Response to consultation on the Guidelines on the criteria on how to stipulate the minimum monetary amount of the professional indemnity insurance under PSD2
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In line with the PSD2, ESBG considers an adequate level of PII an essential condition for an undertaking to obtain and maintain its authorization – comparable to the minimum capital that a credit institution has to evidence at all times.
As a consequence, Guideline 9 should require competent authorities to take all necessary steps in order to ascertain – at least once a year, or on a quarterly basis for newly authorized or “problematic” undertakings – a sufficient PII (based on actual data, and not only on data as provided at the time of application) is in place. In the absence of such sufficient PII, the undertaking’s authorization has to be suspended and, in the absence of a proper remedy, terminated.
ESBG furthermore suggests that the Guideline should recommend competent authorities of all Member States to establish an active dialogue in order compare the results of the application of the present Guidelines. Indeed, it will be essential to arrive at a comparable PII requirement (for a comparable type of activity and a comparable size of activity), as any uneven level playing field which could result from “PII arbitraging” between Member States should be discouraged.
However, ESBG must express concern at the woefully inadequate level of the proposed default indemnity claim value (EUR 50.000 in the current proposal). Is there a better illustration of this inadequacy than the fact that a guarantee at that level would hardly be sufficient to allow a modest travel agency to launch?
As the responsibilities and liabilities of payment initiation and account information service providers (and the market and societal implications of any failing) go well beyond those of travel agencies, a significantly higher default indemnity claim value (e.g. EUR 500.000) must be considered.
It is in particular satisfying that a clear distinction is made between payment initiation and account information services.
It however suggest to add a growth variable, based on the undertaking’s historic development of activity over the past 3 years (gliding).
Question 1: Do you agree with the requirement that competent authorities require undertakings to review, and if necessary re-calculate, the minimum monetary amount of the PII or comparable guarantee, and that they do so at least on an annual basis, as proposed in Guideline 8?
Also noting that this Question actually addresses Guidelines 9 (“Review”) – and not Guideline 8 as mentioned -, ESBG should like to stress that the proposed formulation of Guideline 9 (“…competent authorities should stipulate that the undertakings review, and if necessary recalculate, the minimum monetary amount of the PII…”) is insufficient for a well-functioning payment services market.In line with the PSD2, ESBG considers an adequate level of PII an essential condition for an undertaking to obtain and maintain its authorization – comparable to the minimum capital that a credit institution has to evidence at all times.
As a consequence, Guideline 9 should require competent authorities to take all necessary steps in order to ascertain – at least once a year, or on a quarterly basis for newly authorized or “problematic” undertakings – a sufficient PII (based on actual data, and not only on data as provided at the time of application) is in place. In the absence of such sufficient PII, the undertaking’s authorization has to be suspended and, in the absence of a proper remedy, terminated.
Question 2: Do you agree with the formula to be used by competent authorities when calculating the minimum monetary amount of the PII or comparable guarantee as proposed in Guideline 3? Please explain your reasoning
ESBG agrees with the formula to be used by competent authorities when calculating the minimum monetary amount of the PII or comparable guarantee).ESBG furthermore suggests that the Guideline should recommend competent authorities of all Member States to establish an active dialogue in order compare the results of the application of the present Guidelines. Indeed, it will be essential to arrive at a comparable PII requirement (for a comparable type of activity and a comparable size of activity), as any uneven level playing field which could result from “PII arbitraging” between Member States should be discouraged.
Question 3: Do you agree with the indicators under the risk profile criterion and how these should be calculated, as proposed in Guideline 5? Please explain your reasoning.
ESBG generally agrees with the indicators to use to determine the risk profile criterion.However, ESBG must express concern at the woefully inadequate level of the proposed default indemnity claim value (EUR 50.000 in the current proposal). Is there a better illustration of this inadequacy than the fact that a guarantee at that level would hardly be sufficient to allow a modest travel agency to launch?
As the responsibilities and liabilities of payment initiation and account information service providers (and the market and societal implications of any failing) go well beyond those of travel agencies, a significantly higher default indemnity claim value (e.g. EUR 500.000) must be considered.
Question 4: Do you agree how the indicators under the type of activity criterion should be calculated, as proposed in Guideline 6? Please explain your reasoning.
ESBG agrees with the indicators to use to determine the type of activity criterion.It is in particular satisfying that a clear distinction is made between payment initiation and account information services.
Question 5: Do you agree how the indicators under the size of activity criterion should be calculated, as proposed in Guideline 7? ? Please explain your reasoning
ESBG agrees with the indicators to use to determine the size of activity criterion.It however suggest to add a growth variable, based on the undertaking’s historic development of activity over the past 3 years (gliding).