The ACT recognises the considerable merit in using the Payments Council to elicit contributions from users and providers of payments services. In addition we are supportive of measures to enhance transparency and accountability in payments service provision and contractual arrangements. However it is unclear to us whether the conclusions arising from this process will simply be reported and the industry left to react as it sees fit or whether the Payments Council will seek to force through certain changes or innovations.
In general, the ACT takes the position that except in circumstances of demonstrable market failure or where there is a need for specific co-operation (e.g. potentially under Financial Sector Continuity planning) market-led solutions should always be preferred in the financial services industry. There is no prima facie case set out in this consultation of market failure that requires a centrally enforced set of actions derived from the National Payments Plan (NPP).
In the absence of such a case being made, we are concerned that implementing an NPP could lead to unnecessary constraints on healthy competition between payments services providers. It may also be argued that formalising relationships can lead to the adoption of solutions which suit the balance of argument (of self-interested parties) rather than the test of value. There is also the possibility of non-traditional providers and technologies (including those yet to be developed or provided!) being excluded if there is a centrally enforced specific programme of development. Given that the membership of the Payments Council is overwhelmingly from the payment provider side of the industry, and apart from the independent directors so too is the Board, our worry must be that the Plan and any actions resulting from it may be biased towards the benefit of existing providers not non-traditional providers or customers.
Our experience suggests that users - whether corporate or retail – have generally adapted to changes in technology and service provision without the need for prescribed or centralised planning initiatives. As treasurers our primary concern with payment services is that they are functionally meeting needs and able to add value to our organisations’ processes. It is not clear to us the work of the Payments Council using an NPP will facilitate this. For instance, no reference is made in the National Payments Plan to how access could be facilitated to the UK market for non-UK payment providers, to enable them to meet corporate needs for processing payments from accounts held in the UK in a range of currencies, including Sterling. Indeed, a focus on facilitating market access, instead of listing potential services that need to be offered by UK institutions, would be a healthy response to the ability with SEPA of the UK’s payment providers to offer their services to banks and payment institutions in other EU countries.
