for a thorough analysis of the sensitivity and structural aspects of banks’ interest rate risk management and of the monetary policy developments. As an alternative, the letter recommended that the EBA sets a higher threshold to a more consistent level of 7,5% in combination with a transition period of at least 18 months.
As a result of the advocacy efforts undertaken by ESBG and other banking associations, the EBA issued an Opinion on 28 April rejecting the Commission’s approach. In particular, the Opinion proposed to retain the methodology for a large decline, as originally designed by the EBA, but to amend the level of what constitutes a large decline, replacing the original level of 2,5% of Tier 1 Capital with a level of 5% of Tier 1 Capital in view of the current rate conditions. Compared to the Commission’s proposal, the EBA solution is more realistic and in line with the industry concerns.
The new version of the RTS will still need to be adopted by the Commission, approximatively in mid-2023. The EBA current scrutiny plans on IRRBB will continue, encompassing a reconsideration in the short term of the level of the threshold, which might need regular updates through time
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ESBG responds to the Commission’s consultation on its Taxonomy Environmental Delegated Act
On 3 May, ESBG responded to the Commission’s consultation on its new set of EU taxonomy criteria for economic activities that contribute substantially to one or more of the following environmental objectives: sustainable use and protection of water and marine resources; transition to a circular economy; pollution prevention and control; protection and restoration of biodiversity and ecosystems
As a background information, the EU Taxonomy is a classification system, establishing a list of environmentally sustainable economic activities. It could play an important role helping the EU scale up sustainable investment and implement the European green deal. The EU taxonomy would provide companies, investors and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable.
It is part of the European Green Deal strategy.ESBG has always been supportive of a workable EU Taxonomy. While the technical screening criteria of the taxonomy must remain consistent and encourage capital reallocation towards a sustainable economy, they should be selected so that they may be applied to all relevant financing activities without creating an excessive administrative burden for some players.
In other words, all financial institutions should have the tools at hand to play a vital role in financing the transition to a more sustainable EU economy. Definitions should therefore be clear, and applicable indicators should ensure a sufficient degree of comparability.
Nonetheless, ESBG sees some shortcomings in the Commission’s draft.
Indeed, ESBG is not totally satisfied when it comes to the Green Asset Ratio (GAR). On top of that, ESBG believes that there is a disparity among annexes or criteria. Indeed, there is very little specificity or granularity in some objectives, especially regarding the biodiversity, whereas other annexes are very granular or specific.
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The Global Forum on Remittances, Investment and Development (GFRID) 2023
The GFRID Summit 2023
Register for the event
The Global Forum on Remittances, Investment and Development (GFRID) is a UN informal process aimed at gathering stakeholders from public and private sector, and the civil society, involved in the remittance and diaspora investment ecosystems. The process culminates is biannual Summits, reuniting major experts and partners to discuss opportunities and challenges to leverage the potential of remittances and investment towards sustainable development.
The GFRID Summit 2023 will take place at the UN Office at Nairobi (Kenya) on 14-16 June, and will see the engagement of around 500 participants from public and private sector, and the civil society.
DFR Observance Event - 16 June 2023, United Nations, Nairobi (Kenya)
Since 2015, the International Day of Family Remittances (IDFR) is observed each 16 June, in recognition of the fundamental contribution migrants make to the well-being of their families and communities in countries of origin.
Tell the world what public sector entities are doing to promote financial inclusion, digitalization and an enabling environment to leverage the impact of remittances
GFRID Summit 2023 & RemTECH Awards
The Special Awards Session is a highlight of the GFRID Summit. It recognizes the innovative and impactful contributions made by individuals and organizations in the remittances, investment, and development space in The Remittance Evolution Award, Innovation Remittance Solution, Top Service Provider, Best in Class Compliance Solution, and Partner of the Year. The Awards Ceremony will provide a platform for the awardees to share their achievements and inspire others to drive progress in the field of remittances, migration and development. Scroll down and select the category you would like to submit your entry to.
Tell the world what public sector entities are doing to promote financial inclusion, digitalization and an enabling environment to leverage the impact of remittances
ESBG calls upon European Institutions to ensure a level playing field in response to EPI's new instant payment solution
Brussels, 25 April 2023 – “The European Savings and Retail Banking Group (ESBG) welcomes the announcement by the European Payments Initiative (EPI) on acquisitions, additional shareholders and the coming launch of its new instant payment solution”, said ESBG’s Managing Director, Peter Simon. “Now that the industry showed that they are capable to deliver, it is time for the European Institutions to follow”, he added.
“With this initiative, EPI – backed by its shareholder companies including major European banks and payment services providers- is building the foundation for a response to calls from the European Institutions – the European Commission and the European Central Bank – in their respective Retail Payments Strategies for home-grown, pan-European payment solutions”, mentioned ESBG’s Head of Payments, Digital Finance and Innovation, Diederik Bruggink.
“The solution EPI is currently building, will obviously need to establish itself in the existing competitive landscape as the unified solution and common innovation platform of the European payment ecosystem. In this context, a level playing field and a viable business model must be ensured by the European Institutions”, he added.
The European Payments Initiative announced today four additional shareholders to EPI, and confirmed its planned acquisition of payment solution iDEAL and payment solutions provider Payconiq International. These will support EPI’s vision to set up a new, innovative and unified payment solution for Europe.
The ESBG believed that this development will be the first stepping stone towards a home-grown, pan-European payments solution based on instant payments.
EPI addresses several building blocks identified by ESBG and the other European Credit Sector Associations in their policy paper for creating an integrated EU payments market, in which they observed the European payments landscape at a crossroads. The changing customer demands, the development of SEPA instruments by European banks, an intense regulatory focus and increased competition as well as innovation and technological changes have driven an ever-advancing European payments landscape in which much looks possible, but the risk of fragmentation lurks. Likewise, European authorities have indicated that payments form an important factor for European sovereignty and an important driver for the greater international role of the euro.
ESBG congratulates EPI and its shareholders for this announcement and for their persistence and is calling upon the European Institutions to continue their support to EPI.
Your Contact:
Diederik Bruggink
Head of Department – Payments, Digital Finance and Innovation
diederik.bruggink@wsbi.esbg
Phone: +32 2 211 11 21
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ESBG welcomes the newly issued analysis of the EP Think Tank on a digital euro while preserving its reservations
BRUSSELS, 20 April 2023 – The European Savings and Retail Banking Group (ESBG) takes note of the in-depth analysis of the European Parliament Think Tank on a digital euro, published on 18 April 2023. The document, prepared by the Economic Governance and EMU scrutiny Unit at the request of the European Parliament Committee on Economic and Monetary Affairs, is broadly positive on the preparatory work for a digital euro, currently carried out by the European Central Bank, but “doubtful on the wisdom of eventually launching a digital euro”. In parallel, the European Commission is working on a legislative proposal that will facilitate the rollout of a possible digital euro.
The analysis thereby seems to confirm what has been addressed by the latest ESBG paper, ‘A Digital Euro: what does it mean for savings and retail banks?’, published on 29 March, that stressed the need of addressing many open questions before a successful implementation of a digital euro would be feasible.
Notably, ESBG agrees with the reports’ conclusions on the need for a well-designed compensation structure for the services provided by banks and the analysis of the impact a possible digital euro could have on the banking sector.
“We are supportive of investigating digital money issued by the central bank”, says Sofia Lindh Possne, Chairwoman of the ESBG Task Force on Central Bank Digital Currencies (CBDCs). “Yet, a digital euro must be designed without causing any new vulnerabilities in the financial system”, she says, pointing at potential deposit outflows that would reduce banks’ capabilities to finance the economy, and highlights the need of a sustainable compensation model.
Apart from its potential negative impact on banks’ liquidity, it will be vital to maintain a level playing field in the European payments market, according to Diederik Bruggink, Head of Payments, Digital Finance and Innovation at ESBG, and recent efforts towards a pan-European digital payment solution must be taken into account. “Indeed, ESBG and its members welcome the digital euro as a logical representation of central bank money in the digital age. However, a digital euro needs to find its place in the already busy payments mix, and where it should respect the existing level playing field”.
Supportive of further embracing innovative payment solutions, ESBG looks forward to continue the constructive dialogue with involved stakeholders in the European Commission, the European Parliament and the European Central Bank.
Your Contact:
Astrid Satovich
Policy Advisor
astrid.satovich@wsbi-esbg.org
Phone: +32 2 211 11 36
