SEPA Governance: Setting the Record Straight

SEPA Governance: Setting the Record Straight

SEPA is European integration in action. This process allows any party to engage. There is no ‘SEPA governance issue´

31 October 11

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On specks and logs (or white elephants and red herrings)

Those of you who follow the 'Fringe Observations on ' in the Newsletter are aware that in this section, guidance is regularly sought from the ancients in an attempt to make sense out of the many peculiarities inherent to the politics affecting the Single Euro Payments Area (). The aim is to always clearly define the subject under consideration (not exactly a given in the political debate). The topic in this edition is what some have identified as the so-called ' governance issue'. Those who raise this issue claim that there would be something fundamentally wrong in the way this European Union (EU) integration initiative is managed, citing a lack of adequate stakeholder involvement. The claim calls to mind the 'Sermon on the Mount' (New Testament, Matthew 7:4), which states: "How can you think of saying to your friend, 'let me help you get rid of that speck in your eye,' when you can't see past the log in your own eye?"1

A clear course of action in response to erroneous judgements is offered as well (New Testament, Matthew, 7:5): "Hypocrite! First get rid of the log in your own eye; then you will see well enough to deal with the speck in your friend's eye"2. Regardless of whether one is a believer in scripture or not; we know good advice when we see it. It is time to finally introduce the white elephant3, which has comfortably settled in the middle of the room for too long; i.e. to call a red herring4 a red herring.

There is no such thing as a ' governance issue'. was never a demand-driven initiative, but was launched by the European Commission, the European Central Bank (ECB) and EU governments as a follow-up action to the introduction of the euro and an important measure to further strengthen the EU internal market. These political institutions therefore promote the process of EU market integration according to their mandate. The initiative evolves in line with established opinion building and decision making processes applicable to any EU initiative and ensures fair representation of all parties concerned.

How to share your views with the European Commission: participate in expert groups and public consultations

The European Commission is a politically independent collegial institution, which embodies and defends the general interests of the EU and promotes European integration. The European Commission already identified the need for further integration of the European payments market in 1990. At the time, the European Commission published a report titled "Making Payments in the Internal Market", which outlined a community vision of a single payments area.

The European Commission regularly establishes separate expert groups made up of EU government representatives on the one hand and market participants (demand and supply sides) on the other. The complete list of European Commission expert groups can be viewed on the European Commission Website (see 'related links' below). Recently, the European Commission launched a call for experts to participate in the re-cast Payment Systems Market Expert Group (PSMEG). This follows the European Commission's decision to adjust the composition of the PSMEG, which regularly discusses SEPA-related matters, so that (1) the participation of representatives of consumers and civil society is increased and (2) a better balance between payment service users and providers is ensured. The European Commission will select a maximum of 40 experts for participation in the PSMEG (deadline to submit an application was 7 October 2011). The experts will be appointed for four years. The seats will be allocated as follows:

  • At least 15 members shall represent the payment services industry.
  • At least 15 members shall represent payment users, including companies, associations and consumers (the latter shall be represented by at least seven members).
  • Private bodies closely involved in the prevention of payment fraud.

The tasks of the PSMEG are to:

  • Assist the European Commission in the preparation of legislative acts or policy initiatives regarding payment systems, including fraud prevention issues related to the payment industry and users.
  • Provide insight concerning the practical implementation of that policy.
  • Exchange views on up-to-date best practices and ensure monitoring of potential issues of concern for the market.

The European Commission also regularly conducts public consultations on specific policy issues. In 2009, for example, the European Commission carried out an extensive public consultation to identify whether there would be a need to establish mandatory deadlines for migration to through EU Regulation. For more information on this consultation, refer to the related press release of the European Commission (see 'related links' below).

How Brussels works: thousands of lobbyists representing all European interest groups engage in dialogue with the European Commission, the European Parliament and the European Council

The European Commission enjoys the privilege of initiating proposals for European legislation. As such, the European Commission tabled the proposal for a 'Regulation Establishing Technical Requirements for Credit Transfers and Direct Debits in Euro' (the Regulation), in December 2010. Legislative proposals introduced by the European Commission are subject to consideration and decision by the EU legislator, i.e. the European Parliament and the Council representing EU Member States.

The European Parliament is the only elected EU decision-making body. The members of the European Parliament represent the interests of some 500 million European citizens. The European Parliament called on the European Commission to set definitive deadlines for migration to the payment schemes in March of 2009 and again in March 2010.

The governments of Member States are represented in the European Council. This Council acts in so called configurations. One of these configurations is the Economic and Financial Affairs Council (ECOFIN), which represents finance ministers. governments committed to the vision in the Lisbon Agenda of 2000. The ECOFIN tasked the European Commission in December 2009 to assess whether legislation is needed to set binding end dates for migration to the Credit Transfer () and Direct Debit (SDD) Schemes and to draft a related proposal if required.

Subject to applicable procedures, any accredited lobbying group and individual lobbyist represented in Brussels is free to engage in dialogue with the European Commission, the European Parliament and the Council representing EU Member States on EU policy and related legislative initiatives.

According to the Association of Accredited Lobbyists to the European Union (AALEP), figuring out the number of Brussels-based lobbyists "is indeed difficult"5. The AALEP estimates that there are currently some 2,000 individual lobbyists active in Brussels. As of mid October 2011, the European Parliament Website lists 1172 organisations represented by individuals holding a long-term access pass to the Parliament (see 'related links' below). Interest representatives can be private, public or non-governmental bodies. They can provide the European Parliament with knowledge and specific expertise in numerous economic, social, environmental and scientific areas. According to the European Parliament Website, these organisations can play a "key role in the open, pluralist dialogue on which a democratic system is based and act as an important source of information for members of the Parliament in the context of the performance of their duties". The new 'Transparency Register', operated by the European Parliament and the European Commission (see 'related links' below), provides "citizens with direct and single access to information about who is engaged in activities aiming at influencing the EU decision making process, which interests are being pursued and what level of resources are invested in these activities". As of mid October 2011, there were 1852 registrants (lobbying organisations) listed in the 'Transparency Register'. This register also states however, that an additional 2639 organisations are still in the process of transferring from the old European Commission 'Register of Interest Representatives' to the new 'Transparency Register'. Other sources such as, for example, 'The Lobby Planet Guide' (see 'related links' below), report that there are an estimated 15,000 to 30,000 lobbyists targeting EU decision makers, making the EU quarter in Brussels "home to one of the highest concentrations of lobbyists in the world"6. While we find it a little disquieting that no reliable data on the matter is available, we can note, in any case, that there are 'many' lobbyists engaged in active dialogue with the institutions.

It is the objective of the lobbyists to raise awareness for the concerns and needs of their constituencies. Naturally, they also do this with regard to the initiative in general and the proposal for a Regulation in particular, if relevant to their constituencies. Using the Regulation as a vehicle, individual lobbying organisations succeeded in rewriting the SDD Scheme and other aspects of the programme in line with the views of the specific interest groups they say they represent. This proves that statements which claim a lack of influence on the initiative by all stakeholders do not reflect the political reality. For details on the subject, refer to the article ' Regulation: Last Call to Legislators' (see 'related articles in this issue' below).

The Regulation will also effectively end any controversy raised - erroneously - by some parties regarding the evolution of the payment schemes, developed by the European Payments Council () in close dialogue with the entire payment user community. Moving forward, the European Commission will act as the sole arbitrator regarding the rules and technical standards which make up a Scheme. For details on this matter, refer to the article 'Brave New World: the European Commission Becomes the Scheme Manager' (see also 'related articles in this issue' below).

The focus must shift from politics to the real issues; i.e. how to move the market to

There is no ' governance issue'. On the contrary, the debate regarding this particular integration initiative has been extensive and open to all interest groups at every juncture of the process. Anyone who, despite the above, feels that the decision-making process would be at fault is certainly free to challenge the institutions on the matter, however, should refrain from muddying the waters by fabricating a ' governance issue'.

Reinforcing the notion of flawed ' governance' against all evidence is detrimental to promoting the programme which first and foremost benefits bank customers. It is therefore hoped that the principal moderators of the political debate, i.e. the European Commission and the ECB, will take this phantom discussion off the agenda. Both institutions jointly chair the Council, which brings together representatives from both the demand and supply sides of the payments market. For more information on the Council, refer to the ECB Website and the European Commission Website (see 'related links' below). This body was established by the European Commission and the ECB in June 2010, to promote the realisation of an integrated euro retail payments market by ensuring proper stakeholder involvement at a high level and by fostering consensus on the next steps towards the full realisation of . A principal objective of the Council is to monitor and support migration. Dedicating a substantial part of the two annual meetings of the Council to non-existent ' governance' issues hardly helps the market to move forward.

The forthcoming Regulation, expected to be adopted by the legislator in 2011, will establish deadline(s) for the replacement of national euro credit transfer and direct schemes by harmonised payment schemes. These deadlines could apply as early as 2013 for and 2014 for SDD. Educating payment service users on the steps required by them to comply with the Regulation; i.e. orchestrating the mass migration to and SDD in the real world, must be the focus now. To achieve this goal, it will be necessary to close ranks and coordinate efforts rather than to spend more time and resources on discussing red herrings over coffee and cake.

Javier Santamaría represents Banco Santander. Banco Santander is a member of the European Payments Council.

Related links:

EPC Publication: Shortcut to Who is Who in SEPA

European Commission Website: Register of Commission Expert Groups and Other Similar Entities

European Commission Press Release (September 2009): Single Euro Payments Area (SEPA): Commission Consultation Shows General Support for End-Date for SEPA Migration  

European Parliament Website: Lobbyists accredited to the European Parliament  

The Transparency Register for Organisations and Self-Employed Individuals Engaged in EU Policy-Making and Policy Implementation

The Lobby Planet Guide

European Commission SEPA Website 

European Central Bank SEPA Website

EPC Blog: SEPA - Are Corporates Ready to Make the Move?

EPC Blog: Talking About SEPA Direct Debit: The EPC Invites European Lawmakers to Consider Results of EPC Survey on Direct Debit Models Existing in SEPA Today

EPC Webcast: Broadcast of the Media Briefing Hosted by the EPC on 25 October 2011

Related articles in this issue:

UNIQA Group Austria: Business is Better with SEPA! Migration experience of this leading insurance company confirms: 'SEPA is an excellent and necessary idea'

SEPA Regulation: Last Call to Legislators. EPC invites European lawmakers to align Regulation with bank customer requirements

Brave New World: the European Commission Becomes the SEPA Scheme Manager. The EPC offers the regulator some insight on scheme development and rulebook release management

SEPA Scheme Rulebooks: Next Edition Available in November 2011! EPC publishes new versions of the SEPA Credit Transfer and SEPA Direct Debit Rulebooks

Related article in previous issue:

The Good, the Bad, the Ugly and a Knight in Shining Armour? - European Commission requests unprecedented powers to determine payment functionalities ( Newsletter, Issue 9, January 2011)

EPC Newsletter articles published in the section 'Fringe Observations on SEPA'




3"Elephant in the room" is an English metaphorical idiom for an obvious truth that is being ignored or goes unaddressed (Wikipedia).

4Red herring is an idiomatic expression referring to the rhetorical or literary tactic of diverting attention away from an item of significance. The American Heritage Dictionary of the English Language, Fourth Edition. Retrieved February 04, 2009, from (Widipedia).



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