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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ESBG addresses EU policy makers via a new position paper on instant payments
On 14 February, ESBG sent its position paper on instant payments to key Members of the European Parliament (MEPs) and staff members of the European Commission DG FISMA in charge of the proposed legislative act.
Published in October 2022 by the European Commission, the proposal for a Regulation as regards instant credit transfers in euro aims to make instant payments in Europe the “new normal”.
ESBG collected some main concerns in a position paper over the last months and discussed parts of it with DG FISMA earlier in February. The paper provides some insight into why the adherence to the rules should be based on the number of reached (consumer) accounts and why instant payments, considering it as a “premium” service, should be charged.
Furthermore, the paper supports the streamlining of sanctions screening and supports the European Commission’s approach to leave the design of the confirmation of payee (CoP) to the market.
Finally, it is suggested to reduce the scope of the requirement to offer instant credit transfers to reasonable online customer channels.
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ESBG welcomes EU Commission's legislative proposal on instant payments
BRUSSELS, 26 OCTOBER 2022. The European Savings and Retail Banking Group (ESBG) welcomes the European Commission’s legislative proposal on instant payments announced today. The ESBG hopes that the initiative will strengthen the efforts of savings and retail banks to make instant payments the new normal across the European Union.
Since its introduction, the ESBG has been supporting the development and roll out of instant payments, inter alia by encouraging its member banks to adhere on a voluntary basis to the European instant payments scheme (SCT Inst), one of the major building blocks of a future pan-European solution. Instant payments allow frictionless transfers within 10 seconds in all European countries and therefore support the ambition to strengthen the European sovereignty in the payments sector. However, the ESBG still considers that adherence should be measured in terms of number of accounts reached, rather than in terms of adhering banks and therefore stresses the importance of a more balanced approach in this respect. Nevertheless, we welcome that a differentiation has been made between banks within the euro area and banks within other EU member states when it comes to adhering to the scheme.
The ESBG especially welcomes the proposal’s attempt to streamline the approach to sanctions screening, for which it has been advocating as a key element to make instant payments effective while remaining safe.
“Relying on a daily client database screening, instead of forcing both the sending and the receiving bank to screen each and every cross-border transaction, will allow banks to offer pan-European innovative solutions while ensuring full compliance with AML/CTF rules and targeted financial sanctions regulations” said Fabrice Denèle, CEO BPCE Payment Services and Chair of the ESBG Payments Committee.
“I am very pleased to see that the suggestions put forward by the industry have been taken on board” he continued. “The ESBG was among the first associations to raise awareness on the topic to the political agenda and our regular talks with the European Central Bank have triggered the set-up of a Task Force on sanctions screening that in January 2022 delivered its report to policymakers. I am convinced that with this new approach the number of false positives will decrease drastically – hence increasing consumer trust”.
“ESBG member banks were already between the early adaptors of instant payments in euro”, said the association’s Head of Innovation and Payments, Diederik Bruggink.
“The first cross-border instant payment in euro took place between two ESBG member banks, notably between CaixaBank and Erste Bank, and also the first transaction in the European Central Bank’s instant settlement system TIPS was between to ESBG member banks, BPCE and CaixaBank”, he added.
The ESBG also welcomes the focus of the proposal on consumer protection, a long standing priority for all its member banks. It especially supports the decision to leave the concrete implementation of services known as Confirmation of Payee to the market, which demonstrates full trust in the ability of the industry to find the best solutions based on the specific needs of each Member State.
Finally, in taking note about the Commission’s position on the charging principles, the ESBG highlights that a long term sustainable business model benefiting all stakeholders is key not only to ensure the success of instant payments, but also to foster their innovative potential in the ecosystem.
Press contact:
Leticia Lozano, Senior Communications Adviser
leticialozano@wsbi-esbg.org
Tel. +32 2211 1196
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ESBG and EACB congratulate EU Commission’s Expert Group on its Open Finance report
BRUSSELS, 25 OCTOBER 2022. The European Savings and Retail Banking Group (ESBG) and the European Association of Co-operative Banks (EACB) congratulate the Expert Group on European financial data space of the European Commission on the finalisation of their Report on Open Finance, delivered yesterday to Commissioner Mairead McGuinness. The report provides an overview on the modalities for data sharing and reuse based on a specific number of illustrative use cases and describes the key components of an open finance ecosystem in the EU.
“Established in June 2021, the financial data space Expert Group provided advice and expertise to Directorate General for Financial Stability and Capital Markets Union (DG FISMA) in relation to the preparation of legislative proposals and policy initiatives to foster the establishment of a common financial data space in the EU. The EACB and ESBG were actively involved by working closely with their representatives within the Expert Group, namely: Juliana Pichler, Senior Manager for Group Regulatory Affairs & Data Governance at Raiffeisen Bank International; and Gilles Saint-Romain, Head of Digital European public affairs at Groupe BPCE.
Working with experts from different fields representing a broad range of stakeholders was an incredible learning experience” declared Juliana Pichler. “This report is very balanced and reflects the diversity of views between financial market participants, the outcome should help the reader to understand what is at stake and to make its own opinion.”
Gilles Saint-Romain stated: “We are convinced that a collaborative market driven approach allowing all EU economic actors to maximise innovation collectively is essential not only to have strong European market players in the lead of digital finance but also to bring more benefits to European customers”.
The ESBG and EACB believe that, for a data-driven economy to be successful, consumer protection and trust are the first prerequisite. A possible legal framework must avoid repeating the PSD2 model and instead be based on principles of mutual benefits, creating incentives for all market participants to join. The principle ‘same activity, same risks, same supervision, same rules’ should apply to all actors. This alone ensures a level playing field and a high level of consumer protection.
Building on the Report, the ESBG, EACB, and their members look forward to continuing the dialogue on open finance with the European Commission.
Press contact:
Leticia Lozano, Senior Communications Adviser
leticialozano@wsbi-esbg.org
Tel. +32 2211 1196
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State Aid rules for banks in difficulty
The European Savings and Retail Banking Group (ESBG) welcomes the initiative of the European Commission to launch a targeted consultation aiming at reviewing the State Aid rules for banks in difficulty.
The potential revision will assess the fitness of the current rules regarding burden-sharing, market discipline, financial stability, and the protection of taxpayers among other things. The modernized framework should ensure that the State Aid rules are applied proportionally, are adapted to the crisis management and deposit insurance (CMDI) legislation and are specifically targeted at different kinds of bank crises.
ESBG argues that all DGS measures available under the CMDI framework applied in accordance with the rules established by the DGSD and the BRRD/SRMR, regardless of national specificities in the design, the governance, and the functioning of DGSs, should be exempted from the application of the regular State Aid control rules. It should be made clear that when DGS funds are used for support measures, State Aid rules should not be applicable and no notification to the Commission be required. Exempting the application of the State Aid rules on actions under the CMDI framework will allow the effective and undisturbed use of measures foreseen under DGSD/BRRD/SRMR.
Furthermore, and until such improvements are effectively achieved, ESBG finds it important to avoid any increase in contributions to the national DGS and to the Single Resolution Fund (SRF).
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For a single market for data to push growth and innovation
ESBG submitted its response to the European Commission (EC) targeted consultation on an Open Finance Framework and data sharing in the financial sector on 15 July.ESBG and its members highlighted that they share the objectives of the EC’s data strategy and the commitment to create a single market for data that will constitute a potential source of growth and innovation.
A European approach to data is essential to ensure competitiveness, avoid fragmentation, benefit from an effect of scale and guard against windfall effects from which certain non-European players could benefit. A flourishing data-driven market should be based on principles of mutual benefits and right incentives for all market participants. Therefore, a fair share of value and risk is a fundamental prerequisite for the success of data sharing.
In an open finance framework, the principle “same activity/data, same risks, same rules” shall apply to all actors, including third party providers, ESBG said in its response. To ensure customer’s trust, every third party accessing customer data shall ensure privacy rights and data protection in compliance with all applicable rules. As such, we suggest third party within the financial sector be subject to the same licensing requirements and to supervision by competent authorities.
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PSD2 review must seek fair distribution of value and risk among all market participants
ESBG submitted its response to the European Commission (EC)’s targeted consultation on the review of the revised payment services Directive (PSD2) on 15 July. In it, ESBG and its members stated that the core principle of PSD2 – access to data free of charge – did not foster the best outcome and that the PSD2 implementation has been a highly complicated and costly process for the whole market.
For banks, in particular, the investments required for the implementation of PSD2 have been unproportionally high without a chance of a return. More in general, the significant investment levels do not match the limited economic benefits for the market and the end-consumer.
Therefore, the review of the PSD2 should seek a more balanced approach, with a fair distribution of value and risk among all market participants.
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European Commission review of the Mortgage Credit Directive
On February 28, ESBG sent its response to the European Commission questionnaire on what to include in the upcoming Review of the Mortgage Credit Directive (MCD). The consultation, published in November, covered 55 questions. The review of the legislative text is expected to be launched later this year.
In our response, we asked for a limited review on the necessary topics only. Our overall position is that an in-depth review of the Mortgage Credit Directive would be premature, at this time. Since the last review took place in 2016 and it concerns long-term finance, more time is needed to evaluate the impact of the changes included then.
As the mortgage market is not operating much cross-border, we believe that EU level intervention is not necessary. Consumers rely heavily on local expertise of mortgage advisers and working in their own languages and within national legal frameworks.
However, one area we are in favour of a review is the compatibility with other EU texts. For example, the General Data Protection Regulation, the EU Accessibility Act, and the Rome I Regulation will all impact the MCD so alignment is necessary.
As always, ESBG is pleased to see work being carried out on consumer protection. ESBG members have a long history of financial education and welcome the provision in the MCD text to increase financial education for consumers, which is more defined at national level.
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Clear and fair rules for the use of machine learning in Internal Rating Based models
The European Savings and Retail Banking Group (ESBG) welcomes the initiative of the European Banking Authority (EBA) to discuss the implications of the use of machine learning (ML) in the internal rating based (IRB) models for credit risk.
We encourage the EBA to build a clear and fair supervisory scheme that goes further and allows compliance with the proposed principles to be measured, and that finds the balance between the advantages and the new risks that machine learning brings.
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Call to EBA for equal treatment of actors when accessing consumer payment accounts
The European Savings and Retail Banking Group (ESBG) welcomes the opportunity to respond to the public consultation from the European Banking Authority (EBA) on the amendment of its Regulatory Technical Standards (RTS) on Strong Customer Authentication and Secure Communication (SCA&CSC) under the Payment Services Directive (PSD2) with regard to 90-day exemption from SCA for account access.
ESBG and its members strongly disagree with the EBA’s claim that banks fail to provide user-friendly Strong Consumer Authentication (SCA) methods and that its application often causes friction in the customer journey. Instead, ESBG calls for equal treatment of actors when accessing consumer payment accounts.
