We’re keen Europeans, except when we don’t want to be

Discussions about Brexit in Ireland often have something of an air of gloating.  We are the good Europeans.  We don’t have a stupid Eurosceptic tabloid press.  We don’t blame the EU and ECJ for everything.

But if the government in Ireland doesn’t see the point in EU regulations then it seems that they just ignore them.

The bank

I recently opened a current bank account with N26.  They are a German based online bank who operate in many European countries, including Ireland.  It took me about 5 minutes: the only annoying part was having to enter my passport data manually despite having to also send them a photo to it.  Apparently automated scanning is “coming soon”.  It was 5 times quicker and much simpler than trying to get a debit card set up on an existing account with AIB recently.

The N26 debit card arrived a few days later, the app is great and their website easy to use.  As a German bank, my IBAN begins with DE, rather the IE that indicates an Irish bank.  But since the advent of SEPA, which concluded in 2014, that makes no difference.

The nerdy bit

When a company in the Eurozone wants to process a Direct Debit to its customers’ accounts, it create a file (in a format called SDD, for SEPA Direct Debit) and sends this to its own bank.  The bank then collates this with other Direct Debit files from other companies and, since the advent of SEPA, sends it to EBA Clearing STEP2.  My memory from working on this in A Large Bank in 2016/7 is that the Irish banks use EBA Clearing’s Frankfurt hub, but the important part is that the all DD payments go the same way, regardless of whether the account to be debited is with another Irish bank, or somewhere else in the SEPA zone.  That’s why we now have to use an IBAN when providing the account number even for a domestic payment as everything is cleared at a European level.  The charges levied by the clearing system and the timescales to process the payment are the same regardless of where the account to be debited is located.

The legal bit

The objective of SEPA, as set out by the European Commission is to allow customers … to set up cross-border direct debits in Euros throughout the whole of the EU¹⁹. Consumers will be able to rely on one bank account and one bank card to make payments throughout the 32 SEPA countries.

This was enacted through Article 9 of the EU 260/2012 which includes the requirement All payers’ payment accounts reachable for a national direct debit should also be reachable via a Union-wide direct debit scheme.   

Article 9 was transposed into Irish law by means of Statutory Instrument 204/2016 which prohibits …(j) … any contravention of Article 9(2) of that Regulation where the payer is a consumer and the payee is a trader.

The same Statutory Instrument appoints the Competition and Consumer Protection Commission as the authority to monitor compliance with Article 9 …and take all necessary measures to ensure compliance.  Strangely though, no penalties are mentioned for non compliance.

The results

So far I’ve tried moving 4 direct debits over to use my N26 account with its German IBAN:

• Friends First
• Leap card, which is operated by the National Transport Authority (NTA)
• VHI
• Electric Ireland

I still have to deal with Concern and Bank of Ireland Credit Card Services.

I was able to login to my Friends First account and amend my DD details without a hitch.

However, with Leap card, VHI and Electric Ireland, when I tried to enter my N26 IBAN on the Leap card site, I got an error message about only accepting Irish bank accounts.

Both VHI and Electric Ireland have an online query facility which I used, though neither has sent any acknowledgment.  A Google search seems to indicate that that they will accept non-Irish accounts but I will have to complete a paper mandate as the Irish banks’ Originator Plus scheme for online and telephone direct debit mandates does nor cover other banks.  So a bit of a headache but not the end of the world.

No Great Leap Forward

Changing my Leap card details has revealed a different issue.  After failing to change may details, I noticed the following text on their website: It is currently only possible to specify an Irish bank account when setting up Auto Top-up. However, NTA is pleased to announce that we have been able to fund the final phase of the updates necessary to enable all customers with any SEPA compliant European bank account to sign up to Auto Top-Up. This enhanced feature will be implemented before the end of April 2018. In the meantime there are many other ways to top-up a Leap Card, including: using the NFC Top-Up app (for Android phones), or at a Leap Sales Agent, or at a Vending Machine at Irish Rail and Luas platforms.

A bit of googling revealed an entire thread on boards.ie about other people in a similar position with Leap card not accepting N26 IBANs, with posts starting in early 2017.  A few of the contributors went through all the official channels to seek their rights under Statutory Instrument 204/2016, including lodging a complaint through SOLVIT, an EU online tool for complaints about breaches of consumer rights.  It looks like the SOLVIT service got the run around from both the NTA and the Competition and Consumer Protection Commission, who, despite the name, don’t seem to be all that bothered about Consumer Protection.  After some more prodding, one of the complainants got a detailed response from the NTA which, amongst other things said that their back-office systems were built some time ago (prior to SEPA).  

I know big IT projects run over, and that the Leap card had a long and tortuous birth but SEPA was launched in 2009, and the Leap card in 2011.  It looks like someone took a decision to go ahead with a DD system in the knowledge that the system would be non compliant within a few years.  A decision was also taken not to bother making the system compliant after the the law made it illegal.

So the same Irish government which promotes its credentials as a loyal EU member happily allows its own agencies to ignore EU regulations, doesn’t bother legislating for penalties where the regulation are breached and allows its compliance agencies to ignore breaches.

If I was a conspiracy theorist, I could argue that it’s all a plan to make us stick with an Irish bank and thus make them more attractive assets as the Government sells off its remaining shares.  But having worked in many organisations, I tend to agree with the saying Never attribute to malice that which is adequately explained by stupidity.