Publications and events

The EMA submitted a response to the PSR Phase 2 Draft Guidance on the monitoring and enforcing of the IFR on 8 July 2016.

We sought two objectives, requesting:

(i) clarification regarding when issuers are expected to issue co-badged cards, and

(ii) that the PSR withdraw their requirement to label corporate cards under three different labels, instead of a single “corporate” label.

The final consolidated PSR Guidance, published on 5 October, was amended in line with the our proposals:

• there will be no requirement to co-badge cards if this not a service the issuer already offers, and
• issuers will be able to label all corporate cards with one label rather than separately distinguishing corporate cards between debit, credit and prepaid.

Details of the response can be found here.

PSR’s consultation on the application of the Interchange Fees Regulation

The EMA submitted a response to the PSR Phase 2 Draft Guidance on the monitoring and enforcing of the IFR on 8 July 2016.

We sought two objectives, requesting:

(i) clarification regarding when issuers are expected to issue co-badged cards, and

(ii) that the PSR withdraw their requirement to label corporate cards under three different labels, instead of a single “corporate” label.

The final consolidated PSR Guidance, published on 5 October, was amended in line with the our proposals:

• there will be no requirement to co-badge cards if this not a service the issuer already offers, and
• issuers will be able to label all corporate cards with one label rather than separately distinguishing corporate cards between debit, credit and prepaid.

Details of the response can be found here.

EMA responds to Czech Republic PSD2 consultation

The EMA submitted a response to the Czech Ministry of Finance’s consultation on the implementation of PSD2 in the Czech Republic. The consultation web-page can be found here, and the existing Czech Payments Systems Act (Regulation no. 284/2009 Coll.) here.

The consultation asks for stakeholders’ views regarding the specific options where Member States may diverge from the PSD2 requirements. The EMA response focuses primarily on those options that will affect EMIs, PIs and CIs passporting into the Czech Republic, whether by way of freedom of establishment or by freedom of services.

The response argues:

• Against any requirement for a Central Contact Point for PSPs passporting into the Czech Republic under the Freedom of Establishment, as this is unnecessarily burdensome, particularly for small Fintech companies
• In favour of a harmonised framework across the EEA in general, as this will decrease barriers for firms wishing to access markets across the EEA
• Against any requirement to provide the monthly transaction statement in paper format, as this is not coherent with the average customer profile of many EMA members, who often open, access and use their accounts remotely

Read the EMA response here.

EMA responds to EBA Consultation on Passporting under PSD2

See the EBA consultation details here.

The EMA has responded to the EBA’s consultation on regulatory technical standards (RTS) on the framework for cooperation and exchange of information between competent authorities for passport notifications under PSD2. These draft RTS set out templates for passporting, services passporting, agent passporting, and establishment passporting. They also set out a template for distributor passporting. These templates could have a significant impact on PSPs passporting to other EU Member States, including where any services are outsourced to another EU Member State.

The EMA’s response welcomes the standardisation of passporting notifications, as this may improve efficiencies for both regulators and firms. However, there are a number of concerns raised by the EMA in the response.

PSD2 provides for two types of passporting to be undertaken. These are based on the principle of mutual recognition set out in the Treaty of the European Union (“Treaty”). The first is freedom to offer services and the second is the right of establishment. However, the draft format conflates these concepts by requiring one form for both. Not only is this unhelpful from an administrative perspective, but it may result in Member State authorities treating passport entities as established entities. The EMA has accordingly proposed:
– that two forms are used – one for passporting under Freedom of Services, and one for Freedom of Establishment
– a separate, third form should be used for the outsourcing of services
– a definition of “distributor” would help distinguish between agents and distributors in terms of operation and legal responsibilities.

Read the EMA response here.

EMA response to FCA Guidance consultation on outsourcing to the cloud

Read about FCA’s consultation here.

The EMA responded to the FCA’s recent consultation on the use of cloud IT service providers This is of significant interest for many Fintechs and innovative PSPs who rely on such outsourcers to deliver many important functions. The FCA draft guidance in a number of areas (i.e. Legal and regulatory considerations, Effective access to Systems Data, Access to business premises) will likely have a significant impact on existing outsourcerrelationships. Based on the current draft, it is likely that many existing service contracts would have to be re-negotiated and possibly terminated with the financial service providers bearing additional costs and corresponding impact on existing operations.

The EMA’s response calls on the FCA to take into account current technology trends and market dynamics when drafting the Final Guidance on this topic. Currently, many regulated firms have limited negotiating leverage to introduce any changes to the standard service delivery agreements offered by the large, reputable cloud IT service providers.

The EMA’s response suggests that instead the Guidance focus on:
(1) additional criteria for a regulated firm to consider when establishing a cloud-service outsourcer due diligence process, and
(2) setting up a robust service review & monitoring framework; for example ensuring a service provided by a cloud-based outsourcer meets agreed key performance indicators (“KPIs”).

Read the EMA response here.