The European Consumers’ Organisation Bureau Européen des Unions de Consommateurs Mr….
By email :
Réf.: FIL/2010
/rsa
20 January 2010
BEUC, the European Consumers’ Organisation, represents 31 major national consumer organisations that have an interest in SEPA (Single European Payments Area) and its success. Further to the introduction of the single currency in 2002, SEPA has come to represent a real opportunity to contribute to the integration of European financial markets and, if properly designed, will deliver benefits to European consumers. BEUC, together with other end-users representatives, has participated in the customer stakeholder forum of the European Payments Council (EPC) related to SEPA Credit Transfer and SEPA Direct Debit, and has engaged in particular in a dialogue with EPC through a series of workshops. A number of issues pertaining to SEPA Credit Transfer have been discussed and we are rather pleased with the progress so far. However, as far as SEPA Direct Debit is concerned, we wish to express major concerns: so far, the EPC Plenary has rejected all our proposals. Unless a host of improvements are made, we do not see how consumers would express any interest in migrating from national Direct Debit schemes to SEPA Direct Debit. The background to our concerns lies mainly in the need to provide more security and risk protection for consumers understood as debtors. The harmonisation of SEPA Direct Debit based on the Creditor Mandate Flow model (CMF) has led to concerns amongst consumers in countries where other national models exist but also in those which are familiar with the CMF: with SEPA, all bank accounts are reachable from everywhere and therefore more open to massive fraud in case no additional security measures are taken. Nothing is foreseen as regards pre-check of creditor companies in the SEPA Direct Debit Rulebook. In addition, the SEPA Direct Debit Rulebook does not oblige banks, at any time of the transaction, to check the existence of the mandate, nor its exactitude or the coherence of the data. As a result anyone will be able to withdraw money from a consumer bank account in the SEPA area by simply providing authentic bank accounts’ data and debtors’ addresses in the SEPA format.
B E U C - Bureau Européen des Unions de Consommateurs - The European Consumers’ Organisation Rue d’Arlon 80, B-1040 Bruxelles, Tel: (32-2) 743 15 90, Fax: (32-2) 740.28.02- consumers@beuc.org
The European Consumers’ Organisation Bureau Européen des Unions de Consommateurs If such a situation arises, the consumer’s bank, supposing the existence of a mandate, will debit their customer’s bank account. Even if the consumer has a refund right of 8 weeks, fraudulent payments can be a major source of trouble for consumers because they will block their other payments especially if they do not have the possibility to check their bank account (e.g.: holidays). This leaves the door wide open to a type of fraud equivalent to what occurs with distance payments by card, on a cross-border scale this time. The current SEPA Direct Debit rules do not prevent a fraudulent company from opening bank accounts in one or several lenient countries thereby obtaining real BIC and IBAN numbers, in the same way that real credit card numbers are obtained by fraudulent means today. All the fraudster has to do is issue a wave of cross-border direct debits and disappear once having received the funds. This risk has been identified by many actors in the payment area who have acknowledged the potential for security breaches that the current rules lead to. The only EPC answer is that banks may offer additional services to better protect their customers within the framework of an additional commercial offer of service (AOS). Given that the question of trust is crucial, especially because this means of payment is not fully under debtor control, it should be required that all debtor banks put in place additional measures that should also be included in the SEPA Direct Debit Rulebook. The only existing protection rule adopted by the EPC is that the debtor has the right to instruct his bank to completely prohibit his bank account to be debited for any collection. If consumers are to continue to use direct debit without taking risks, new protection rules are undoubtedly necessary. We wish to see all consumers being offered the following possibilities without having to pay additional charges: • Blocking of all direct debits coming from specific creditors (negative list) or authorising direct debits coming from specific creditors (positive list); • For those consumers who do not wish to establish a list of authorised creditors in advance, preliminary information before any new direct debit installation should be sent to them (only before the 1st payment in the case of recurring payments). In this case, account holders would be informed before the amount is debited so they can block the payment before it is made. Practical modalities of information could be defined by banks themselves.
B E U C - Bureau Européen des Unions de Consommateurs - The European Consumers’ Organisation Rue d’Arlon 80, B-1040 Bruxelles, Tel: (32-2) 743 15 90, Fax: (32-2) 740.28.02- consumers@beuc.org
The European Consumers’ Organisation Bureau Européen des Unions de Consommateurs We also have other concerns regarding the application of the "refund right rule”. The current rulebook states that a debtor can be refunded by its bank during a period of 8 weeks after the payment on a "no-questions-asked" basis. The EPC is now restricting this rule to debit debits only without the specific amount mentioned in the mandate. With this new rule, consumers would have no possibility to be refunded even if their creditor does not deliver. The success of SEPA being at the heart of the European Parliament’s preoccupations, we would be very grateful if you could take our concerns into consideration and ensure that all the actors involved take greater care of end-users’ requests. If there is no chance to obtain improvements through the EPC, consumer organisations would be in favour of EU legislation with the objective of solving all remaining issues.
Closure to a letter Anne Fily Head of the Economic and Legal Department
B E U C - Bureau Européen des Unions de Consommateurs - The European Consumers’ Organisation Rue d’Arlon 80, B-1040 Bruxelles, Tel: (32-2) 743 15 90, Fax: (32-2) 740.28.02- consumers@beuc.org
FAL 21/1/10 11:25 Commentaire: Pour les PERMREPs il faut écrire « the Council’s preoccupation » + footnote « the ECOFIN Council conclusions of 2 December »