SDD: The FBF against the drafted SEPA Regulation
- The French Banking Federation (FBF) criticises the European Commission's draft Regulation on SEPA migration of 16 December 2010. It its opinion, the “Technical Requirements” on SCTs and SDDs, as well as the ban on interchange, disadvantage SEPA payment instruments.
- Having met twice since, the French SEPA National Committee fears that some features of SEPA instruments that are already in use may be put to question. In addition, it argues that the Commission retains the power to bring in new modifications any time later. This uncertainty could create operational difficulties and additional costs for all players.
- Moreover, the text forbids SDD interchange (which covers interbank services), but does not propose any realistic business model.
- The project is currently under discussion at the EU Council and Parliament, but the FBF insists that it maintains an interchange mechanism on SDD and gives up the technical requirements.
- French banks are busied by the same preoccupations as in other countries using direct debits interchange, such as Spain, Italy and Belgium. Creating added value services for the debtor is the only way to preserve the profitability of this instrument, as it has to undergo several other regulatory evolutions all reducing bank revenues: cap on fees for payment incidents, PSD's ban to charge some services that are today paid for, etc. The interest of consumers may however prove limited, precisely because basic direct debit used to be free of charge.
- Lobbying the European institutions seems however to be illusive: the EU Council of Ministers must already reach a consensus by all 27 European countries on the migration end-dates themselves. Moreover, the European Parliament is known to stand in favour of consumers.
- Banks will have to turn to a more innovative offer to prevent revenue losses. Some financial institutions are already putting pressure through attractive rates on current accounts, such as online banks, and could lead the way. The newly approved French Payment Institution SlimPay is another example.
See December 2010 Watch