Communications - Transfer of Payment Services

DEPARTMENT OF BANKING AND FINANCIAL SUPERVISION CLIENT PROTECTION AND ANTI-MONEY LAUNDERING SERVICE (902) TRANSPARENCY AND FAIRNESS VERIFICATION DIVISION (003) Ref. note n. dated Classification VII 2 8 Subject Transfer of Payment Services

With Legislative Decree of 15 March 2017 No. 37 (1), published in the Official Gazette on 30 March last, Italy has implemented Directive 2014/92/EU (the so-called PAD Directive, Payment Account Directive) (2) regarding the comparability of charges related to payment accounts, the transfer of payment accounts, and access to basic payment accounts.

The transposition of the PAD Directive strengthens consumer protections regarding payment accounts and integrates provisions already existing in the Italian legal system concerning the transparency of contractual terms, the transfer of payment services, and access to basic accounts.

The entry into force of certain provisions—for example, those governing the offer of basic accounts—is deferred until the issuance of secondary implementation provisions by the Ministry of Economy and Finance or the Bank of Italy. The Bank of Italy has recently placed in consultation the first implementation provisions of the decree concerning certain information on basic accounts and the transfer of payment services in the event of the assignment of legal relationships.

No secondary legislation is, however, required for the entry into force of the new provisions of the Consolidated Banking Act (TUB) regarding the transfer of payment services (so-called "portability") at the consumer's request. These provisions, which largely repeat those already provided for by Legislative Decree No. 3 of 24 January 2015 (converted into Law No. 33 of 24 March 2015), became effective on 13 June.

These are a set of rules designed to regulate the consumer's right to obtain, within predefined terms (12 working days), the transfer of recurring payment services from one payment account to another. No fees may be charged to the consumer for the transfer service.

The transfer of payment services represents an important element of the overall consumer protection framework for users of banking services. The right to transfer, the certainty of the time required to complete the operation, and the absence of charges for the service indeed constitute the necessary complement to rules aimed at ensuring comparability among different offers on the market. These rules guarantee the effectiveness of the consumer's right to choose and favor competition in the market for the offer of more convenient products for customers.

Pursuant to Article 126-septiesdecies of the TUB, payment service providers (banks, payment institutions, electronic money institutions, Poste Italiane for bancoposta services, hereinafter PSPs) must make available to consumers free of charge (3):

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information regarding the transfer service (4). The Bank of Italy, as the supervisory authority for transparency and fairness, expects that this information be simple, clear, and provide the consumer with all the indications needed to obtain an efficient transfer of payment services (4).

In the event of delays in the transfer, compensation is also provided in favor of the consumer, in the amount of 40 euros, increased for each day of delay by an additional amount commensurate with the availability existing in the payment account (Article 126-septiesdecies, paragraph 2, of the TUB). The law provides that this sum be paid to the consumer by the non-compliant PSP without delay and without the need for formal notice of default.

The supervisory authority expects that PSPs have in place the necessary measures to ensure that the transfer occurs within the prescribed times; during the transfer procedure, and in particular in the event of delays, that PSPs provide the consumer with the necessary assistance to avoid the occurrence of damages or prejudice arising from problems in the transfer; in the event of delay, that the non-compliant PSP (i.e., the one responsible for the delay) takes initiatives to compensate the consumer.

Based on what is established by Article 126-quinquiesdecies of the TUB, if the consumer has pending obligations that prevent the closure of the originating payment account, the transferring PSP must still perform all operations necessary for the execution of the transfer service within the prescribed terms, except for the closure of the originating payment account. Furthermore, the execution of the transfer service cannot be conditioned on the return by the consumer of cards, checks, or other payment instruments linked to the original account.

The Bank of Italy hopes for the adoption of self-regulation forms and cooperation agreements, also among the different categories of PSPs, with the objective of favoring the transfer of payment services and making procedures for portability more fluid and efficient.

The Bank of Italy will continue to monitor the correct implementation of the rules on the transfer of payment services by PSPs, in light of the powers conferred by Article 128 of the TUB.

Finally, it is noted that the Bank of Italy, within the scope of its financial education activities, is launching specific information and awareness initiatives in favor of customers to highlight the main characteristics of the portability procedure and the aspects to pay greater attention to in the event that one intends to activate it, with the aim of favoring informed choices and the actual mobility of customers.

Digitally signed by MAGDA BIANCO BY DELEGATION OF THE BOARD OF DIRECTORS Digitally signed by ANDREA PILATI

(3) As provided for in Section IV, paragraph 3.1, of the Transparency Provisions, periodic communications inform the customer of the existence of procedures that favor the "portability" of relationships with another intermediary. (4) It is also recalled that, based on current Transparency Provisions, internal procedures aimed at ensuring transparency and fairness in the marketing of products must include measures to ensure that sales network staff are able to provide clarifications on the characteristics of services and customer rights, based on the informative documentation provided by the aforementioned Provisions and, if necessary, additional documents.

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