Last week an introductory overview was given of the Payment Services Directive (PSD). Today, the focus is on the meaning and scope of a framework contract or arrangement.
The directive requires that a payment account has a framework contract to govern the terms of the payment service. A framework contract/arrangement means a contract for payment services that governs the future execution of individual and successive payment transactions and may contain the obligation and conditions for setting up a payment account.
Local banks are currently informing customers about changes that need to be made to the terms and conditions applicable for payment accounts. You may receive the revised terms via your online banking facility, if available. Alternatively, you may be asked to collect your terms personally from your branch.
Whichever way, it is imperative that you go through the terms carefully and identify those provisions which you may not understand or disagree with. If you do not respond by a specific date (that announced by your bank), the bank will take it that you have agreed to the revised terms.
The terms may be offered to you in English. Do not hold back from asking for a Maltese version, if that is the language with which you are more conversant - it is your right to do so. After all, signing the revised terms signifies your understanding and agreement. If you disagree with the proposed terms, ask your bank to suggest a mutually acceptable remedy in the circumstances.
A framework contract/arrangement is focused on a specific set of terms governing the provision of payment services. Such contracts must contain information on:
• a specification of the unique identifier to be provided by the payer for the payment to be properly executed. Typically unique identifiers involve the payer, providing the beneficiary's IBAN (International Bank Account Number) and the (BIC) Bank Identifier Code of the beneficiary's bank;
• maximum execution time;
• charges payable and a breakdown of the charges;
• the exchange rate to be applied, if applicable; and
• the frequency of statements indicating the transactions passed through the account. You may receive such a statement electronically (if you have an internet banking system available) or by post.
Depending on the type of service or product offered, the terms may also include other more comprehensive information:
• the use of the payment service and its main characteristics;
• means of communication;
• safeguards and corrective measures in the case of unauthorised or incorrectly executed payments;
• changes in and termination of the contract; and
• redress available to the payer.
Your bank is obliged to inform you two months in advance before it can amend any aspect to the agreed terms and conditions. The PSD specifically makes reference to situations where a consumer refuses to accept proposed changes and identifies those rights which customers enjoy in such situations.
Information requirements relative to payments in and from a payment account as well as execution timeframes will be covered next week.