In SEPA Area the Discrimination of IBANs is Unlawful and…
… Damages FinTech and Consumers
IBAN discrimination is that fact whereby the beneficiary of a payment does not accept that the payment, in one shot and/or recurring, originates from a foreign current account in the name of the originator.
Vice versa, the situation can arise whereby the originator refuses to make the payment to a foreign current account held in the name of the beneficiary.
The case history shows refusals both in the public and private sector, both for the purchase of goods and services and for settlements of positions not arising from purchases, such as the crediting of salaries or funds of another nature or the settlement of obligations towards public administrations.
The obvious consequence is that in the presence of refusal, and in the absence of alternatives, the originator or beneficiary whose current account is not accepted must renounce the monetary transaction due to the arbitrary behaviour of the counterparty, with all the consequences that this entails.
The reference context is cross-border transfers in the countries of the SEPA area, i.e. the 28 EU countries plus Iceland, Norway, Switzerland, Andorra, Liechtenstein, Monaco, San Marino and Vatican City.
This is unlawful behavior because on March 14, 2012, thus almost 10 years ago, the European Parliament and the Council of the European Union issued a regulation, 260/2012, which entails the obligation to accept incoming/outgoing cross-border payments in the SEPA area; as known, European regulations are mandatory and directly applicable for all EU member states.
In a November 2017 report, the European Commission notes that IBAN discrimination is ‘the number one priority’ (after 5 years!!) for the application of Regulation 260/2012, due to reports and complaints made by consumers. However, in the report there are few complaints highlighted by the national central banks: the discrepancy is explained by the lack of knowledge (unawareness) of the existence of the instrument by the operators, especially in the countries of the SEPA area but not in the Euro area; by the low use of the direct debit form (SSD) in most countries; by problems in the legacy processes related to the compilation of the IBAN online or on pre-filled paper; by the absence of indications to whom to complain.
After nine years, the situation has worsened. If for obvious reasons unawareness, after such a period of time, can no longer be justified, only bad faith remains and, therefore, the intention to cause damage arbitrarily.
The most damaged market players are the plethora of fintech initiatives that have disintermediation as their competitive focus. For these companies, the hostile behavior has become of such a level, and the actionss of the authorities that should protect the issue so absent, that some of them have consorted and have initialized a website where the individual, who is made the object of arbitrariness, can report the discrimination in order to help highlight the actual consistency of the wrongdoing to the European Community.
It has come to the point that an operator in the sector, N26, for customers residing in Italy and to efficiently and quickly remedy the problem, has equipped itself to provide them with an Italian IBAN.
To the individual, subject of arbitrariness, remains very little to do. In addition to reporting to acceptmyiban.org can proceed through a communication to the authority that in each country is responsible for control, first of all the national central bank and then, in some cases, the national agencies for the protection of competition and / or consumers. In Italy, there is the AGCM (Authority for the Protection of Competition and the Market): in addition to first having to make a complaint via certified email to the culprit of arbitrariness, and usually waiting 30 days for a non-satisfactory or unsatisfactory response, the authority, being overburdened with work, usually starts up after a critical quantity of reports have been received from a single subject. This can be deduced from the results that have heavily affected telephone, TV-streaming and financial operators, i.e., all subjects with widespread and fragmented clientele. Moreover, no public entity appears among those sanctioned.
If one is the victim of discrimination on the part of operators with little quantitative weight, in terms of the number of clients or the overall sum involved in illicit behavior, there are few ways of obtaining justice. Even recourse to consumer associations is, in this as in other cases, extremely uncertain in outcome. By virtue of the internal policy priorities that govern these players, they never work in the interest of the individual consumer, for whom they have reason to exist, but always in function of a critical mass that gives them prestige and visibility.
Curious is the behavior of central banks. The ECB last addressed the issue in February 2019, transposing the Commission’s report, at the SEPA impact assessment. In addition to replicating it in discrimination cases and posing it as the first item as a challenge to the SEPA project it does nothing else, except to state that the issue is practically on the way to being resolved, which is not true in light of the current market exasperation (after 7 years)mentioned above.
As for the national central banks, which are responsible for the implementation of Regulation 260/2012, some, such as the Dutch and Irish, in their online presence have exhaustive pages regarding the definition of the problem; others, such as the Italian one, have nothing except slavishly reporting the ECB and Commission reports in the documentation of the site. Noting that many actors who practice discrimination are subject to the supervision of Bank Of Italy, such as several credit guarantee consortiums or consumer loan providers or banks, and some of them have been sanctioned by AGCM, some doubt about the protectionism and corporatism of the sector is not detached.
This is an English adaptation of a neuronal Italian/English AI translation by DeepL.
