The Danish Financial Supervisory Authority (Danish FSA) and the Danish Competition and Consumer Authority (DCCA) have issued new guidelines under Article 63 of the Danish Payments Act (DPA) (transposing PSD2 Article 36) on payment institutions’ objective, non-discriminatory and proportionate access to credit institutions’ payment account services.
Under Article 63 of the DPA, credit institutions are obligated to provide payment institutions access to payment account services allowing payment institutions to provide payment services effectively and smoothly to its users. Following the implementation of Article 63 of the DPA, the DCCA has published three decisions regarding credit institutions’ violation of the DPA by access or terminating access to its payment account services.
The Danish FSA and DCCA have now issued guidelines aiming to provide guidance to credit institutions and payment institutions to navigate the scope of Article 63 of the DPA (Guidelines).
Under Article 63 of the DPA, credit institutions shall provide payment institutions access to its payment account services on objective, non-discriminatory and proportionate terms. Such access shall be sufficiently extensive as to allow payment institutions to provide payment services in an unhindered and efficient manner.
The Guidelines clarify that agents of payment service providers are not separately subject to the right to a payment account under Article 63 of the DPA, but only to a payment account for the purpose of offering the specific services covered by the agent arrangement.
Credit institutions must provide access to payment account services, which besides access to payment accounts also includes other services offered by the credit institution to its customers. If, for example, a credit institution performs authentication to initiate payments on behalf of a payer, the credit institution should also make this service available to payment institutions.
According to the DCCA, unhindered and efficient manner shall be understood as the access to the payment account services; as a main rule this shall include all the payment account services that the credit institution offers to its corporate customers. If a credit institution offers accounts in different currencies, for example dollars, euros or yen, the payment institution should have access to accounts in these currencies, and the exchange service offered by the credit institution between these accounts.
A payment institution’s access to payment account services shall be on objective, non-discriminatory and proportionate terms.
As an example, the Guidelines set out that a credit institution cannot limit its risk tolerance for the purpose of restricting payment institutions’ access, neither directly nor indirectly, by setting out requirements that de facto cut off payment institutions from accessing the credit institution’s payment account services.
Access on objective terms is access on terms that are objectively ascertainable and that do not depend on any subjective elements.
The Guidelines set out that credit institutions must have policies and procedures in place that do not contain subjective elements which includes terms that seem objective but in reality, depend on subjective elements. Policies or procedures appearing vague, ambiguous or are described in general terms may be considered subjective if it is not transparent how a payment institution should or should not act and how the payment institution should change its business model to gain access to payment account services.
If the payment institution is an existing customer of the credit institution, terms allowing the credit institution to terminate the engagement with the payment institution on the basis of a given number of notifications to the Danish State Prosecutor for Serious Economic and International Crime (SØIK) may not be considered immediately objective, as such terms do not establish objective standards for when notification to SØIK should take place - and therefore in practice it may allow for circumvention.
The DCCA’s decision of 8 July 2020 on a credit institution’s refusal to provide access to payment account services, as well as the credit institution’s conditions for access to payment account services is an example of a credit institution having non-objective terms.
Access on non-discriminatory terms means not treating similar situations differently and not treating different situations the same. This includes “hidden” discrimination meaning that terms must be administered in a way ensuring that there is no subjective differentiation of payment institutions.
For a credit institution’s terms to be objective these must describe how a payment institution gains access to the credit institution’s payment account services, but also how the credit institution will act towards the payment institution.
The DCCA sets out in the Guidelines that payment institutions on certain areas differentiates from other corporate customers. The terms should only differ from other customers terms if there are specific circumstances applicable to payment institutions which do not apply to other types of customers and which may therefore justify special treatment.
The DCCA’s decision of 7 November 2019 on a credit institution’s termination of a payment institution is an example of non-discriminatory terms.
The requirement for terms to be proportional means that they must be proportionate in respect of the legitimate purpose they seek to fulfil, and that any termination or refusal of access must be necessary for and not go further than necessary to ensure the legitimate purpose.
Terms that go beyond what is required under applicable legislation, for example in respect of anti-money laundering, can be based on a legitimate purpose and be classified as proportional even though they may not be based on a legal obligation, for example if the term is based on the credit institution’s risk-tolerance and risk management. A credit institution may on that basis operate with a lower risk tolerance in respect to money laundering or have a specific geographical focus for its customers. Terms that go beyond what is necessary to fulfil the legitimate purpose will be considered disproportionate.
Proportional terms must also be administered proportionally meaning that a credit institution must inform payment institutions of the exact requirements that they must comply with to gain access to the credit institution’s payment account services. Further, the credit institution must provide a reasonable deadline for the payment institution to comply with the requirements to gain access to the credit institution’s payment account services.
The DCCA’s decision of 28 June 2019 on a credit institution terms of access to payments account services is an example of non-proportional terms.
According to Article 63(2) of the DPA, credit institutions must notify the DCCA when access to payment account services is denied. Such notification must be provided in reasonable time and be duly justified.
The notification must be provided, at the latest, simultaneously with the credit institution notifying the payment institution of the rejection and the notification must include sufficient information for the DCCA to assess whether the credit institution has complied with its obligations under Article 63 (1) of the DPA.
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