Approval of the optional Fixed Amount Direct Debit Scheme Rulebook for public consultation
The Plenary approved release of the latest version of the Fixed Amount Direct Debit Scheme Rulebook ( FA) and Implementation Guidelines for public consultation; a link to the consultation documents is included below. For further details on the public consultation refer to the article "New optional SDD Fixed Amount Scheme. Public consultation to close on 13 May 2010" in this Newsletter. For details on the new FA Scheme refer to the article "Optional SEPA Direct Debit Scheme in the Pipeline. Additional SDD Fixed Amount Scheme provides maximum planning security to consumers and billers" published in the previous issue of this Newsletter.
The Plenary is favourable to support the development of a "Code of Conduct" specifying the type of goods and services adequate to be paid for through direct debit collections under the new FA Scheme. The aim of such a "Code of Conduct" is to ensure sufficient consumer protection. Usage of the FA Scheme could be limited to payment for goods and services which consumers can purchase or have access to without delay and which by their nature cannot be returned such as, for example, lottery tickets.
This "Code of Conduct" should build on principles accepted at a European level together with all relevant market players. The will support the development of this "Code of Conduct" with a view to make it available as soon as possible. The ownership of the "Code of Conduct" should be shared with the regulators and associations representing consumers and corporates. Creditor banks servicing creditors (billers) should require these creditors to respect the "Code of Conduct". Furthermore, the appropriate governance model allowing relevant parties to supervise the correct application of the "Code of Conduct" will have to be defined.
The will take the necessary actions to bring this matter to the attention of the customer associations representing consumers and corporates. The will open the adherence process allowing payment services providers to seek participation in the new Fixed Amount Scheme following approval of the FA Rulebook version 1.0 in June 2010 and further clarification regarding the envisaged "Code of Conduct".
Going forward, the will discuss with the members of the Customer Stakeholder Forum representing bank customers their involvement in the process of defining such a code.
Approval of the "New Mandate Check" functionality as an option in the three Direct Debit Scheme Rulebooks providing an extended timeline for the optional verification of mandate information by the payer's bank (debtor bank)
The Plenary addressed concerns perceived by the Bureau Européen des Unions de Consommateurs (BEUC) with regard to mandate management options of the payer's bank (debtor bank) under the Core Direct Debit Scheme. With a mandate, the payer (debtor) authorises a biller (creditor) to collect payment by direct debit. At the same time the mandate authorises the payer's bank (debtor bank) to debit the payer's account when a direct debit collection is presented.
In a letter to the with regard to the points raised by the BEUC, the European Commission and the European Central Bank confirmed that the Direct Debit Scheme is based "on proven national concepts, fully meets the respective legal requirements and - in some points - goes even further than required by the Payment Services Directive in order to better satisfy customer needs". In their letter to the , both the European Commission and the European Central Bank also recognised that "factual and perceived security may not always coincide". The Plenary noted that the European Central Bank acts as an observer in all Working and Support Groups and also in the Plenary. As such, the European Central Bank has closely followed and monitored the development of the Schemes.
The Plenary considered means to further accommodate the requirements of bank customers used to a pre- direct debit model based on the so-called "debtor-driven mandate flow" (see below).
The pre- direct debit models existing on national level today fall into two broad categories as regards the process of issuing a mandate:
- The "creditor-driven" mandate flow: (1) the payer (debtor) completes and signs a paper-based mandate and (2) sends it directly to the biller (creditor). The biller (creditor) is responsible for storing the original mandate, together with any information regarding amendments relating to the mandate or its cancellation. In this scenario, the payer's bank (debtor bank) does not receive any mandate-related information from its customer nor is the payer's bank (debtor bank) responsible for checking the right of a biller (creditor) to collect payment from a payer's account. This model is used in a large number of Member States today.
- The "debtor-driven" mandate flow: (1) the biller (creditor) informs the payer's bank (debtor bank) that the payer (debtor) indicated to wish making payments by direct debit; (2) the payer's bank (debtor bank) then issues the actual mandate and informs the payer (debtor) accordingly; e.g. the mandate stays with the payer's bank (debtor bank). When a biller (creditor) presents a direct debit collection to the payer's bank (debtor bank), the payer's bank (debtor bank) might choose to check the authorisation of the biller (creditor) to collect payment based on the mandate.
The Direct Debit Schemes ( ) are based on the first model; e.g. the creditor-driven mandate flow.
To give even more comfort to those bank customers who are used today to pre- direct debit models existing in some Member States based on the debtor-driven mandate flow, the will deliver an optional "New Mandate Check" functionality to be included in the next release of the Direct Debit Scheme Rulebooks to be published in November 2010. The "New Mandate Check" functionality provides an extended timeline for the optional verification of mandate information by the payer's bank (debtor bank) thus increasing its ability to widen its mandate management in relation to its customers. This functionality could also serve as basis for banks and communities of banks to develop further Additional Optional Services (AOS) building on this functionality and facilitating migration from legacy direct debit systems to the Direct Debit.
The will discuss and agree the practical and technical modalities of this additional optional functionality with the representatives of the European associations of consumers and businesses in its Customer Stakeholder Forum together with the European Commission and the ECB (Eurosystem) with a view to stabilising the Scheme to the satisfaction of all bank customers. The timelines defined in section 3 of the Scheme Management Internal Rules (see link included below) which govern the Scheme Change Management Process apply.
In addition, the will reinforce ongoing efforts to explain to all European organisations representing consumers and businesses in yet greater detail the principles governing the Scheme which already today enable payment services providers to supply the services requested by the BEUC. The Chair reported that on the occasion of a meeting of the European Consumer Consultative Group convened by the Directorate-General for Health and Consumers, for example, it became clear that not all consumer advocate groups are aware which services are already possible to be delivered based on the current Rulebooks.
The Plenary reiterated that
- The Schemes are fully aligned with consumer rights as defined in the Payment Services Directive (PSD).
- Even exceeding the requirements of the PSD, the Core Direct Debit Scheme grants payers a "no-questions-asked" refund right during the eight weeks following the debiting of a payer's account; e.g. during this time any funds collected by Direct Debit will be credited back to the payer's account upon request.
- In the event of an unauthorised direct debit collection, the payer's right to a refund extends to thirteen months as stipulated in the PSD.
- The Scheme is built on the same business assumptions and basic trust between the parties involved as the established pre- , national direct debit model used for decades in a large number of Member States.
- Payment services providers servicing billers who collect direct debit payments must ensure that only trustworthy billers are able to collect payments via Direct Debit. This is also in the interest of payment services providers as they would have to cover any losses resulting from fraudulent and / or erroneous direct debits.
- To help in meeting the preferences of bank customers living in countries currently using a direct debit model based on the debtor-driven mandate flow, the Direct Debit includes the option to create mandates through the use of electronic channels - called e-mandates. If the payer issues an e-mandate, the mandate information stays directly with the payer's bank (debtor bank). In this case, the payer's payment services provider has the option to verify whether the payer authorised a direct debit collection (see also the article "Have it Your Way! The EPC e-Mandate option: a secure way to authorise a SEPA Direct Debit payment" in this Newsletter).
Approval of application pack for adherence of non-credit institutions to the Schemes
The Plenary approved an updated version of the "Application Pack for Adherence to the Credit Transfer Scheme and the Direct Debit Schemes for Applicants that are neither licensed credit institutions in accordance with Article 6 of Directive 2006/48/EC (or licensed Swiss banks) nor entities listed under Article 2 of Directive 2006/48/EC" - in short, the Non-CI Application Pack. The updated version 3.0 was aligned with the latest version of the Scheme Rulebooks for credit transfer and direct debits. A link to the Non-CI Application Pack version 3.0 is included below.
Gerard Hartsink is the Chair of the European Payments Council..
Non-CI Application Pack (Application Pack for Adherence to the SEPA Credit Transfer Scheme and the SEPA Direct Debit Schemes for Applicants that are neither licensed credit institutions in accordance with Article 6 of Directive 2006/48/EC (or licensed Swiss banks) nor entities listed under Article 2 of Directive 2006/48/EC) version 3.0
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