The UK and two other European countries have refused to adhere to new payment guidelines set out by the European Banking Authority (EBA).
The guidelines on the security of internet payments aim to set minimum security requirements for payment services providers across the EU.
The EBA have stated that the guidelines will come into force on 1st August. The rules will provide more protection for EU consumers against payment fraud on the internet.
The recommendations are an interim measure until the upcoming revised Payments Services Directive (PSD2) comes into force in 2018/19.
The directive ‘‘provides the legal foundation for the creation of an EU-wide single market for payments. The PSD aims at establishing a modern and comprehensive set of rules applicable to all payment services in the European Union.’’
Published on December 19th 2014, the guidelines are based on the ‘comply or explain’ principle, whereby all the European countries have to give a final answer to the EBA within two months of the guidelines being made available. If countries fail to comply, then an explanation has to be given to the EBA.
‘‘This work will ensure increased confidence in internet payments for consumers and firms in the EU, and is aimed at allowing this sector of the payments market to continue to grow,’’ explained Dirk Haubrich, head of the EBA’s consumer protection, financial innovation and payments unit at the EBA.
The UK, who is represented in this matter by the Financial Conduct Authority (FCA), is one of three countries who have refused to comply with the guidelines.
Slovakia and Estonia are the other two nations who also refused to adhere to the new rules. Iceland failed to give a response, so the EBA considers the country to be non-compliant. Sweden and Cyprus are have indicated that they are partially compliant to the new guidelines.
The EBA released a table documenting each nation’s response, which includes the explanations given by non-complying countries. The EBA commented on why the FCA intends not to comply.
‘‘FCA reported that it does not have the power without legislative change to make binding rules requiring all payment service providers (credit institutions, payment institutions and e-money institutions) to comply with the EBA Guidelines. The FCA is therefore not compliant,’’ stated the report.
Although the FCA is non-compliant on this issue, it is completely focused on maintaining a high level of payment security for all UK residents.
‘‘FCA also reported that it… agrees with the importance of consumers being protected against fraud when making payments online. Ensuring the security of payments and the protection of sensitive customer data is a critical part of the infrastructure of robust payment systems, and FCA has reminded payment service providers of their responsibility to ensure consumers’ payments are safe and secure.’’
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