Last Friday, the European Central Bank (ECB) released its latest opinion document on SEPA, the proposed Single European Payments Area directive. In this they support the initiative but raise a number of concerns.
In a generally positive assessment, the ECB believe that some modifications are still needed. Their major concern is regarding the scope of the activities of “payment institutions”, a new SEPA definition. ECB recommend that greater clarity is needed in defining the types of activities that these institutions are permitted to perform, in particular, regarding the treatment of funds including e-money, and whether any credit facilities are to be included. Any such activities should qualify as deposit taking, with attached risks and, as the proposed directive is currently worded, will apply a lighter supervisory regime than that currently applicable under other EU directives. The ECB believe that there should be the same level of safeguards regarding services, risks and capital as applied to any other credit or e-money institutions. They go on to recommend that any investment usage of funds in transit by the payment institution should be specifically prohibited.
The ECB also criticise some of the wording of SEPA, highlighting much of the definition of payment institutions and their services, as well as the exemptions from these regulations. They see confusion in the roles of central banks and public payment authorities, as well as problems in the defining of physical and electronic means of payments, and go on to make a number of drafting recommendations. But despite any concerns, the ECB believe that implementation should proceed without delay and that, should there be any problems, the directive should be split so as to facilitate the current 2008 and 2010 planned migration dates.
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