Consultation on customer information requirements in the Payment Accounts Regulations (PARs) 2015

Following a consultation in connection with the review of the Payment Accounts Regulations 2015 (SI 2015/2038), particularly Part II and schedules 1 and 2 of those regulations relating to fee disclosures (please see EventID #18798 in this context), the HM Treasury has now published a corresponding response paper. In this paper, the Treasury briefly discusses the feedback it has received to its consultation and describes the way forward on this matter.
#### Background
Following Brexit and UK’s opportunity to review (retained) regulations as to their usefulness and effectiveness, the Treasury launched a review of the Payment Accounts Regulations 2015 (PARs), which were once adopted to transpose Directive 2014/92/EU on payment accounts. According to the regulator, some of the provision described in the regulations relating to fee disclosures are simply unnecessary or redundant, hardly used by customers at all, and do not or insufficiently fulfill the transparency objective of the original EU Directive. Therefore, the Treasury sought feedback on
– the appropriateness of the obligation to provide clients with Fee Information Documents (FIDs) which provide basic information on the fees related to payment accounts;
– the appropriateness of the obligation to provide the statement of fees (SoFs) which summarizes the fees a customer incurs during a specific time period;
– the appropriateness of the obligation of the Financial Conduct Authority (FCA) to maintain the „linked services list“ which was drawn up by the Authority in 2018 to define ALL key terms used in the FIDs or SoFs; and
– the appropriateness of the obligation of the Money and Pensions Service (MaPS) to maintain a website where all fees of payment service providers can be compared.
#### Responses
As far as FIDs are concerned, banks and industry bodies confirmed the Treasury’s opinion in that much of the information included in the documents may be found elsewhere in more customer-friendly formats. They also pointed out that similar fee information requirements were covered under different legislation, such as the Payment Services Regulations 2017 (PSRs). Also, FIDs are costly to produce, highly prescriptive in nature with little flexibility for individual design options. Furthermore, commenters noted that the length, content, and format requirements of the documents make it hardly impossible for customers to compare more than 2-3 FIDs, significantly reducing their usability for comparison purposes. Additionally, the majority of respondents noted that the upcoming Consumer Duty would already ascertain that fees and other relevant information are adequately disclosed to clients, making FIDs unnecessary.
As far as the Statement of Fees is concerned, several respondents found it to be helpful in providing transparency regarding fees and charges, and it has also contributed to improved competition within the industry. However, as with the FIDs, many argued that the content of the SoFs can be found elsewhere, which makes the document redundant. Additionally, they pointed out that the cost of delivering the SoFs is substantial and disproportionate given the redundant nature of the statement.
As far as the maintenance of the „linked services list“ is concerned, the feedback was quite mixed. Some respondents found the glossary initially helpful for customer understanding, but its overall impact has been limited. On top, the glossary and linked services list have not been updated since 2018 and some of the terms included are simply too complex for „standard“ customers. Many firms thus felt restricted in using their own, clear language, although a large number of respondents also appreciated the standardization of terms and consistency of definitions.
Finally, as far as the maintenance of the „comparison“ website by Money and Pensions Service (MaPS) is concerned, particularly banks and consumer groups found the website helpful for customers as it provides comprehensive information for comparing different accounts of different institutions. „One bank highlighted the lack of ranking as a positive“ aspect, praising its unbiased nature and consistent metrics. However, many respondents raised doubts about the actual usage of the site and thus its usefulness and many also supported the notion that this „comparison information“ can be made available via open banking services.
#### Way forward
Having reviewed the responses and considering the government’s policy to introduce „smarter regulation“ made by those actually in charge and supervising market participants, the HM Treasury believes that removing the disclosure requirements pertaining to FIDs and SoFs under Part 2 and Schedules 1 and 2 of the PARs are useful and justified and thus plans to revoke those schedules.
As far as the other above noted issues are concerned, the Treasury plans to „hand over“ responsibility to the Financial Conduct Authority to determine the way forward.