Response to consultation on Technical Standards on standardised terminology and disclosure documents under the PAD
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The definition of a service should not be confused with the providers’ pricing policy that sometimes leads to divide a service into several tariff lines. For instance, a cash withdrawal is a single service regardless of the fact that some providers may adopt several fees depending on whether the withdrawal is done in the same bank, in another bank or abroad.
It should also be taken into account that pricing policies vary over time. In recent years, they have become increasingly complex in some countries, making comparisons more difficult for consumers. It is therefore important that the definition of services remains stable and is based only on the core elements of the service.
The broad approach is consistent with the EBA guidelines on national provision lists of services stating that “competent authorities should bear in mind that more than one fee or type of fee might relate to the same service within their Member State. Each fee does not need to be considered as a separate service.”
Option A makes it possible to include more tariff lines in the FID, thereby better informing consumers: for example, each provider should, for each service, specify clearly the different fees that apply for this service.
The issue of single definition at national level should not be a major obstacle to the implementation of Option A. An arranged overdraft remains an arranged overdraft, regardless how it is billed. The same can be applied to most services related to a payment account such as withdrawal, transfer, card payments.
While the Directive requires Member States to establish a provisional list that includes at least 10 and a maximum of 20 of the most representative services related to a payment account and subject to fees, no minimum number of services is required for the list drawn up by the EBA.
However, we are somewhat surprised by the low number of representative services reported by national authorities. For example, the Belgian Consumer organization, Test-Achats has identified between 17-20 items that deserve to be included in the standardised list of the most representative services in Belgium. It is worth reminding that in terms of bank tariffs Belgium ranks in the group of the most transparent and cheapest Member States.
It is obvious that the 8 services selected by EBA on the basis of data provided by national authorities (account maintenance; provision of a debit card with a payment account; provision of a credit card with a payment account; cash withdrawal from a payment account; making a credit transfer of money from a payment account to another account; standing orders from a payment account; direct debits on a payment account; overdraft on a payment account) are widely used by consumers throughout Europe. They must therefore be included in the final list.
However, some services are missing. The Payment Account Directive defines services linked to a payment account ‘as all services related to the opening and closing of a payment account, including payment services and payment transactions falling within the scope of point (g) of Article 3 of Directive 2007/64/EC, and overdraft facilities and overrunning”. This implies that not only real services such as direct debit, credit transfer, debit card, but also all kinds of fees and penalties linked to the use of a payment account such as unarranged overdraft penalties fall under the definition.
When shopping around for a payment account, the level of penalties for unarranged overdraft is not considered by most consumers among essential account features, while it is paid by many of them. For instance, two-thirds of French consumers exceed their overdraft authorisation at least once a year.
Moreover, Article 3 of the PAD provides that the services which ‘generate the highest cost for consumers, both overall as well as per unit’ should be taken into consideration to establish the list of services. Penalties, especially for unauthorized overdrafts, also meet this criterion.
Therefore, the RTS should include 'unarranged overdraft service' in order to clearly inform consumer of their costs.
The provisions in Recitals of the draft RTS are in line with the approach described by EBA.
For the service related to providing a credit card, the BSG supports that the definition refers to the fact that the use of a credit card is a form of money borrowing.
As stated in response to question 2, a definition of penalties related to payment account should be added to the list.
The BSG is worried that different approaches may be adopted by Member States to integrate the final Union standardised terminology at national level, which may, according to the EBA explanations (see paragraphs 54 to 59) lead some Member States to adopt a shorter final list of services (even less than 10 services).
As the objectives of the Directive are to enhance the transparency and comparability of payment accounts fees both at national and cross-border levels, the BSG is of the opinion that all the terms and definitions adopted in the RTS must be included in all national lists, which obviously does not preclude any Member State to add other services to its national list, and/or provide additional information in case a specific service would include several sub-services at national level.
However, the BSG is of the view that unit prices (e.g. direct debit, credit transfer, debit card, credit card, overdraft fees, etc.) should appear at the top of the FID, i.e. before packages. This is the best way to inform consumers that they have a choice between ‘à la carte’ services and packages.
Most consumers do not buy services piecemeal but through packages mainly because they are incentivized to do so by their providers. The main issue is that the composition of packages varies from one provider to another. Some packages contain only essential services used by consumers, others contain services rarely used, or even never used. Some packages provide for a maximum number of transactions per year for some services like transfers and cash withdrawals. This number of transactions also varies from one provider to another.
Information on fees for piecemeal services is not sufficient to really inform the consumer about the pricing practices of the different suppliers and compare them. For example, the price of a debit card can be very low when provided separately, and be expensive when it is included in a package, and vice versa.
The only way to cope with the lack of transparency, and give the consumer the opportunity to judge whether the package's fee is reasonable or not, is that the FDI includes the obligation to provide a detailed list of services with their respective detailed fees.
Article 4 ‘Name of the account provider’: for consistency the BSG is of the view that the wording ‘Name of the account provider’ should be changed to ‘Name of the payment service provider’. Indeed, article 1(3) of the PAD states that: ‘Chapters II and III apply to payment service providers’.
Article 6 ‘Introductory statement’: Article 4(2)(g) of the PAD requires the FID to include a statement that contains fees for the most representative services related to the payment account and that complete pre-contractual and contractual information on all the services is provided in other documents.
The introductory statement proposed in Article 6 of the draft ITS goes way beyond this. The PAD does not require naming the documents. Similarly, it does not require the payment service provider to inform the consumer in the FID that a glossary is available free of charge (as per the Annex to the draft ITS for the FID). These additional information requirements might be desirable from the consumer viewpoint. Nevertheless, the EBA should act within the clear legal framework set by the PAD and draft the FID template within its remit. The requirements laid down in Article 4(2) concerning what information has to be included in the FID are concluding and therefore also binding for the EBA.
Article 9 ‘Additional information’, we believe that it should be clarified in the draft ITS that the ‘Additional information’ table in the FID template may be deleted without replacement if the account-based payment service provider does not provide services and fees in this field. For this reason, we would like to suggest an additional indent in Article 9 as per the following 9(4) (new) ‘Payment service providers shall delete this table should they not provide information of the kind specified in paragraphs 1 and 2 of this Article’.
As regards the order of services listed in the FID template, the BSG acknowledges that the same order of items should be followed for every FID and SoF in each Member State, as this will allow consumers to compare the two documents, thereby maximizing understanding and use of the information as per Recital 20 of the PAD. Moreover, as part of the mandate under Article 4(6) of the Directive, the draft ITS needs to explain how the FID template is to be completed by PSPs. To this end, we understand that the draft ITS on the FID propose requirements regarding the order of the services presented in the template. However, the EBA decision to include the table relating to the ‘package of services’ before the table dedicated to ‘service’ is questionable. There is no mandate in the PAD that asks the EBA to put the table of the ‘package of services’ before the table of ‘service’. We believe it would be more relevant to put the table dedicated to ‘service’ in the FID template before the table dedicated to ‘package of services’, as this presentation would better highlight the tariff advantages compared to individual services.
Article 12 ‘Statement if fees paid on the account’: Article 5(2)(a) of the PAD prescribes that the SoF shall specify the number of times the service was used during the relevant period and not the number of times the service was charged during the relevant period as reported in the draft ITS for the SoF (Article 12(4)) and relating Annex. For the sake of consistency as well as practicality (using the wording ‘charge’ might be ineffective when standard or capped fees are applicable), we would like to ask the EBA to adjust the wording in the draft ITS for the SoF and relating Annex as per Article 5(2)(a) of the PAD.
Articles 13 and 14 ‘Detail of interest paid on the account’ and ‘Detail of interest earned on the account’: we would suggest that the possibility of deleting the table should be given (in line with Article 11 (4) and Article 12(12) of the same ITS). Such possibility, suggested by Article 5(1) of the PAD (‘[…]as well as, where applicable, information regarding the interest rates […]’), would allow to substantially lighten the SoF.
As regards the order of services listed in the SoF template, see the BSG comments under question 8.
Question 1: Do you agree with the EBA’s decision to take a broad approach to defining ‘service’? Please explain your reasoning.
The BSG supports the broad approach (option A) taken by EBA as this is the one that best fits the use consumers make of the services associated with their payment account and best meets the Directive’s aims of transparency and comparability.The definition of a service should not be confused with the providers’ pricing policy that sometimes leads to divide a service into several tariff lines. For instance, a cash withdrawal is a single service regardless of the fact that some providers may adopt several fees depending on whether the withdrawal is done in the same bank, in another bank or abroad.
It should also be taken into account that pricing policies vary over time. In recent years, they have become increasingly complex in some countries, making comparisons more difficult for consumers. It is therefore important that the definition of services remains stable and is based only on the core elements of the service.
The broad approach is consistent with the EBA guidelines on national provision lists of services stating that “competent authorities should bear in mind that more than one fee or type of fee might relate to the same service within their Member State. Each fee does not need to be considered as a separate service.”
Option A makes it possible to include more tariff lines in the FID, thereby better informing consumers: for example, each provider should, for each service, specify clearly the different fees that apply for this service.
The issue of single definition at national level should not be a major obstacle to the implementation of Option A. An arranged overdraft remains an arranged overdraft, regardless how it is billed. The same can be applied to most services related to a payment account such as withdrawal, transfer, card payments.
Question 2: Do you consider the services that the EBA has selected for standardised terms and definitions to be suitable to achieve the aims of the Directive? Please explain your reasoning.
To answer this question precisely, it would have been necessary to have access to all the data provided by the 28 national authorities. But as this is not realistic, we have no choice but to rely on the analysis described in this consultation.While the Directive requires Member States to establish a provisional list that includes at least 10 and a maximum of 20 of the most representative services related to a payment account and subject to fees, no minimum number of services is required for the list drawn up by the EBA.
However, we are somewhat surprised by the low number of representative services reported by national authorities. For example, the Belgian Consumer organization, Test-Achats has identified between 17-20 items that deserve to be included in the standardised list of the most representative services in Belgium. It is worth reminding that in terms of bank tariffs Belgium ranks in the group of the most transparent and cheapest Member States.
It is obvious that the 8 services selected by EBA on the basis of data provided by national authorities (account maintenance; provision of a debit card with a payment account; provision of a credit card with a payment account; cash withdrawal from a payment account; making a credit transfer of money from a payment account to another account; standing orders from a payment account; direct debits on a payment account; overdraft on a payment account) are widely used by consumers throughout Europe. They must therefore be included in the final list.
However, some services are missing. The Payment Account Directive defines services linked to a payment account ‘as all services related to the opening and closing of a payment account, including payment services and payment transactions falling within the scope of point (g) of Article 3 of Directive 2007/64/EC, and overdraft facilities and overrunning”. This implies that not only real services such as direct debit, credit transfer, debit card, but also all kinds of fees and penalties linked to the use of a payment account such as unarranged overdraft penalties fall under the definition.
When shopping around for a payment account, the level of penalties for unarranged overdraft is not considered by most consumers among essential account features, while it is paid by many of them. For instance, two-thirds of French consumers exceed their overdraft authorisation at least once a year.
Moreover, Article 3 of the PAD provides that the services which ‘generate the highest cost for consumers, both overall as well as per unit’ should be taken into consideration to establish the list of services. Penalties, especially for unauthorized overdrafts, also meet this criterion.
Therefore, the RTS should include 'unarranged overdraft service' in order to clearly inform consumer of their costs.
Question 3: Do you consider the drafting decisions taken by the EBA for the standardised terms and definitions, and the resultant provisions in Recitals of the draft RTS, to be suitable for achieving the aims of the Directive of enhancing transparency and comparability? Please explain your reasoning.
Because the end-users of the terms and definitions will be consumers, and the overarching aim of the standardised terminology is to enhance the transparency and comparability of fees, the BSG supports the EBA proposal to use a language accessible to consumers, which means that standardised terms and definitions are drafted in clear, simple, and consumer-oriented language avoiding the use of legal terminology.The provisions in Recitals of the draft RTS are in line with the approach described by EBA.
Question 4: Do you consider the terms and definitions proposed by the EBA in the Annexes to the draft RTS, and the resultant provisions in the Recitals of the draft RTS, to be adequate for achieving the aims of the Directive of enhancing transparency and comparability? If not, please provide alternative terms and definitions and their underlying rationale.
The BSG is of the view that the terms and definitions of the 8 services selected by the EBA are clear, including their different versions for the same language (e.g. the 3 versions in French (BE, FR, LU)).For the service related to providing a credit card, the BSG supports that the definition refers to the fact that the use of a credit card is a form of money borrowing.
As stated in response to question 2, a definition of penalties related to payment account should be added to the list.
The BSG is worried that different approaches may be adopted by Member States to integrate the final Union standardised terminology at national level, which may, according to the EBA explanations (see paragraphs 54 to 59) lead some Member States to adopt a shorter final list of services (even less than 10 services).
As the objectives of the Directive are to enhance the transparency and comparability of payment accounts fees both at national and cross-border levels, the BSG is of the opinion that all the terms and definitions adopted in the RTS must be included in all national lists, which obviously does not preclude any Member State to add other services to its national list, and/or provide additional information in case a specific service would include several sub-services at national level.
Question 5: Do you consider the FID template that is being proposed in the draft ITS and its Annex to be suitable to achieve the aims of the Directive? Please explain your reasoning.
The template seems adequate, as it allows to specify the fees on the most representative services and their subcategoriesQuestion 6: Do you consider the common symbol in the FID template that is being proposed in the draft ITS and its Annex suitable to achieve the aims of the Directive? Please explain your reasoning.
The BSG has no specific comment to make on what has been tested with a representative panel of consumers, particularly the font size, use of color, page numbering and the proposed common symbol to identify the FID.However, the BSG is of the view that unit prices (e.g. direct debit, credit transfer, debit card, credit card, overdraft fees, etc.) should appear at the top of the FID, i.e. before packages. This is the best way to inform consumers that they have a choice between ‘à la carte’ services and packages.
Most consumers do not buy services piecemeal but through packages mainly because they are incentivized to do so by their providers. The main issue is that the composition of packages varies from one provider to another. Some packages contain only essential services used by consumers, others contain services rarely used, or even never used. Some packages provide for a maximum number of transactions per year for some services like transfers and cash withdrawals. This number of transactions also varies from one provider to another.
Information on fees for piecemeal services is not sufficient to really inform the consumer about the pricing practices of the different suppliers and compare them. For example, the price of a debit card can be very low when provided separately, and be expensive when it is included in a package, and vice versa.
The only way to cope with the lack of transparency, and give the consumer the opportunity to judge whether the package's fee is reasonable or not, is that the FDI includes the obligation to provide a detailed list of services with their respective detailed fees.
Question 7: Do you consider the proposed instructions for the completion of the FID template contained in Articles 2 to 11 of the draft ITS, to be suitable to achieve the aims of the Directive? Please explain your reasoning.
Instructions given by EBA fit Directive’s purpose.Question 8: Do you consider the proposed instructions for the completion of the FID template contained in Articles 2 to 11 of the draft ITS, to be clear and easy to follow? Please explain your reasoning.
Instructions given are in general clear and easy to follow. However, we send some specific suggestions below.Article 4 ‘Name of the account provider’: for consistency the BSG is of the view that the wording ‘Name of the account provider’ should be changed to ‘Name of the payment service provider’. Indeed, article 1(3) of the PAD states that: ‘Chapters II and III apply to payment service providers’.
Article 6 ‘Introductory statement’: Article 4(2)(g) of the PAD requires the FID to include a statement that contains fees for the most representative services related to the payment account and that complete pre-contractual and contractual information on all the services is provided in other documents.
The introductory statement proposed in Article 6 of the draft ITS goes way beyond this. The PAD does not require naming the documents. Similarly, it does not require the payment service provider to inform the consumer in the FID that a glossary is available free of charge (as per the Annex to the draft ITS for the FID). These additional information requirements might be desirable from the consumer viewpoint. Nevertheless, the EBA should act within the clear legal framework set by the PAD and draft the FID template within its remit. The requirements laid down in Article 4(2) concerning what information has to be included in the FID are concluding and therefore also binding for the EBA.
Article 9 ‘Additional information’, we believe that it should be clarified in the draft ITS that the ‘Additional information’ table in the FID template may be deleted without replacement if the account-based payment service provider does not provide services and fees in this field. For this reason, we would like to suggest an additional indent in Article 9 as per the following 9(4) (new) ‘Payment service providers shall delete this table should they not provide information of the kind specified in paragraphs 1 and 2 of this Article’.
As regards the order of services listed in the FID template, the BSG acknowledges that the same order of items should be followed for every FID and SoF in each Member State, as this will allow consumers to compare the two documents, thereby maximizing understanding and use of the information as per Recital 20 of the PAD. Moreover, as part of the mandate under Article 4(6) of the Directive, the draft ITS needs to explain how the FID template is to be completed by PSPs. To this end, we understand that the draft ITS on the FID propose requirements regarding the order of the services presented in the template. However, the EBA decision to include the table relating to the ‘package of services’ before the table dedicated to ‘service’ is questionable. There is no mandate in the PAD that asks the EBA to put the table of the ‘package of services’ before the table of ‘service’. We believe it would be more relevant to put the table dedicated to ‘service’ in the FID template before the table dedicated to ‘package of services’, as this presentation would better highlight the tariff advantages compared to individual services.
Question 9: Do you consider the SoF template that is being proposed in draft ITS and its Annex to be suitable to achieve the aims of the Directive? Please explain your reasoning.
The template seems adequate, as it allows to specify the fees on the most representative services and their subcategories.Question 10: Do you consider the common symbol that is being proposed in the draft ITS and its Annex to be suitable to achieve the aims of the Directive? Please explain your reasoning.
The BSG has no particular comments to make on the Statement of Fees template and the common symbol, and considers that the SoF fulfills the objectives set out in the Directive.Question 12: Do you consider the proposed instructions for payment service providers on how to complete the SoF template, contained in Articles 2 to 16 of the draft ITS, to be clear and easy to follow? Please explain your reasoning.
Concerning the article 4 of the draft ITS, see the BSG comments under question 8.Article 12 ‘Statement if fees paid on the account’: Article 5(2)(a) of the PAD prescribes that the SoF shall specify the number of times the service was used during the relevant period and not the number of times the service was charged during the relevant period as reported in the draft ITS for the SoF (Article 12(4)) and relating Annex. For the sake of consistency as well as practicality (using the wording ‘charge’ might be ineffective when standard or capped fees are applicable), we would like to ask the EBA to adjust the wording in the draft ITS for the SoF and relating Annex as per Article 5(2)(a) of the PAD.
Articles 13 and 14 ‘Detail of interest paid on the account’ and ‘Detail of interest earned on the account’: we would suggest that the possibility of deleting the table should be given (in line with Article 11 (4) and Article 12(12) of the same ITS). Such possibility, suggested by Article 5(1) of the PAD (‘[…]as well as, where applicable, information regarding the interest rates […]’), would allow to substantially lighten the SoF.
As regards the order of services listed in the SoF template, see the BSG comments under question 8.