Chris Finney looks at a recent Attorney General’s Opinion and sees it as a useful prompt for financial services organisations to review their compliance with their duty to provide information to customers.
BAWAG PSK Bank, Austria provides e-banking services. To do this, it creates a mailbox for every BAWAG e-banking customer, which is accessible by logging on to the BAWAG e-banking system. BAWAG sometimes sends messages to these mailboxes, without sending an email to the private email address of its customers as well.
Is this enough to comply with the relevant requirements of the Payment Services Directive (PSD)? In particular, is the information being communicated through these mailboxes on a 'durable medium' and 'provided' to the customer? Or is it merely 'made available', instead?
These were the questions raised in Case C-375/15 BAWAG PSK Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse AG v Verein für Konsumenteninformation and the recently published Opinion of Advocate General Bobek gives us a preliminary view on the answers to these questions, from a European law perspective.
Article 41(1) of the PSD requires a 'payment service provider [(PSP) to] provide a payment service user [(PSU)] on paper or on another durable medium with [certain] information…' (emphasis added).
Article 4(25) of the PSD defines 'durable medium' as 'any instrument which enables the [PSU] to store information addressed personally to him in a way accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored' (emphasis added).
Although the concept of a 'durable medium' has been used in different ways in different European legislation since 1997 (including (eg) in the Distance Marketing Directive, and the Insurance Mediation Directive), in the opinion of Advocate General Bobek, 'it is by now clear that the concept of "durable medium" is defined in a flexible manner [which the] Court has viewed … as a "functional equivalent" to paper, therefore emancipating it from any preconception as to what the material support of the information should be'. In particular, the reference 'to "any instrument" confirms that "durable medium" is to be defined in a broad way, a priori not excluding any potential modes of communication'.
In fact, in the opinion of Advocate General Bobek, 'information transmitted by a [PSP] to the e-banking mailbox of the customer constitutes information on a "durable medium" [if] the e-banking mailbox enables the [PSU] to store information personally addressed to him in a way which is accessible [by him] for future reference for a period of time adequate in the light of the purposes of the information. It must furthermore allow the unchanged reproduction of the information stored, thus preventing the service provider from accessing, modifying or erasing that information'.
An 'e-banking mailbox can also constitute a suitable channel for the transmission of information in the form of electronic documents if those documents themselves comply with the requirements of being a "durable medium" and if such a system incites the user to electronically store and/or print those documents through an easily accessible function'
Provided or made available?
According to the Attorney General, the identity of the communicator and the communicator's purpose are 'not the sole or conclusive factor in ascertaining whether … information has been 'provided' … What is more important is the effective transmission of the information. The information must cross the line from the domain of the service provider in order to enter into the sphere of awareness of the user … information placed in an e-banking mailbox, even at the initiative of the [PSP,] does not … penetrate the domain of the regular communication instruments used by customers in their everyday life. [So] the information is not "provided" … [The] "provision" of information may occur as a result of a "two-tier" operation. A system may be set up which ensures that a notice or alert is sent to the customer's private email address (or a text message to their personal telephone, or even a simple letter of alert), making the customer aware that there are new messages available in their e-banking mailbox. Such a procedure would, in my view, be a suitable complement to information communicated through an e-banking mailbox on a durable medium so as to constitute "provision" of information … information … transmitted by a [PSP] solely through an e-banking mailbox is not "provided" … but merely "made available" to a [PSU]'
The UK's Treasury and Financial Conduct Authority will not be at all surprised if the CJEU follows the Advocate General's Opinion in this case because (a) the European Court usually follows the Advocate General's Opinion; and (b) this particular Opinion is consistent with the Treasury and FCA's existing views on the meaning and effect of the words 'durable medium' and 'provided', in the first Payment Services Directive, and elsewhere.
But that doesn't mean this Opinion can be disregarded by UK PSPs, insurers, insurance intermediaries and others. This is because the terms 'durable medium' and 'provided' are often used in the UK's European Directive implementing legislation and the FCA's rules and this case draws our attention (and it's likely to draw the attention of the FCA) to the possibility that at least some UK authorised firms won't be meeting the requirements of these rules in full, on every relevant occasion.
This could therefore be a useful prompt to review your firm's particular arrangements to make sure they're properly compliant with the relevant rules.
Chris Finney is a Partner at Cooley LLP and leads Cooley's financial services and fintech regulatory practices.