Two months to go to PSD 2 Day

Two months to go to PSD 2 Day – an update from the EBA Dr Dirk Haubrich Head of Consumer Protection, Financial Innovation and Payments, EBA Re-inventing Payments in the Digital Age, Frankfurt, 15 November 2017

Outline of the presentation I. Introduction to the EBA Ø The creation of the EBA Ø Objectives, tasks, and scope of action Ø Legal instruments II. Progress update on the RTS on SCA & CSC and other PSD 2 -related work Ø Ø Progress update on EBA mandates under PSD 2 Competing objectives of PSD 2 Progress update on the RTS on SCA & CSC Additional PSD 2 -related topics currently being assessed by the EBA 2

I. Introduction to the EBA 3

The creation of the EBA Ø The EBA was established by Regulation (EC) No. 1093/2010 of the European Parliament and EU Council; Ø came into being on 1 January 2011; Ø took over all existing tasks and responsibilities from the Committee of European Banking Supervisors (CEBS); Ø took on additional tasks, incl. consumer protection, the monitoring of financial innovation, and payments; Ø is an independent authority; Ø is accountable to the EU Parliament and EU Council; Ø has as its highest governing body the EBA Board of Supervisors, comprising the Heads of the 28 national supervisory authorities. 4

Main objectives and tasks of the EBA Objective “To protect the public interest by contributing to the short, medium and long-term stability and effectiveness of the financial system, for the Union economy, its citizens and businesses. ” (Art. 1(5)). Tasks through which the EBA is to achieve its objective The EBA shall inter alia “contribute to Ø improving the functioning of the internal market, including in particular, a sound, effective and consistent level of regulation and supervision; Ø ensuring the taking of credit and other risks are appropriately supervised and regulated; Ø enhancing customer protection. ” (Art. 1(5)(f); Ø “monitor[ing] new and existing financial activities and adopt[ing] guidelines and recommendations with a view to promoting the safety & soundness of markets and convergence of regulatory practice”. (Art. 5

The scope of action of the EBA The EBA’s regulatory remit is defined by a set of EU Directives and Regulations that fall into its ‘scope of action’. They include: Ø Capital Requirements Directive (CRR/D IV) Ø Deposit Guarantee Scheme Directive (DGSD) Ø Mortgage Credit Directive (MCD) Ø Payment Accounts Directive (PAD) Ø Electronic Money Directive (EMD) Ø Payment Services Directive (PSD 1 + forthcoming PSD 2) Ø Anti–Money Laundering Directive (AMLD) Ø Markets in Financial Instruments Directive (Mi. FID/R, for structured deposits) 6

Legal instruments available to the EBA The EBA has different types of legal instruments at its disposal that differ in terms of purpose, legal status, and possible addressees. Ø Technical standards Ø Guidelines and recommendations Ø Opinions / Technical Advice Ø Warnings Ø Temporary prohibitions Ø Joint Positions Ø Breach of Union law investigations Ø Binding and non-binding mediation 7

Output of the EBA to date Since its creation in 2011, the EBA has issued more than 200 legal instruments, plus more than 100 reports and other outputs. Regulatory Technical Standards Implementing Technical Standards Guidelines Opinions / Technical Advice Published reports Recommendations Breach of Union Law investigations Mediations Peer reviews Warnings Stress tests 2011 2012 2013 2014 2015 2016 Total 1 39 22 15 15 92 21 10 10 7 48 2 6 2 17 19 12 58 1 6 6 14 21 17 65 6 12 26 23 34 37 138 2 4 1 2 1 10 1 1 2 5 7 1 1 1 2 5 2 - 2 1 1 4 8

II. Progress update on the RTS on SCA & CSC and other PSD 2 -related work 9

Progress update on PSD 2 mandates Deliverables Milestones reached Milestone 1: EBA has started work Milestone 2: EBA has published CP with draft GL/TS Milestone 3: EBA has published Final draft TS or Final GL Milestone 4: EBA has published GL Compliance table or Commission has published TS in OJ 1 GL on security of internet payments under PSD 1 2 RTS on scheme separation under IFR 3 RTS on Passporting Notifications under PSD 2 4 GL on Professional Indemnity Insurance under PSD 2 2017 Q 4 5 GL on Incident Reporting under PSD 2 6 GL on Authorisation of payment institutions under PSD 2 2017 Q 4 7 GL on Complaints Procedures by CAs under PSD 2 2018 Q 1 8 RTS on Strong Authentication & Secure Comms. under PSD 2 9 GL on Operational & Security Measures under PSD 2 2017 Q 4 10 RTS on Central Contact Points under PSD 2 2017 Q 4 11 RTS & ITS on EBA Register under PSD 2 2017 Q 4 12 GL on fraud reporting under PSD 2 2018 Q 1 13 RTS on home-host coordination under PSD 2 2018 Q 1 10

The different, competing objectives of PSD 2 The PSD 2 has a number of different, often competing, objectives, that requires the EBA to make difficult trade-offs when developing its mandates, incl. the RTS on SCA &CSC. Enhancing competition Facilitating innovation Strenghteni ng security Competi ng objective s of PSD 2 Protecting consumers Contributin g to a single EU payments market Ensuring technology & businessmodel neutrality Promoting customer convenienc e 11

Progress of the RTS on SCA & CSC (I) Dec 2015: EBA Discussion Paper August 2016: EBA Consultation Paper Feb 2017: EBA draft RTS May 2017: EC proposals to amend June 2017: EBA Opinion ? • was published by EBA before entry into force of PSD 2, so the EBA had a chance to meet deadline; • contained early views of the EBA on the interpretation of the Directive; • yielded 113 helpful responses, which the EBA subsequently used for the development of the RTS; • contained the EBA’s proposals for the draft RTS; • yielded a record 242 responses, in which 320 distinct issues and requests for clarification were raised; • was published 13 months after entry into force of the PSD 2, i. e. with a one-month delay; • contained the final view of the EBA, incl. dozens of amendments made as a result of CP responses; • included a 100 -page Feedback Table, in which the EBA provided feedback on every one of the 320 queries /requests received; • was received by the EBA within the deadline of three months set by the EBA Regulation; • contained four proposals by the EU Commission to amend the RTS; • was published in response to the Commission’s proposals, and within the six-weeks deadline set by the EBA Founding Regulation; • conveyed that the EBA disagreed with three of the four proposals, in particular in respect of the so-called ‘fall back’ option; • concludes the EBA’s work on these particular RTS, as they now require adoption by the EU Commission, EU Parliament and EU Council. • Date of adoption and publication in the Official Journal (OJ) of the EU is currently not known, and not under the EBA’s control; • However, PSD 2 provides that these RTS apply 18 months after adoption; • Until these RTS are published in the OJ and, thus, the final version known, the EBA will not respond to queries regarding these RTS; 12

EBA Opinion on the RTS on SCA&CSC In response to the EU Commission’s proposals of May 2017, the EBA issued an Opinion in June 2017, in which it disagreed with three of the Commission’s four proposals. 1) PSPs should report to the EBA the outcome of their monitoring of the application of the exemption on transaction risk analysis; 2) The audit on exemptions based on using transaction risk analysis should be performed by statutory auditors; 3) An exemption to SCA should be added for those corporate payments that use dedicated payment processes or protocols; 4) In case of the unavailability or inadequate performance of a dedicated interface, TPPs should be allowed to access payment accounts using the customer interface. 13

Other PSD 2 topics being progressed by the EBA In addition to the delivery of PSD 2 mandates, the EBA is currently in the early stages of work on a number of other PSD 2 -related topics. Ø The implications of the ‘transitional period’ under Articles 109 and 113 of PSD 2; Ø The status of agents and distributors of electronic money under the EU freedom to provide services; Ø The implications for firms and national authorities from potential delays in the delivery/adoption of PSD 2 mandates; Ø Potential application of the existing JC Guidelines on complaints handling to the new AI and PI services under PSD 2; Ø The feasibility of extending the EBA’s existing web-based Q&A tool to PSD 2 -related queries from external stakeholders; Ø Once the Commission has published the RTS on SCA&CSC in the OJ, EBA to invite all industry initiatives on APIs, to answer their questions in relation to CSC aspects of the RTS. 14

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