EPC Blog: Don’t count on 1 August 2014 – different SEPA migration dead...

EPC Blog: Don’t count on 1 August 2014 – different SEPA migration deadlines apply across the euro area during the “additional transition period” agreed by the European Commission, the European Parliament and EU governments.

24 February 14

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The European Commission commented on 20 December 2011 on the agreement by the European Parliament and the Council of the European Union ( ) on the 1 February 2014 deadline for migration to the Single Euro Payments Area ( ) in the euro area: “The reasonable transition periods applied will allow customers and banks to get used to the adjustments in domestic payment transactions, provide legal certainty, avoid the cost of operating dual payments systems and bring forward the substantial future benefits of .” (The Council of the is the institution where the Member States’ government representatives sit, i.e. the ministers of each Member State with responsibility for a given policy area.) The vast majority of European laws are adopted jointly by the European Parliament and the Council of the .

The European co-legislators, i.e. the European Parliament and the Council of the , adopted the ‘Regulation ( ) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ (see ‘related links’ below), also known as the Regulation, in February 2012. Article 6(1) and (2) of the Regulation mandates that credit transfers and direct debits (in the euro area) shall be carried out in accordance with the relevant requirements set out in Article 5 and in the Annex to the Regulation by 1 February 2014, subject to certain limited exemptions mentioned in the Regulation.

On 9 January 2014, the European Commission introduced a legislative proposal for a new Regulation amending Regulation ( ) No 260/2012 to “give an extra transition period of six months during which payments which differ from the format can still be accepted” after 1 February 2014.

On 4 February 2014, the European Parliament adopted a new draft Regulation “amending Regulation ( ) No 260/2012 as regards the migration to Union-wide credit transfers and direct debits”  (see ‘related links’ below) which states, among other things (italics added): “In Article 16 of Regulation ( ) No 260/2012, paragraph 1 is replaced by the following: (...) By way of derogation from Article 6(1) and (2), [payment service providers] may continue, until 1 August 2014, to process payment transactions in euro in formats that are different from those required for credit transfers and direct debits pursuant to this Regulation. [ ] Member States shall apply the rules on the penalties applicable to infringements of Article 6(1) and (2), laid down in accordance with Article 11, from 2 August 2014.” The Council of the adopted this new Regulation amending Article 16 of Regulation ( ) No 260/2012 on 18 February 2014. This new Regulation will enter into force the day after its publication in the Official Journal of the (“to have a retroactive effect as from 31 January 2014”, as proposed by the European Commission).

With his blog published on 20 February 2014 (see ‘related links’ below) Javier Santamaría, Chair of the European Payments Council ( ), provides further details on the legislative process that must be concluded for the “additional transition period” to take effect. He also invites readers to be mindful that different euro area countries might decide on different timelines during which they would make use of the option to continue processing non- formats, i.e. some countries might do so during the full six months transition period agreed by the European Commission, the European Parliament and the Council of the while others might settle for a shorter timeline.

The European Central Bank makes available country-specific information with ‘Fact Sheets on Regulation 260/2012’ (see ‘related links’ below). Following the announcement of the European Commission proposal to amend Regulation ( ) No 260/2012 to “give an extra transition period of six months” for migration, these fact sheets now also feature information obtained from Eurosystem national central banks concerning migration timelines envisaged at national level in each euro area country during the additional transition period. (The Eurosystem comprises the European Central Bank and the national central banks of Member States whose currency is the euro.)

(Please note: the , representing the European banking industry in relation to payments, is not an legislative body. More generally, the is not part of the institutional framework. The has therefore, no role in the adoption or modification of any laws.)

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