Policy paper

UK compliance with the EU Payment Accounts Directive

Published 18 September 2016

This page provides information on how the UK has met its responsibilities under the EU Payment Accounts Directive (PAD).

0.1 The EU Payment Accounts Directive (PAD)

PAD (Directive 2014/92/EU) was published in the Official Journal of the European Union on 28 August 2014.

The directive sets common regulatory standards that EU member states are required to meet in order to:

• improve the transparency and comparability of fees related to payment accounts that are used for day-to-day payment transactions
• facilitate switching of those accounts
• ensure access to bank accounts with basic features

The government is required to have implemented PAD in the United Kingdom by 18 September 2016.

0.2 The UK’s implementing regulations (the Payment Accounts Regulations 2015)

In order to implement PAD, and following a public consultation on the government’s proposed approach to implementation, the government made the Payment Accounts Regulations 2015. The regulations come into force from 18 September 2016.

0.3 Competent authorities and duties

The Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) have been appointed as competent authorities under the Payment Accounts Regulations.

The FCA is responsible for monitoring and enforcing the Payment Accounts Regulations’ requirements on payment service providers.

The PSR is responsible for designating and monitoring alternative switching schemes.

The Money Advice Service (MAS) also has duties under the regulations.

To improve the comparability of fees related to payment accounts, MAS is required to provide consumers with access, free of charge, to a website comparing fees charged by payment service providers for the services most commonly associated with payment accounts. However, the requirement to provide this website only arises when the Commission has completed its work on transparency and comparability of fees related to payment accounts (see below).

With regards to basic bank accounts, MAS also has a duty to raise awareness about these accounts. It has further information on its website.

0.4 Improving the transparency and comparability of fees related to payment accounts

The measures concerning the transparency and comparability of fees related to payment accounts that are used for day-to-day payment transactions will come into force at a later date, after the Commission adopts the draft regulatory technical standards submitted by the European Banking Authority to standardise terms and definitions to describe the key services that are linked to payment accounts and subject to a fee. For further information about these measures, please refer to the public consultation on the government’s proposed approach to implementing PAD.

0.5 Facilitating switching of payment accounts

The Payment Accounts Regulations require payment service providers to offer customers a switching service between payment accounts.

The PSR has designated the Current Account Switch Service (CASS), operated by Bacs, as an alternative switching arrangement. Payment service providers may choose to offer the CASS service or the switching service outlined in the regulations.

0.6 Designation of credit institutions to offer basic bank accounts

At Budget 2016, the government designated the nine largest providers of current accounts in the UK under the Payment Accounts Regulations. This means that the nine banks are legally required to offer basic bank accounts to eligible customers from 18 September 2016.

The nine banks are:

• Barclays
• Clydesdale and Yorkshire Bank
• Co-operative Bank
• HSBC
• Lloyds Banking Group (including Halifax and Bank of Scotland brands)
• Nationwide
• Royal Bank of Scotland (including NatWest and Ulster Bank brands)
• Santander
• TSB

MAS has further information about access to basic bank accounts on its website.