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FCA: Terms and definitions re Payment Accounts Directive

The FCA has published a consultation paper FCA call for input: Terms and definitions for services which are linked to payment accounts and subject to fees, which relates to the EU Payment Accounts Directive (PAD) adopted in July 2014. One of the aims of the Directive is to improve the transparency and comparability of fee information in relation to payment accounts for consumers. This includes introducing standardised terms and definitions to describe the key services linked to payment accounts that are subject to a fee. The FCA are therefore consulting on terms and definitions in the UK market.

We support the aim of the EU Payments Account Directive (PAD) to improve transparency and comparability of fee information in relation to payment accounts, and note that a key component of this is the introduction of standardised definitions to describe various services linked to payment accounts.

  • We note that, for the purpose of the PAD, Article 1(6) applies PAD to payment accounts where consumers are at least able to place funds, withdraw cash, and execute and receive payment transactions, including credit transfers, to and from a third party. We note that HM Government is minded to limit the application of PAD to current accounts – or accounts that have functionalities directly comparable to those of current accounts – in the UK. Credit card accounts will be specifically exempted. We support this approach.
  • We recognise that the current work being taken by both the FCA and the EBA will impact how UK current account providers describe the fees applied for using debit cards to access foreign currency at an ATM, or over a branch counter, or when paying for goods and services in a foreign currency.
  • We have already achieved a high degree of consistency within the UK on foreign transactions.
  • We are concerned that EBA initiative may inadvertently undermine previous work undertaken by The UK Cards Association, OFT and British Banking Association to deliver this consistency, in response to a consumer super-complaint on using cards abroad. In particular it might frustrate the ability of consumers to compare the cost of making transactions with credit cards rather than debit cards. Over 60% of UK citizens have both a credit and debit card and therefore are likely to have an interest in comparison of that choice.
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