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Payments & FinTech Lawyer

Commission dawn raids sound warning to Member States ahead of PSD2 application

The European Commission (‘EC’) has carried out a number of dawn raids, including to the offices of the Polish and Dutch Banking Associations, in regards to concerns that banks have been engaging in anti-competitive behaviour by restricting the access of third parties to the online bank account data of consenting customers, according to the EC’s press release of 6 October 2017.

The alleged practices being investigated are aimed, according to the EC, “at excluding non-bank owned providers of financial services by preventing them from gaining access to bank customers’ account data, despite the fact that the respective customers have given their consent to such access.” “Anecdotal evidence suggests some banks are doing this by refusing to open accounts for FinTech businesses, and dragging their heels on access requests,” said Chris Finney, Partner at Fox Williams LLP. The investigation relates to possible breaches of EU antitrust rules under Articles 101 and 102 of the Treaty on the Functioning of the European Union; the EC has made clear that at this stage the inspections are a preliminary step in the investigation, and not a finding of any wrongdoing.

Finney does not find the EC’s concerns entirely surprising, noting that “FinTechs have been concerned about the anti-competitive behaviour of some banks for a long time. The EC sees PSD2 and enhanced competition in the retail banking sector as vital. So an early intervention to head off problems makes sense. The only thing that might be a surprise is that the EC has the resources to do this at this stage, when there are so many other demands on its time. That might tell us something about how bad the EC thinks this problem might be.”

The EC’s actions come only a few months before the date when Member States are required to have transposed PSD2 into their national law, which is 13 January 2018; PSD2 will regulate for the first time account information services and payment initiation services. The EC’s investigation here might well be viewed as a warning signal to Member States to be prepared for PSD2. “If the EC finds evidence of anti-competitive behaviour by some banks, it will take action against them, and do what it can to encourage national authorities to do the same,” said Finney. “If there is evidence of anti-competitive behaviour by the banks, the UK authorities may be more inclined than most to act, because of the investment that’s already been made, by the Government, the Prudential Regulation Authority, the Financial Conduct Authority and the Competition and Markets Authority, to enhance competition in the UK’s retail banking sector, which they’d hate to see unnecessarily go to waste.”

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