23 August 2012

EPC: EU law mandates migration to SEPA by February 2014 in euro area - Recommendation is to rely on EU legislator when planning migration

The European Union (EU) Regulation No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation EC No 924/2009 stipulates the mandatory deadlines for compliance with its rules for credit transfer and direct debit transactions.

Recent public debate regarding the SEPA project seems increasingly to entertain the idea that the deadlines for compliance with the SEPA Regulation might not apply due to the ongoing euro debt crisis. In light of such comments, it appears that some clarification is required. Firstly and most importantly, the legal obligation to comply with the 1 February 2014 deadline; i.e. Article 6 (1) and (2) of the SEPA Regulation, is not subject to the "ability" of individual "economies to make a certain decision on the future of SEPA."

Consequently, the only party empowered to amend the SEPA Regulation is the EU legislator. The question is whether there are any indications that the EU legislator intends to change Article 6 (1) and (2) of the SEPA Regulation as a result of the euro debt crisis at this stage in the process. In asking this question, the following should be considered: the euro debt crisis has evolved since late 2009. The European Commission (the Commission) tabled a first discussion paper detailing, among other things, the option to establish mandatory deadlines for migration to harmonised SEPA payment instruments through EU regulation in March 2010. The Commission introduced its proposal for the SEPA Regulation in December 2010. This proposal was then considered by the Council of the EU and the European Parliament throughout 2011. As mentioned above, both EU legislative bodies adopted the SEPA Regulation in February 2012. In other words, the determination of EU lawmakers to establish a timely deadline for compliance with the SEPA Regulation was not deterred at any stage in the legislative process which evolved in parallel with the deepening of the euro debt crisis.

The EPC shares the opinion that SEPA contributes towards a solution for the current euro crisis. In line with statements from other market participants, the EPC believes that the current situation reinforces the need for swift migration to harmonised SEPA payment schemes. It is therefore positive that the European legislator established clear deadlines for migration to SEPA. It is the view of the EPC that the 1 February 2014 deadline for migration in the euro area mandated with the SEPA Regulation should not be delayed.

Clearly, the euro crisis impacts the economic actors in the internal market. This is however no reason to procrastinate the actions required to achieving compliance with the SEPA Regulation. Unless the EU legislator were to decide otherwise, payment service providers and payment service users such as business and public entities in the euro area must comply with the SEPA Regulation by 1 February 2014.

Consequently, the EPC maintains that payment service providers and payment service users need to evaluate the impact of the SEPA Regulation on their day-to-day operations. The EPC also reiterates that the experience of early movers handling major payment volumes indicates that migration to SEPA Schemes and technical standards is beneficial but requires careful planning. The relevant actions and resources should be identified as soon as possible. The time to act is now.

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