Traditionally the UK has been ahead of the EU when it comes to financial products. Almost 10 years ago moves to set common standards amongst Member States led to the Payment Accounts Directive (2014/92/EU) (PAD).
The EU wanted banks in all Member States to improve:
- Transparency - by making fees clearer and easier to compare;
- Competition - by enabling bank account switching and making switching more attractive to consumers; and
- Inclusion - by providing basic bank accounts so that all EU citizens have access to banking services regardless of their financial position.
In the UK, PAD was implemented through the Payment Account Regulations 2015 (PAR). A number of the changes brought in by PAD had already been dealt with here in the UK, and so PAR was designed to prevent negative impacts in the UK market. Post-Brexit the UK Government undertook a Post-Implementation Review of PAR. This was then followed by a HM Treasury consultation launched on 9 December 2022. The consultation focused on the information requirements in PAR and closed on 17 February 2023.
On 2 June 2023 HM Treasury issued their consultation response in which they confirmed that Part 2 of, and Schedules 1 and 2 to, PAR would be revoked. This was followed up by a statutory instrument confirming timing:
- The Financial Services and Markets Act 2023 (2023 Act) was enacted on 29 June 2023;
- The Financial Services and Markets Act 2023 (Commencement No. 1) Regulations 2023, made on 10 July 2023, set of the dates for various parts of the 2023 Act coming into force; and
- Regulation 5 of the Order states that Part 2 of, and Schedules 1 and 2 to, PAR will revoked on 1 January 2024.
In assessing the consultation responses, HM Treasury agreed that information requirements are currently duplicated in this space. In particular they cited existing obligations under:
- Regulations 53 and 54, and Schedule 2, of the Payment Services Regulations 2017;
- FCA Handbook rules in BCOBS 4; and
- The Consumer Duty "consumer understanding" outcome.
In responding to the consultation, the banking industry recognised the importance of transparency, but noted that prescriptive requirements got in the way of complying with Consumer Duty. Firms felt that the duplication of information was confusing and could create poor outcomes. The practical and financial impacts of trying to comply consistently across paper / online / mobile displays were also raised.
Throughout the summary of responses to the consultation, consumer groups argued that the information requirements should be made more prescriptive. In a number of responses, they pushed for more prescription on presentation and in particular alternative formats like braille (at paras 2.6, 2.9, 2.13 and 2.23). I found myself reading this thinking has everyone forgotten about the Equality Act 2010?
To be fair, HM Treasury had not forgotten. In Chapter 3, Government Response, they called out that whilst consumer organisations had called for more requirements in PAR, the Equality Act already includes a legal duty to make reasonable adjustments. This duty is anticipatory, so firms should already be set up to arrange braille and audio options. They also pointed to the FCA Consumer Duty and Guidance on the treatment of Vulnerable Customers when it comes to accessible formats.
The UK Government see the revocation of parts of PAR as aligning with their "wider approach to delivering a smarter regulatory framework" as part of the Edinburgh Reforms. It is anticipated that the FCA will take responsible for setting information requirements. At this point rule changes are not expected, the FCA will use their existing powers to hold firms to account.
TTFN to FIDs and SoFs!
Ta-ta for now to Fee Information Documents (FIDs) and Statements of Fees (SoFs)!
Hopefully any future rules mean less documents, duplication and industry acronyms.
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