17 Financial services
| (30038)
14308/08
+ ADDS 1-2
COM(08) 640
| Draft Regulation on cross-border payments in the Community
|
| Legal base | Article 95(1) EC; co-decision; QMV
|
| Department | HM Treasury |
| Basis of consideration | Minister's letter of 2 December 2008
|
| Previous Committee Report | HC 16-xxxv (2007-08), chapter 4 (12 November 2008)
|
| To be discussed in Council | Not known
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
17.1 Regulation (EC) No. 2560/2001 is intended to ensure the price
of cross-border euro payments is no higher than the price of identical
euro payments within a Member State. The Regulation applies to
euro payments between two Member States of up to €50,000
made with credit transfers, card payments and cash machine withdrawals.
The Regulation allows non-eurozone Member States to apply to implement
the provisions of the Regulation to cross-border payments made
in their national currency. The main objectives of the Regulation
are to:
- reduce the level of charges levied on cross-border electronic
euro payments, as these were perceived to be unduly high; and
- encourage the payments industry to make significant
improvements to the existing cross-border payment infrastructure,
in terms of cost, speed and quality, so as to facilitate an internal
market.
17.2 In February 2008 the Commission reported on
its review of the Regulation's application. The review found that
the overall impact of the Regulation was broadly positive, as
it had achieved its intended objectives. However, to address gaps
resulting from recent market developments, and to align the Regulation
with changes that will be introduced, from 1 November 2009, by
the Payment Services Directive, the Commission concluded the Regulation
would need to be amended.[70]
Accordingly, in October 2008, the Commission proposed this draft
Regulation to amend Regulation (EC) No. 2560/2001. The overall
objective would remain — to achieve a single market for
euro payment services, subject to effective competition and where
there is no difference of regime between cross-border and national
payments, thereby providing significant savings and benefits to
the Community's wider economy.
17.3 The main proposed amendments include:
- modifying Regulation (EC) No.
2560/2001 so as to enable the Single Euro Payments Area (SEPA)
and to align it with the Payment Services Directive;[71]
- phasing out balance of payment reporting; and
- introducing a requirement to appoint a competent
authority and out-of-court redress body.
17.4 When we considered the draft Regulation we noted
the Government's general endorsement of the proposal and its suggestion
that some technical changes to the draft might be necessary. We
also recalled that in relation to the Commission's review the
Government had told us that it was concerned about the proposal
for a requirement whereby the competent authority and out-of-court
redress mechanism would mirror that of the Payment Services Directive,
saying that it should be for Member States to decide which competent
authority and out-of-court redress mechanisms were most appropriate
for the Regulation.[72]
We asked, before considering this document further to hear from
the Government as to:
- whether negotiation of the
draft Regulation was meeting its priorities for the payments market
and consumer protection; and
- how it had been satisfied in relation to requirements
for competent authority and out-of-court redress mechanisms.
Meanwhile the document remained under scrutiny.[73]
The Minister's letter
17.5 In his letter of 2 December the Financial Services
Secretary to the Treasury (Lord Myners) tells us that there is
now a Presidency compromise proposal which addresses all the Government's
policy issues of concern. Once the text has been agreed in principle
at official level, the Council will be invited to agree a general
approach to the text. Potentially this could take place under
the French Presidency if no further discussion is necessary or
alternatively will fall to the Czech Presidency. The Minister
comments first, in relation to the Government's priorities for
the payments market and consumer protection, that during the negotiations,
the Government has sought changes to align the revised Regulation
with the Payment Services Directive, where this is appropriate,
so as to ensure a simplified legislative landscape for the payments
industry and consumers alike. He adds that, significantly, the
original proposal retains the Member State option for non-euro
currencies to opt-in, meaning that non-eurozone Member States
can decide whether the same charge should be levied on a cross-border
intra-Community payment as that for an equivalent domestic (non-euro)
payment. The Government considers this opt-in to be highly important,
in order to avoid the cost of domestic payments rising to meet
that of cross-border transactions. In the negotiations the Government
is prioritising maintenance of the existing currency scope of
the Regulation and the ability to opt-in.
17.6 In relation to the second point, a competent
authority and out-of-court redress mechanism, the Minister says
although the Commission proposed, in its February 2008 report,
that Member States should appoint a competent authority to supervise
the Regulation and an out-of-court redress mechanism and suggested
that the competent authority and the out-of-court mechanism for
the Regulation should mirror that of the Payment Services Directive,
the draft amending Regulation revises the Commission's original
proposal so as to allow Member States to decide which bodies would
be the most appropriate. This meets the concern originally expressed
by the Government.
17.7 Finally the Minister says that, assuming that
the negotiations come to a positive conclusion, the Government
intends to publicly consult on the revised Regulation, with a
view to its implementation in the UK on, in particular, the appointment
of the most appropriate competent authority to supervise the Regulation
and out-of-court redress mechanism and on the opt-in.
Conclusion
17.8 We are grateful to the Minister for this
response to our earlier report. We have no further matters to
raise and now clear the document.
70 (29462) 6436/08 + ADD 1: see HC 16-xv (2007-08),
chapter 10 (12 March 2008). Back
71
(27104) 15625/05 + ADD1 (27503) 8758/06: see HC 34-xvi (2005-06),
chapter 8 (25 January 2006), HC 34-xxxii (2005-2006), chapter
6 (21 June 2006) and HC 41-iv (2006-07), chapter 16 (14 December
2006) and the final Payment Services Directive, 2007/64/EC, OJ
No. L 319, 5.12.07, p.1. Back
72
See HC 16-xv (2007-08), paragraph 10.8, op cit. Back
73
See headnote. Back
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