The European Banking Authority (EBA) has published its draft Guidelines on professional indemnity insurance (PII) and comparable guarantees for payment initiation and account information service providers (PISPs and AISPs respectively), under the second Payment Services Directive (PSD2). The draft Guidelines include criteria, indicators, calculation methods and a formula for national regulators to use when they authorise a PISP or register an AISP.
The EBA’s consultation on the draft Guidelines closes on 30 November 2016. The final Guidelines will be published by 13 July 2017, and apply from 13 January 2018.
Under article 5(2) of PSD2, when a regulator authorises a PISP, it must, as a condition of the authorisation, require the PISP “to hold [PII], covering the territories in which they offer services, or some other comparable guarantee against [their] liability … ” for (e.g.) unauthorised payment transactions; and non-execution, defective and late execution, of payment transactions.
Under article 5(3) of PSD2, when a regulator registers an AISP, it must, as a condition of the registration, require the AISP “to hold [PII] covering the territories in which they offer services, or some other comparable guarantee against their liability vis-à-vis the account servicing payment service provider or the payment service user resulting from non-authorised or fraudulent access to or non-authorised or fraudulent use of payment account information“.
Article 5(4) of the PSD2 requires the EBA to publish Guidelines addressed to the Member States’ regulators, by 13 July 2017. These Guidelines are to be “on the criteria on how to stipulate the minimum monetary amount of the professional indemnity insurance or other comparable guarantee”.
If the final Guidelines are in the same form as the draft Guidelines on which the EBA is consulting, national regulators will be expected to:
Guideline 1: “ensure that the minimum monetary amount of the PII or comparable guarantee … allows undertakings … to effectively meet the liabilities in relation to their activities by verifying that a PII or comparable guarantee does not have any excess as a threshold and is valid when the liability occurs”
Guidelines 2 to 7: use (a) a set of publicly available risk profile; activity type; activity size; and comparable guarantee, criteria; and (b) a prescribed formula, when they set the minimum monetary amount for the PII or comparable guarantee;
Guideline 8: require firms to hold PII or a guarantee, not both;
Guideline 9: “When granting the authorisation and/or registration … stipulate that [relevant firms] review, and if necessary re-calculate, the minimum monetary amount of the PII or comparable guarantee … at least on an annual basis”
The EBA will only accept responses to its consultation, if they are submitted using the “Send Your Comments” button on the EBA website (here). Attachments cannot be submitted.
[View source.]
