ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.
December 2008/January 2009
In issue 72 of ombudsman news (September/October 2008), chief ombudsman, Walter Merricks, mentioned a new European directive, coming into force in 2009 and intended to help protect consumers transferring money cross-border, as well as providing more of a level playing-field in this market.
In this ombudsman focus, we give more information about the Payment Services Directive – and about the proposed role of the Financial Ombudsman Service as part of the Directive’s complaints-handling requirements.
The Payment Services Directive requires countries in the European Economic Area (EU members plus Iceland, Norway and Liechtenstein) to regulate payment services – including, for example, payments by plastic cards, direct debits and money transfers.
The Directive will affect all businesses providing payment services in or from the European Economic Area. In the UK that will include:
The Payment Services Directive will be implemented in the UK through the Payment Services Regulations 2008. These regulations have recently been the subject of a public consultation by HM Treasury. They will come into force on 1 November 2009 – when the requirements of the Directive will take effect in the UK.
Businesses that provide payment services – and that will be covered by the Payment Services Directive – will have to comply with the Europe-wide rules on their "conduct of business" in relation to how they handle payment-services transactions with their customers. They will also have to comply with rules on how they deal with consumer complaints about payment services. Unresolved disputes can be referred to the ombudsman, if the consumer remains dissatisfied.
The FSA has recently consulted on the changes that are required to its Handbook in order to implement aspects of the Directive.
These changes involve:
The FSA intends to publish a document in early 2009, outlining its approach to matters such as authorisation and supervision under the Payment Services Directive. In the meantime, information for businesses affected by the Payment Services Directive is available on the FSA’s website.
The FSA proposes to extend the ombudsman’s remit, so as to cover all transfers carried out by businesses providing payment services in or from the UK. This will include transactions starting or ending outside the European Economic Area and in non-European currencies. This reflects the ombudsman’s current remit for the money-transfer complaints it already covers – in relation to banks, building societies and e-money issuers.
Yes. But in order to align the ombudsman’s traditional definition of a "small business" with the definition of "micro-enterprise" used in EU legislation, the FSA plans to alter how we define those businesses that can bring complaints to the ombudsman.
From November 2009, when the Payment Services Directive comes into effect in the UK, businesses with an annual turnover of up to €2 million (approx £1.6 million) will be covered by the ombudsman – as long as they have fewer than ten staff.
This raises the turnover limit from the current threshold of £1 million – but introduces the new, separate, requirement relating to the number of staff.
This new definition of "micro-enterprise" will affect small businesses that bring complaints relating to everything the ombudsman covers – not just payment services complaints.
The government has appointed the FSA as the "competent authority" for most aspects of the Payment Services Directive. This means the FSA will be responsible for authorising, supervising and registering so-called "payment institutions". These are businesses that carry out payment-services transactions such as money transfer – other than banks, building societies and e-money issuers (that are already regulated by the FSA).
In addition to the Financial Ombudsman Service’s role in providing the "out-of-court" redress functions under Article 83 of the Payment Services Directive, the OFT will be responsible for requirements relating to access to payment systems. And HM Revenue and Customs will be responsible for the anti money-laundering supervision of businesses providing payment services.