On 15 March 2016, the Payment Systems Regulator (PSR) published Consultation Paper 16/1: The Application of the Payment Accounts Regulations 2015 in respect of alternative arrangements for switching accounts. Alongside the consultation document, the PSR has published draft guidance setting out its proposed approach to account switching rules (as well as its proposals for regulatory fees).
On 23 July 2014, the European Parliament and the Council of the European Union adopted the European Payment Accounts Directive (2014/92/EU) (PAD) and in December 2015, the UK government published the Payment Accounts Regulations 2015 (PARs), transposing the PAD into national law, a process that we commented on in this article.
PAD sets common regulatory standards across EU Member States that banks, building societies, electronic money institutions and other providers operating ‘payment accounts’ must meet in order to:
- improve transparency and comparability of current account fees;
- ensure access to bank accounts with basic features; and
- facilitate current account switching.
The PSR’s latest consultation focuses on the last of these requirements.
Switching service or the alternative switching scheme
Part 3 of the PARs requires payment service providers operating payment accounts (PAPs) to provide a switching service enabling account holders to switch to alternative PAPs. Under the PARs, ‘switching’ (or ‘switching service’) means “upon a consumer’s request, transferring from one PSP to another either the information about all or some standing orders for credit transfers, recurring direct debits and recurring incoming credit transfers executed on a payment account, or any positive payment account balance from one payment account to the other, or both, with or without closing the former payment account” (Regulation 2).
PAPs can satisfy this requirement:
- by providing a switching service which meets the requirements of Schedule 3 of the PARs; or
- by being a member of an alternative switching scheme designated by the PSR as meeting the requirements of Regulation 15(2) of the PARs.
The draft guidance published explains how the PSR will approach its role in designating alternative switching schemes. The guidance will therefore be of particular interest to the operators of switching schemes who want to be designated, as well as the PSPs who might use their services.
Request for feedback
As well as stakeholder feedback on the approach to switching schemes, the PSR has also sought views on its proposals in respect of regulatory fees. The mechanism for the allocation and collection of PSR fees under the PARs is set out in detail in the Consultation Paper and Chapter 6 of the draft guidance.
The FCA has also published a PAR-related Consultation Paper which seeks feedback on changes it is proposing to make to the Handbook to reflect the new rules. Both the PSR and the FCA consultations have recently closed, so we look forward to seeing a summary of responses later this year.