New EU Banking Legislation
Increases Pressure on Free Banking
London 28 October 2009 - The 1st November sees the implementation of parts of the EU's Payment Services Directive.
For consumers and small businesses the biggest visible impact of the Directive will be that payments made to or from their bank accounts will be available the next working day - eliminating the long and confusing waits for funds to clear. However the faster payments could come at a price.
With record low interest rates already cutting revenues, banks are going to lose the benefit of several days' interest on billions of pounds of money in transit. The loss of this revenue stream is likely to increase pressure on free current account banking - an almost unique feature of the UK retail banking market.
The Payment Services Directive also establishes:
- A Passport scheme allowing payment services providers authorised in one Member State to operate in other Member States without having to adhere to further licensing requirements there. This could result in more competition in the payment services industry, for example providing businesses with a greater choice of credit card processing partners.
- A compulsory authorisation or registration of payment service institutions with the Financial Services Authority
- A duty for service providers to safeguard clients' funds in respect of a payment transaction which exceeds the threshold of £50.
- Rules for transparency over items such as charges, consent and its withdrawal by the payer, obligations of the user and provider, liability for unauthorised transaction, refunds policy and liability for defective transactions.
"The Payment Services Directive is intended to benefit consumers and businesses but the costs it imposes on banks mean that there is a risk of unintended impacts on the UK banking system." said Katrina Crossley of LexisNexis EU Tracker, "The variation in implementation regimes and time-scales across Europe for EU legislation such as the Payment Services Directive makes it vital that British businesses, large and small, monitor the constant stream of EU legislation and analyse its impact on their business in each of the Member States. Alternative payment service providers such as mobile phone operators, payment collection networks and money transfer operators will now be allowed to deliver new payment services alongside banks and credit card firms, paving the way for a more efficient non-cash economy; banks certainly risk facing strong competition from new actors''
Experts in the provisions of the Payment Services Directive and EU law from LexisNexis are available for comment on the Directive and the processes of implementing EU law.
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LexisNexis EU Tracker
is a unique monitoring and analysis tool for lawyers, PSLs and information managers. It tracks the implementation of key EU Directives across 20 Member States analysing the state of play in the Member States, each of which has its own legislative framework and parliamentary timetable. The EU Tracker team of EU law experts constantly updates the service ensuring subscribers are on top of all developments as they unfold and provide expert analysis with links to implementing legislation, at-a-glance traffic light status updates and targeted alerts.
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