EBA issues statement on consumer protection and payment aspects in the context of COVID-19

On March 25^th the European Banking Authority (EBA) issued a statement in relation to consumer and payment issues in the context of the COVID-19 pandemic, which acknowledges the need to adopt appropriate measures to protect consumers and the orderly functioning of payment services across the EU.

Without prejudice to any measures already taken, EBA makes recommendation with respect to two main areas:

1. Consumer protection

New and additional charges. Cross-selling - EBA recommends careful consideration from a legal and reputational perspective of any new and additional charges in relation to contingency measures and any cross-selling of products to consumers, reminding the importance of alleviating the pressure on consumers and business alike.

Consumer credit rating – in the case of general temporary measures offered by financial institution, EBA highlights that the acceptance of temporary measures should not automatically lead to negative implications for the consumer’s credit rating, as such measures may not automatically lead to loan reclassification from a prudential perspective.

Consumers interest first - EBA calls financial institutions to act in the interest of consumers, especially as far as temporary measures for existing loans are concerned.

Special crisis measures to comply with EU law - any measures taken by financial institutions in relations to consumers should be in accordance with EU law (e.g. Mortgage Credit Directive, the Consumer Credit Directive etc.) and should ensure full information disclosure, especially in case of potential charges and costs, as well as transparency and clarity of terms and conditions.

2. Payment services

Sanitary precautions at POS - consumers and merchants are encouraged to take sanitary precautions when using or providing services at point of sale terminals (POS) especially if the insertion of a PIN code is required and recommends the use of contactless or remote payments methods.

Maximise the use of the SCA exemption for contactless payment - Payment service providers are advised to facilitate the use of payment methods that do not require physical contact. EBA encourages these providers to apply the exemption for contactless payments from strong customer authentication (SCA) to the fullest extent permitted by the Regulatory Technical Standards on SCA (e.g. use the maximum thresholds of EUR 50 per transaction).

Postponement of regulators’ obligation to notify readiness to apply SCA - with the intention to alleviate the pressure on the payment service providers to implement migration plans to SCA compliant solutions for e-commerce card-based payment transactions, EBA removed the national competent authorities’ obligation to report by March 31^st, 2020, the readiness of the payment service providers in this respect.

It is however debatable if some relief will be given to the payment service providers, especially when the other obligations for implementing the migration plans to SCA compliant solutions remain in force and the calendar of implementation as provided in EBA Opinion on the migration to SCA has not suffered any additional changes. Nevertheless, EBA mentioned that it will continue to monitor events and assess if any additional measures need to be taken.

You can read the whole EBA statement here.