Wednesday, 27 June 2018

C-191/17 AG Tanchev on the notion of 'payment account'

Last week Advocate General Tanchev delivered a not very ‘consumer friendly’ opinion in case C-191/17 Budeskammer fur Arbeiter und Angestellt v ING-DiBa Direktbank Austria Nidererlassung der ING-DiBA AG. Referred by the Oberster Gerichtshof (Supreme Court of Austria) this case involves the the interpretation of Article 4 (14) of Directive 2007/64/EC on payment services in the internal market (PSD 1).

Representing consumer interests the Budeskammer fur Arbeiter und Angestellt brought an action against ING-DiBa Direktbank Austria alleging that the bank’s ‘Direkt-Sparen’  (‘direkt-savings’) product (referred to as online direct savings account) contains a large number of standard terms and conditions that are not compliant with the Austrian law transposing PSD1. Given the special nature of the financial product, the subject of the dispute became the scope of PSD1, i.e. whether this particular kind of account qualifies for a payment account within the meaning of PSD1.

Article 4 (14) PDS1 provides that a 'payment account' is an account held in the name of one or more payment service users which is used for the execution of payment transactions. The definition itself neither specially refers to nor specially excludes the particular product in question.

What is an online direkt savings account and how it works?

The online direct savings account is a particular kind of bank account. It is labelled as a savings account, i.e. that should be used for depositing money for saving purposes. however, access to this account is granted via online banking, enabling consumers to make deposits and withdrawals from the account. Any transfer however must be carried out  through another account called a reference account. The reference account must be a current account opened in Austria, but can be held by any Austrian bank, it does not have to be held with the same bank that holds the online direst savings account. A consumer is able to decide, without any restriction or notice when and in what amount the consumer transfers money between the online direct savings account and the reference account. 

Is the online savings account covered by PSD1?

Interpreting the provision in question in the context of other provisions of PSD1 (other definitions within Art. 4, Art. 2, and the Annex) and related EU legislation (Directive 2014/92/EU and Regulation 260/2012) AG Tanchev concluded that the particular product cannot be considered to be a payment account within the meaning of Article 4 (14) of PDS1, because this account does not involve ‘direct participation in payment transactions with third parties’. 

Our evaluation

Although AG Tanchev rightly said that the mere labeling of an account as a ‘savings account’ is not in itself an indication that the account does not constitutes a ‘payment account’ within the meaning of PSD1, what seems to have been determinative in his reasoning was that the online direct savings account is not intended to be used for transactions between the consumer (account holder) and third parties, essentially accepting the argument of the defendant bank. Whilst this may be true, if the account allows for  consumers to execute payment services consumers would surely deserve to have the same level of protection that belongs to users to payment accounts. According to AG Tanchev, this protection will be provided for consumers via the protection they enjoy buy the underlying, reference account. Whilst this may be correct, by the same token, applying a different regime for the two accounts creates uncertainty and opens a potential protection gap for consumers. In case of a future dispute, the bank  holding the online direct savings account would be able to  use the same argument as a shield against their liability; that the higher level of protection offered by PSD1 attached to the reference account does not apply the transaction executed though the online savings account, because the transaction was attached to that separate account and not to the reference account. The situation gets even more complicated leaving consumers with less access to redress when the two accounts are held by different banks.

At this instance we must agree with the EU Commission’s submission that argued against the restrictive approach in interpreting the scope of PSD1. The EU Commission stressed that the purpose of PDS1 is to confer protection on the users of payment services: as mentioned in recital 46 and in the articles of Title IV of PSD1. The accounts covered by PSD1 benefit from certain minimum regulatory requirements for the proper execution and processing of payment transactions, and such protection is denied to consumers in the event of a restrictive interpretation of the notion of a ‘payment account’ within the meaning of PSD1 (para 21).

Whilst the opinion involves the interpretation of PSD1, it remains relevant in the light of the current PSD2 that contains exactly the same provision in Article 4 (12) and seems to makes no special reference to the features of the product under scrutiny here.

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