Savings accounts: In or out? The CJEU's flexible approach to savings accounts.

In a very short judgment the CJEU has decided that an online direct savings account which permits unlimited access to funds, but only through an intermediate reference (current) account, is not a "payment account" under Article 4(14) of PSD1.

Since many savings accounts can only be operated through a current account, the judgment has a major impact including the following:

  • Conduct rules relying on there being a payment account, such as value dating, will not apply
  • The information requirements will not apply
  • Third Party Providers (TPPs) will not have a right to view account information or initiate payments from these accounts
  • The requirements for secure communications and strong customer authentication will not apply.
Although many of these requirements are replicated in BCOBS in the UK the scope of BCOBS is more limited and providers also have more flexibility as to how they comply.

This is the final, binding judgment on this issue. The court's reasoning, however, is unconvincing.  In essence, it relies on recital 12 of the Payment Accounts Directive which states that savings accounts are excluded from the scope of PAD unless they can be used for day-to-day payment transactions.  This recital was introduced to clarify that, while the definitions of 'payment account' in PAD and PSD are virtually identical, PAD should only apply to payment accounts that are current accounts or that have the same functionality as current accounts. 

The judgment suggests that a savings account will not be a 'payment account' if use of an intermediary account is necessary to make payment transactions to third parties. Savings accounts which can be credited directly from a third party account or be used to make payments to a third party e.g. by direct debit or other payment functionality would therefore still be payment accounts within the scope of PSD.

Whilst the outcome for the type of savings account considered in this case seems sound, the basis for the decision is not.  If applied more generally, effectively using the restricted set of payment accounts within scope of PAD as though that is what the definition of payment account in PSD means, this could result in absurd outcomes for other types of account.  For example, might a normal credit card account be viewed as not being a payment account as it is not included within the scope of PAD?

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