Concern over direct debit payment as Brexit looms – Chris MacManus MEP

Sinn Féin MEP Chris MacManus has said he is greatly concerned that some direct debits payments will not be processed by banks in January as a result of Brexit. He said payments from Ireland to British providers could be declined by Irish banks.

MacManus said:

“In October I raised with the EU Commission directly the issue of British payment providers not being ready for the additional obligations that will be placed on them from the 1st of January as a non-EEA country. The Commission acknowledged to me that there was an issue and put the onus on the providers to put in place the necessary work.”

“Now, in a parliamentary reply to my colleague Louise O’Reilly TD, the Central Bank haver made it clear this issue remains stating : “To date action has been taken by most businesses and PSPs to address the issue, and while the risk in terms of value and volume of potentially rejected payments has significantly reduced, there remains residual risk that a number of payments may be rejected from 1 January 2021 due to non-compliance with the Funds Transfer Regulation and the SEPA scheme rulebook.”

The Midlands Northwest MEP concluded by insisting Irish customers must be protected, “Irish businesses should not in any way suffer for the lack of preparedness by these British based providers. These providers need to get their act together and guarantee that they will be ready to fulfil all their obligations by 1st January. I understand up to 20% of these payments to British providers are still facing uncertainty.”

“It may be necessary for the Central Bank however to give some leeway for a short time to protect Irish consumers from having, through no fault of their own, their regular payments declined. The Commission should stand ready to signal this leeway would be tolerated in the exceptional circumstances and to protect Irish businesses.” ENDS

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PQ referenced:

For Written Answer on : 18/11/2020
Question Number(s): 55 Question Reference(s): 37241/20
Department: Finance
Asked by: Louise O’Reilly T.D.
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QUESTION

To ask the Minister for Finance his views on whether SEPA payments made through UK based providers will be unaffected in January 2021; if an examination has been carried out at the potential number of Irish consumers that would be affected if these providers fail to secure an EU licence before January 2021; if the Central Bank will signal some flexibility for Irish banks to continue to process these payments for a short period after January 2021 if necessary; and if he will make a statement on the matter.

REPLY

The Single Euro Payments Area (SEPA) enables cashless euro-denominated retail payments to be made across the European Union and European Economic Area under the same basic terms and conditions.

From 1st January 2021, payments to and from the UK will be treated as payments to and from a third country for the purposes of Regulation 2015/847/EU – Funds Transfer Regulations (FTR).  This means that additional information, including the payer address, will be required for fund transfers between Ireland and the UK.  

The Central Bank of Ireland has had extensive and ongoing engagement with the payment service providers (PSPs) e.g. banks and payment institutions, UK supervisory authorities and industry representative bodies to understand the potential consumer impact, to assess the impact of mitigating actions taken on residual risks, to emphasise the mandatory requirements for additional information from 1 January 2021 and to monitor progress towards compliance. 

There is regular reporting from Irish PSPs to the Central Bank of Ireland on the volume and value of SEPA credit transfer and direct debits between UK and Irish PSPs. Additionally, there has been regular data exchange with UK supervisory authorities to facilitate a joint and consistent approach to mitigating the risk of failed payments. 

To date action has been taken by most businesses and PSPs to address the issue, and while the risk in terms of value and volume of potentially rejected payments has significantly reduced, there remains residual risk that a number of payments may be rejected from 1 January 2021 due to non-compliance with the Funds Transfer Regulation and the SEPA scheme rulebooks.

It is primarily an issue for UK payment service providers offering services to Irish customers (creditors) to ensure they have obtained the necessary authorisations from an EU competent authority before the end of this year to ensure that they can continue to offer their services.

The Central Bank of Ireland continues to engage with all relevant parties, including supervisors in other jurisdictions, to further reduce this residual risk and officials in the Department of Finance are monitoring the situation.