Direct access: Amend the Settlement Finality Directive (SFD)
The definition of ‘participant’ in Article 2b of the Settlement Finality Directive should be expanded to cover electronic money institutions within the meaning of the E-Money Directive, and authorised payment institutions as defined in the Payment Services Directive. This would mean the legal blocker to enable direct access to payment systems for non-bank PSPs is removed.
In addition, the exemption under the Second Payment Services Directive (PSD2) Article 35 (2a) regarding payment systems designated under Directive 98/26/EC (SFD) should be removed. At the same time, central banks should work with payment systems operators to reconsider the participation criteria for the payment system they operate.
Establish proportionate risk assessment criteria to create a path for non-banks to obtain a settlement account and become direct participants in payment systems
It's important that risks to payment systems are mitigated. Much like banks, non-bank PSPs should be assessed to ensure they have robust operations and procedures in place. Before they are granted settlement accounts and are able to become direct participants in payment systems, they should be assessed against the same criteria as banks except where the business model differs and the risk for the non-bank PSP doesn't exist, e.g credit risk.
Protect safeguarded funds under deposit protection guarantee
The EBA recommends clarifying the Deposit Guarantee Schemes (DGS) Directive to ensure that a non-bank PSP's client funds deposited with a bank are covered by a DGS in case the bank holding the client funds were to fail. This means that, from a technical perspective, DGSs need to be capable of identifying ultimate beneficiaries by obtaining SCV files with all the necessary data.
In addition, the estimated impact of a bank's additional contributions to DGSs, based on non-bank PSPs' safeguarded funds, would be minor.
De-risking: Amend art. 36 of PSD2 as suggested by the EBA
In order to tackle the de-risking problem, article 36 in PSD2 should be enhanced by:
- mandating the EBA to develop technical standards to ensure consistent application of art. 36 across all EU countries
- clarifying ‘duly justified reasons’ for banks refusing access to PIs/EMI to accounts or terminating contracts on accounts of PIs/EMIs that have already been opened (criteria such as demonstrable shortcomings in ML/TF controls, the risk profile of the CI or PI/EMI, a breach of contract, the particular business model of the bank or PI/EMI, lack of information and documents received from the PI/EMI, and others)
- obliging banks to notify competent authorities not only about rejecting to open an account during the PI/EMI onboarding process, but also about an intended closing of an account when a banks takes a decision to offboard a non-bank PSP.