COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 29.11.2002
COM(2002) 663 final
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND
TO THE COUNCIL
on the application of Directive 97/5/EC
of the European Parliament a nd of the Council of 27 January 1997
on cross-border credit transfers
2SUMMARY
This Commission report on the implementation of the Cross-Border Credit Transfers
Directive (97/5/EC), is, as provided for in Art. 12 of this Community text, to be submitted tothe European Parliament and the Council.
This report describes the way in which the provisions of the Directive are implemented in the
Member States: both, the legal transposition of the Directive into national legislation as wellas the actual application of these provisions by the banking industry in the Member States are
dealt with.
In general, Directive 97/5 EC has been adequate ly transposed in all Member States. However,
there are some specific cases of concern: e.g. certain Member States have not fully reflectedthe prior and subsequent information requireme nts of the Directive, some Member States
have also failed to adequately transpose the pr ovisions obliging them to ensure the existence
of adequate and effective complaints and redre ss procedures. All in all, the legal transposition
of the Directive into national legislation is, however, quite satisfactory.
As regards the actual situation of cross-border credit transfers in each Member State, the
situation is, however, far from satisfactory. Whereas execution times for the transfers areacceptable (this had been a particularly conc ern addressed in Article 12), the persistent
practice of double charging, the lack of cust omer information and the unwillingness of some
credit institutions to compensate for late paymen ts or to refund for lost payments or unlawful
deductions is alarming.
The conclusion of this document proposes lines for possible action to be taken in order to
further improve the performance of cross-bor der credit transfers. The principle of non-
discrimination between cross-border credit transfers and credit transfers at national level hasalready been achieved by the Regulation on cross-border payments in euro (2560/2001/EC).
This Regulation imposes the equality of charge s for cross-border and national payments and
should thus lead to a reduction of the charges fo r cross-border payments and in particular of
cross-border credit transfers, which was a majo r public concern. This re port also addresses
further necessary improvements in the field of cross-border credit transfers and bringsforward proposals for amending the Directive.
However, having in mind the overall objective of "Better Regulation", the report proposes to
work towards a more coherent and comprehensiv e legislation for payments and to integrate
the proposals for amending the Directive into a consolidated framework for payments in the
Internal Market. Such an initiative would cont ain all legislative measures regarding retail
payments in the Internal Market, thus ab andoning the present piece-meal approach and
aiming at establishing a single legal act in this field.
31. Introduction................................................................................................................. .6
2. General remarks on the impleme ntation of the Directive ............................................ 7
2.1. Origin of the Directive ................................................................................................. 72.2. The Aim of the Directive ............................................................................................. 72.3. The Impact of the Directive ......................................................................................... 82.4. Links with other Community Legislation .................................................................... 82.5. Implementation of the Directive under the EEA agreement........................................ 83. Article by article  implementation of the Direc tive in the Member States ................... 9
3.1. General Situation.......................................................................................................... 9
3.2. Adequacy of Transposition – General.......................................................................... 93.3. Article 1 – Scope.......................................................................................................... 9
3.3.1. Transposition in Member States ................................................................................ 103.3.2. Practical application of pr ovision in Member States ................................................. 10
3.3.3. Cases of concern ........................................................................................................ 1 0
3.4. Article 2 – Definitions................................................................................................ 103.4.1. Transposition in Member States ................................................................................ 103.4.2. Practical application of pr ovision in Member States ................................................. 12
3.4.3. Cases of concern ........................................................................................................ 1 2
3.5. Article 3 – Prior information on conditi ons for cross-border credit transfers............ 12
3.5.1. Transposition in Member States ................................................................................ 123.5.2. Practical application of pr ovision in Member States ................................................. 13
3.5.3. Cases of concern ........................................................................................................ 1 3
3.6. Article 4 –Information subsequent to a cross-border credit transfer.......................... 13
3.6.1. Transposition in Member States ................................................................................ 133.6.2. Practical application of pr ovision in Member States ................................................. 14
3.6.3. Cases of concern ........................................................................................................ 1 4
3.7. Article 5 – Specific undertakings by the institution................................................... 153.7.1. Transposition in Member States ................................................................................ 153.7.2. Practical application of pr ovision in Member States ................................................. 15
3.7.2.1. Accuracy in relation to execution times quoted:........................................................ 153.7.2.2. Accuracy in relation to charges quoted:..................................................................... 16
43.7.3. Cases of concern ........................................................................................................ 1 6
3.8. Article 6 – Obligations regarding time taken............................................................. 16
3.8.1. Transposition in Member States ................................................................................ 173.8.2. Practical application of pr ovision in Member States ................................................. 17
3.8.3. Cases of concern ........................................................................................................ 1 7
3.9. Article 7 – Obligation to execute the cross-border transfer in accordance with
instructions................................................................................................................. 18
3.9.1. Transposition in Member States ................................................................................ 183.9.2. Practical application of pr ovision in Member States ................................................. 18
3.9.3. Cases of concern ........................................................................................................ 1 9
3.10. Article 8 – Obligations upon institutions to refund in the event of non-execution of
transfers...................................................................................................................... 19
3.10.1. Transposition in Member States ................................................................................ 193.10.2. Practical application of pr ovision in Member States ................................................. 20
3.10.3. Cases of concern ........................................................................................................ 20
3.11. Article 9 – Situation of force ma jeure........................................................................ 20
3.11.1. Transposition in Member States ................................................................................ 203.11.2. Practical application of pr ovision in Member States ................................................. 21
3.11.3. Cases of concern ........................................................................................................ 21
3.12. Article 10 – Settleme nt of Disputes ........................................................................... 21
3.12.1. Transposition in Member States ................................................................................ 223.12.2. Practical application of pr ovision in Member States ................................................. 23
3.12.3. Cases of concern ........................................................................................................ 23
3.13. Other issues .............................................................................................................. .. 23
3.13.1. Sanctions ............................................................................................................... ..... 23
3.13.2. Right to Cancel or Terminate Transfers..................................................................... 244. Conclusion ................................................................................................................. 244.1. Assessment of the transposition in Member States.................................................... 244.1.1. Main differences between nationa l regimes and Directive 97/5/EC.......................... 24
4.1.1.1. Article 2 - definitions ................................................................................................ .2 4
4.1.1.2. Article 3 – provision of information pr ior to a cross-border credit transfer .............. 24
4.1.1.3. Article 4 – Provision of information after a cross-border credit transfer................... 25
54.1.1.4. Banks' undertakings in relation to requests  for cross-border credit transfers Article 525
4.1.1.5. Article 9 “Force majeure” .......................................................................................... 254.1.1.6. Article 10 “Complaints a nd redress procedures”....................................................... 25
4.2. Assessment of the application of th e provisions in the Member States..................... 26
4.2.1. Provision of information before a nd after a cross-bor der transfer:............................ 26
4.2.2. Execution times.......................................................................................................... 26
4.2.3. Obligations to compensate for late payments ............................................................ 264.2.4. Obligation to execute the cross-border tran sfer in accordance with instructions ...... 26
4.2.5. Refund of unlawfully deducted ch arges..................................................................... 26
4.2.6. “Money-back guarantee” ........................................................................................... 264.3. Proposals for the revision of the Directive................................................................. 27
6REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND
TO THE COUNCIL
on the application of Directive 97/5/EC
of the European Parliament a nd of the Council of 27 January 1997
on cross-border credit transfers
1. I NTRODUCTION
Directive 97/5/EC on cross-border credit transfers1 entered into force on 14 August
1999, two and a half years afte r its publication in the Official Journal on 14 February
1997 (see Annex 1).
Article 12 of the Directive requests of the Commission to submit a report to the
European Parliament and the Council on the application of this Directive,
“accompanied, where appropriate, by pr oposals for its revision”. The second
paragraph of that Article emphasises in particular to report on execution times forpayments [time limit in Article 6(1)].
The Commission thus responds to this oblig ation and reports whether the provisions
of Directive 97/5/EC have been fully tr ansposed into national law by adequate
national legislative measures in the 15 Member States. Furthermore, the report alsoevaluates the actual situation of how the Directive is applied in practice in eachMember State. Finally, the report cont ains several proposals for the revision of
Directive 97/5/EC as well as for the further development of legislation in the field of
payments in the Internal Market.
A study on the implementation and applica tion of Directive 97/5/EC was undertaken
by a consultant in order to substantiate this report
2. The members of the “Payment
Systems Government Expert Group”, a gr oup of payments experts from the Member
States set up in order to discuss payment issues and to monitor the implementation ofthe payments legislation, were informed a bout the results of the study and invited to
express their reactions. Several Member States submitted additional comments. TheCommission assumed that the consultant’s findings, which were not commented on
by Member States before 30/9/2001, were correct.
This study had shown that the legal  transposition of the Directive into national
legislation was in general adequate. However, the study also evidenced that thefactual application of the Directive in day-to-day operations was far from being
satisfactory. The study revealed that – despite the Commission’s and Parliament’scontinuous efforts and warnings toward s the banking industry to improve the
situation - banking charges for cross-border credit transfers remained at anunacceptably high level.
These alarming study results called for immediate legislative action. On 25 July 2001
the Commission therefore proposed to the Eu ropean Parliament and to the Council a
Regulation on cross-border payments in euro (2560/2001/EC). This Regulation was
                                                
1OJ L 43, 14/2/1997, p. 25
2The details of the study can be found on the Commission web-site:
http://europa.eu.int/comm/internal_market/en/finances/payment/directives/97-5study.pdf
7adopted by the European Parliament and Council on 19 December 2001 and entered
into force on 1 January 2002. It aims at reducing charges for cross-border payments
in euro, so that by 1/7/2002 (concerni ng electronic payment transactions),
respectively by 1/7/2003 (concerning cross- border credit transfers) charges would be
aligned to those for corresponding  payments at national level.
2. G ENERAL REMARKS ON THE IMPLEMENTATION OF THE DIRECTIVE
2.1. Origin of the Directive
In 1990, the Commission published its first general documents on the operation of
the payment systems within the framework of the Single Market: The “Discussionpaper – making payments in the Internal Market”
3 already stated that payment
systems function rather well inside each Member State, but remained unsatisfactoryin a cross-border context. In the same year, the Commission’s "Recommendation onthe transparency of banking conditions  relating to cross-border financial
transactions"
4 proposed several principles and me asures in order to improve cross-
border payments.
Studies, which the Commission launched in 1993 and 1994 (see footnote 4), were
aimed at checking whether this Recomme ndation was being prope rly applied and at
monitoring customer-information practices in  the banking sector. It was in the light
of the results of these studies, which reveal ed many shortcomings in the operation of
cross-border transfers and of the European  Parliament's Reso lution of 12 February
19935 , that the Commission decided to propose legally binding measures concerning
cross-border credit transfers.
In 1994, the Commission published a Communication on the transfers of funds6
which contained two very important te xts: a preliminary draft proposal for a
Directive (which became Directive 97/ 5 under consideration) and a draft
Communication on the implementation of the rules of competition with this type oftransfer
7.
The Directive was, after very lengthy negotiations, adopted on 27 January 1997. Due
to the fact that some Member States considered it very difficult to incorporate theDirective into national legi slation, the transposition pe riod for implementation was
unusually long, namely 30 months.
The Cross-Border Credit Transfers Directive has now been in force for almost three
years, namely since 14 August 1999.
2.2. The Aim of the Directive
The Cross-Border Credit Transfers Directive establishes minimum information and
performance requirements for cross-border credit transfers, so as to ensure that funds
                                                
3COM 90/447 fin of 26/9/1990
4Recommendation 90/109/EEC, OJ L 67, 15/3/1990, p. 39
5OJ C 72 of 15/3/1993
6COM(94) 436 of 18/11/94
7Which became later the Commission's Notice on the application of the EC competition rules to cross-border
transfers (OJ C 251, 27/9/1995, p. 3)
8can be transferred cross-border from one pa rt of the Community to another rapidly,
reliably and at low cost.
To this end, the Directive contains rules on
/g183 Transparency : the Directive provides for information obligations prior and
subsequent to the transaction. Armed w ith such information made available
regarding the conditions applicable to cross-border credit transfers, users ofpayment systems would thus be in a bette r position to compare the terms available
on the market, so that competition between different systems would be reinforced
and abnormally high pri ces would be eliminated.
/g183 Performance : the Directive lays down certain principles which apply as standard
transfer conditions, namely regarding the execution period, the distribution of
costs and the liability of the originator's bank for "lost" transfers. On the whole,these rules should have the effect of ensu ring that cross-border credit transfers
meet the requirements of a genuine Si ngle Market by introducing standard
principles for the entire Community.
/g183 Redress : the Directive introduces provisi ons on complaints procedures. By
obliging Member States to provide for adequate and effective redress
mechanisms, the customer is given efficient tools to enforce the rights given tohim by the Directive.
2.3. The Impact of the Directive
The Directive would have had enormous impact on the functioning of cross-border
credit transfers within the European Un ion, had the Directive’s provisions been
applied correctly by all banks. Althou gh the execution of cross-border credit
transfers has now become much swifter, the goal of rendering these transfers cheaperand more reliable cannot be considered as having been achieved. This failure ofbanks finally led to the proposal and a doption of the recent Regulation on Cross-
Border Payments in euro
8.
2.4. Links with other Community Legislation
The Cross-Border Credit Transfers Directive was the first legally binding instrument
at EU-level dealing with payments in general and with credit transfers in particular.Subsequently, the Regulation on Cross-Border  Payments in euro further regulates
cross-border credit transfers by introducing th e principle that i.a. charges for cross-
border credit transfers and corresponding credit transfers at national level must be the
same.
2.5. Implementation of the Di rective under the EEA agreement
The Directive applies to Iceland, Li echtenstein and Norway under the EEA
Agreement. The EFTA Surveillance Authority is preparing a report on theimplementation of the Directive by these countries.
                                                
8Reg. 2560/2001 of 19/12/2001; OJ L 344, 28/12/2001, p.13
93. A RTICLE BY ARTICLE IMPLEMENTATION OF THE DIRECTIVE IN THE MEMBER
STATES
3.1. General Situation
In accordance with the long transitional period granted for implementing national
measures, namely 30 months, the Directive was only to be transposed by 14 August1999. However, Member States considered it desirable that the Directive would be
implemented before the beginning of Phas e III of the Economic and Monetary Union
(1 January 1999). For that reason, the Member  States entered the following statement
into the Council minutes: "The European Parliament, the Council and the
Commission note the determination of the Me mber States to implement the laws,
regulations and administrative provisions requi red to comply with this Directive by 1
January 1999." Despite this declaration of intent, no Member State met this political
undertaking to implement the Directive by 1 January 1999.
A majority of Member States (11) transposed the Directive into national law within
the legal deadline of 14 August 1999 (cf. Annex 3). Several Me mber States had
adopted legislation before the legal deadline (and in the case of The Netherlands,even before the date laid down in the Joint Undertaking), although the date of entryinto force was not immediate but only foreseen for later.
Four Member States (Belgium, Greece, Italy, and Portugal) failed to transpose the
Directive within the legal deadline. In one case (Greece) an attempt was made torectify late implementation by providing for retroactive effect to its nationallegislation.
In conclusion, all Member States have  now adopted implementing legislation
(cf. annex 2).
3.2. Adequacy of Transposition – General
A limited number of legal concerns, e.g. regarding information requirements or the
provisions concerning redress mechanisms , have been identified. Otherwise, the
transposition of the Directive into Member State legislation has been in line withMember States' obligations.
This report also identifies a number of di fferences (as opposed to clear conflicts)
between Member States' implementing legislation and the Directive. Thesedifferences may in the future, in theory
9, lead to the issue of whether the minimum
conditions for the performance of cross-bor der credit transfers are being met in one
or more Member States.
3.3. Article 1 – Scope
Article 1 defines the scope. The Directive applies to cross-border credit transfers of
up to € 50,000 (whether effected in the curren cies of the Member State or in euros).
For the purposes of the Directive a 'cross-border credit transfer' is a transactioncarried out on the initiative of an originator via a credit institution in one Member
                                                
9To date, there has been no case-law in any Member St ate interpreting the provisions of either Directive
97/5/EC or of national implementing legislation
10State, with a view to making funds ava ilable to a beneficiary at an institution in
another Member State. The originator a nd the beneficiary may be the same person.
3.3.1. Transposition in Member States
A number of Member States (Finland, Ge rmany and Portugal) used the opportunity
to legislate also for national credit transfers and not only for cross-border
transactions.
As the Directive is applicable within the EEA, by virtue of the Agreement on the
EEA and its related procedures, most Member States expressly stated in theirimplementing legislation that it would apply also to the territory of the EuropeanEconomic Area ('EEA'). Danish law went one step further and granted power to
extend the implementing legislation to a dditional countries (provided always that
those countries had equivalent rules).
Germany extended its implementing legislation to cover cross-border credit transfers
in excess of the Directive's ceiling of  €50,000. The German provisions set a ceiling
of €75,000.
3.3.2. Practical application of provision in Member States
No problems on the practical application re garding the scope of the Directive have
been reported.
3.3.3. Cases of concern
None.
3.4. Article 2 – Definitions
This Article proposes 12 definitions of term s used in the Directive. Defined are the
“players” in a cross-border credit transfer (‘institution’: credit institution, otherinstitution, financial institution, intermed iary institution as well as ‘customer’:
originator and beneficiary), and the term s related to a cross-border credit transfer
(cross-border credit transfer, cross-border credit transfer order, reference interestrate, date of acceptance).
It is important to stress that the Directive applies to any legal or natural person
carrying out cross-border credit transfers by way of business. If in a Member Statenon-banking or even non-financ ial establishments are allowed to carry out payment
transactions, such establishments are cove red by the Directive. Member States may
(and many do) reserve transfer transactions for certain categories of institutions,particularly banks.
3.4.1. Transposition in Member States
Legislation in a number of Member Stat es (Austria, Denmark, Germany, Portugal
and Sweden) omits a majority of the definitions of Directive 97/5/EC. In practice, theabsence of definitions in specific cases is not deemed to give rise to significant legalissues. In the event of a dispute, genera l provisions of nationa l law would apply, in
addition to the general principle of Comm unity law that national measures should be
interpreted consistently with corresponding  provisions laid down in Community law.
11No significant legal issues arising from any single Member State's use of different or
additional definitions have been identified.
A limited number of definitional differences give rise to more general issues of
principle:
'credit institution ': implementing legislation of a number of Member States (such as
Italy, Sweden) applies not to 'credit institutions' (as appears in the Directive) but toother defined institutions. In Italy, implementing legislation applies to 'banks'. InSweden, implementing legislation applies to 'banks' and 'other companies'. This isunlikely to have major consequences in practice;
'financial institution ': this definition is omitted from the implementing legislation of
several Member States (Austria, Italy, Portugal, the Netherlands, Germany andDenmark) although it is not considered that this is of legal significance in terms of
the rights and obligations of consumers and credit institutions;
'banking day ': the absence of a definition of ba nking day from the Directive has been
criticised in at least one Member State (Belgium). A number of Member States haveinserted a definition of what constitutes a 'banking day' (Belgium), 'banking businessday' (Italy), 'banking working day' (Austria ), 'bank day' (Sweden) or equivalent, into
legislation implementing Directive 97/5/EC . These definitions will take into account
specific national requirements or traditions.
'cross border credit transfer ': in some Member States (Finland, Germany and
Portugal), the opportunity presented by implementing the Directive has also been
used to legislate for internal or domestic credit transfers. Where this is the case, thedefinitions appearing in the Directive ar e supplemented by additional definitions. In
Belgium, the term 'money transfer' is used in preference to the term 'credit transfer'.One effect of this difference has been to underline the fact that the terms of theimplementing legislation will apply only to transfers initiated by a deposit, orwithdrawal from an existing account as e.g.  opposed to debit transfers. This is not,
however, inconsistent with th e position under Directive 97/5/EC;
'date of acceptance ': in one Member State (Spa in) the definition of 'date of
acceptance' is supplemented by a presum ption that acceptance will be deemed to
have occurred within one day of the inst ructions provided by the customer. In some
other Member State, the definition used in the Directive has not been implemented(Portugal, Germany, Denmark and Austri a). In the United Kingdom, 'commencement
date' is defined as the date upon which a number of different conditions are fulfilled.
In addition to those conditions laid down by the Directive, United Kingdom
legislation also allows the customer and his institution to agree a different, later dateof acceptance. Such a provision is not expressly foreseen by the Directive.
Directive 97/5/EC includes no sp ecific provision identifying the value date  (i.e. the
date on which funds are credited and ava ilable on a beneficiary's account). Some
Member States do identify the concept of 'value date' (Denmark, Germany, Portugaland the United Kingdom),
10 but practice differs from Member State to Member State.
                                                
10In Germany, this rule, which provides for greater consumer protection than is laid down by the Directive, is
the result of a decision of the Federal High Court, dating from 1997. That decision held that defining the
123.4.2. Practical application of provision in Member States
No problems regarding the definitions of th e Directive have been reported in the
practical application of the Directive in the Member States, and also not due toMember States’ use of differe nt or additional definitions.
This does not, however, exclude that differen ces could arise in the future between the
cross-border credit transfer regimes of different Member States. Although this mayappear paradoxical, it is legally perfectly possible for all such Member States to be incompliance with their obligations under Comm unity law. One example of this could
be the fact in relation to the execution peri ods: "banking day" is not defined in the
Directive; however, some Member States define "banking day" as an equivalent
notion in their transposing laws. Different, i.e. diverging definitions would not be in
conflict with the Directive, but still raise difficulties, as the calculation of theexecution periods are based on the notion of "banking days".
3.4.3. Cases of concern
The different definition of “d ate of acceptance” in Spain might give rise to difficulty,
since in Spain acceptance is presumed onl y on the business day 'following' the order,
which has consequences for calculating the execution times.
3.5. Article 3 – Prior information on conditions for cross-border credit transfers
Article 3 of Directive 97/5/EC requires the institutions to provide written information
“in a readily comprehensible form” to cu stomers before carrying out cross-border
credit transfers. This information must at least contain an indication of the executiontime, the way fees and commissions are being calculated, the value date applied, thedetails of the complaint and redress procedure available and as well, if applicable, anindication of the reference exchange rate used.
3.5.1. Transposition in Member States
In some countries, minor issues of interpre tation may arise. For example, in Austria,
no reference is made to 'readily comprehe nsible form' (but this would arguably be
implied by Austrian administrative law). In the same Member State, no reference ismade to the provision of the 'value date' as  part of the prior information. Austria has
also omitted to refer to complaints and redress schemes.
Certain Member States' implementing legislation (Italy, Austria, United Kingdom,
Sweden and France) does not expressly a dopt the term 'reference exchange rates
used', required by the last indent of Ar ticle 3 of Directive 97/5/EC, and, instead,
refers to, for example, 'exchange rate used'.
Danish implementing legislation exceeds the information obligations laid down in
the Directive, as it requires credit institutions to provide prior information not only inrelation to the reference rate of exchange, but also to the date of exchange.
Furthermore, Danish implementing legislation requires credit institutions to inform
                                                                                                                                                        
value date as the date following the day on which money was made available to the beneficiary's account
constituted an infringement of the consumers' rights under the German Act on General Terms and
Conditions
13customers not only about the redress scheme s as such, but also about the customers’
right to compensation in the context of such procedures.
3.5.2. Practical application of provision in Member States
Only 16 out of 40 tested credit institutions provided the customer with a
brochure/printed material. A ll the brochures/printed material contained information
on the charges to be applied. Information on the other areas was not present in more
than six cases, with information on complaints and redress procedures the leastprevalent, appearing in only three case s. Only 3 brochures contained all the
information asked for in Article 3 of Di rective 97/5/EC (2 UK banks and 1 Belgian
bank).
As for the quality of the brochures/printed  material, only the information on charges
was considered between adequate and good. Brochure information on timing,
exchange rates and value date was gene rally poor, and information on complaints
and redress procedures  was considered nearer useless than poor.
3.5.3. Cases of concern
The Austrian transposing law does not oblige institutions to inform customers about
complaints and redress procedures. This has to be considered as an incompletetransposition of Art. 3 of Dir. 97/5/EC.
The other cases of concern do not concern inadequate or incomplete transposition but
the lack of correct application of the national laws by the institutions executing cross-border credit transfers. The study undertaken to substantiate this report clearlyshowed that the prior information obligations laid down by the Directives and the
national implementing laws were not complied with by many institutions.
3.6. Article 4 –Information subsequent to a cross-border credit transfer
Subsequent to a cross-border credit tran sfer, customers must be provided with
documentation in writing about va rious details of the transfer: a reference in order to
allow identification of the transfer, the or iginal amount of the transfer, the amount of
all charges and fees, the value date and the exchange rate, if applied. In case that thecharges are to be wholly or partly bor n by the beneficiary, the latter should be
informed of this by his institution.
3.6.1. Transposition in Member States
Article 4 of the Directive lays down provisions relating to ' clear information in
writing including where appropr iate by electronic means '. Some Member States
(Austria, Denmark and Irelan d) have failed to expressl y make the requirement that
such information be: (a) clear; and/or (b) in writing; and/or (c) where appropriate byelectronic means.
In Ireland there is no positive obligation to  supply the requested specified categories
of information, but only to 'make it available' in general terms.
Article 4 allows customers to waive thei r rights to subsequent information. This
provision is not always implemented into Member State law. No right to waiver isprovided in Germany, Denmark, Spain and France and is only partly granted in
14Sweden and Belgium. This lack of transposition may, arguably, be considered as
more protective of the customer.
The United Kingdom includes provisions, which more specifically delimit the
obligations imposed upon credit institutions to  provide information subsequent to a
credit transfer. In the UK, a 'long-stop' time period of one-month is imposed uponcredit institutions within which inform ation must be supplied. This provision
provides greater protection to the consumer than that provided by the Directive. In
Denmark, the minimum requirements of Artic le 4 of Directive 97/5/EC are made
absolute requirements (although this is not  strictly a provision which 'exceeds' the
provisions of the Directive). Danish legislation also imposes an additional conditionto the obligation of credit institutions to provide subsequent information - Danish lawrequires that such information be supplied 'promptly'.
3.6.2. Practical application of provision in Member States
In 97.6% of all transfers executed within th e implementation study, the originators of
the cross-border credit transfer received information on the transfers either onseparate advice slips (82%) or on their bank statements.
The level of information provided to the originator was generally good. Information
on the original amount of the transfers a nd the charges applied was almost always
provided. The reference number was provided in 74% of all transfers, but only in
half of the cases in Belgium, in Irela nd and in the UK and none in Portugal. The
value date was provided in 75%  of all transfers, but again, not in certain countries
(notably in Belgium, where no bank, and in the UK, where only one out of the fourbanks used provided the value date on the sender's documentation). The exchange
rate was provided for 95.1% of transfers overall, with one bank in Germany and one
bank in the UK not providing this information.
The level of information provision to recei vers was lower than to senders: 86.5% of
all beneficiaries received in formation on advice slips or bank statements. The
information on the original amount transfe rred was very poor; this information was
missing in more than half of the advice slips/statements provided. The informationquality for the other criteria was signifi cantly higher. The reference was quoted in
74% of incoming transfers. The UK and Ir eland stand out however, with fewer than
50% of transfers providing this inform ation. Charges to the beneficiary were
identified for 87% of the transfers which incurred deductions. When this informationis not provided, receivers cannot be sure whether their bank has made a charge, or
the sender did not send sufficient funds . The value date was quoted for 77% of
transfers.
3.6.3. Cases of concern
The situation concerning the practical application of Article 4 is very similar to what
has been said for Article 3; although information provided by the institutions
executing cross-border credit transfers subsequent to a transfer is better than the priorinformation provided, the situation is still far from being satisfactory. The studyundertaken to substantiate this report clearly showed that certain information
obligations to be fulfilled subsequent to a cross-border credit transfer were notcomplied with by the institutions.
153.7. Article 5 – Specific undertakings by the institution
Article 5 obliges institutions to make, at a customer's request, a specific offer for a
cross-border credit transfer, in particular concerning the execution time and thecommission fees and charges. The institution would, of course, not be compelled toenter into a contractual relationship with everyone who so requests; however, if such
an undertaking is given with the view of en tering into a contractual relationship, the
institution would be bound by its offer.
3.7.1. Transposition in Member States
Italy has not fully implemented this pr ovision. The implementing legislation only
refers to the liability for failure to execute within a time limit, but does not providefor undertakings in relation to the time  taken, the commission fees and charges.
The circumstances in which a credit institution may “refuse to do business with a
customer” is an element also reflected in Article 5 of Directive 97/5/EC: this will ingeneral be governed by other (i.e. non-imp lementing) national le gal instruments. In
France, for example, consumer s have a right to hold a bank account and to receive a
basic banking service. In some Member States (Portugal, Austria, France, Italy,Spain and Sweden) this element of Article 5 has not been transposed at all. This ishowever not deemed to cause a problem of correct transposition.
Austrian implementing legislation goes further than the Directive by providing that
credit institutions may not charge fees or commissions for the execution of the credittransfer, when specific undertakings ag reed between the parties have not been
complied with.
3.7.2. Practical application of provision in Member States3.7.2.1. Accuracy in relation to execution times quoted:
In the course of the study, institutions were asked by the consultant in advance, how
long the transfers would take to arrive. Most institutions indicated a maximum timeof five to seven days. The main excepti ons were banks in France and Italy which
claimed the transfers would only take one da y. A more cautious approach was taken
by banks in the Netherlands where the two banks indicated 10 and 15 daysrespectively.
Nearly 90% of the credit transfers arrived within the time indicated by the executing
institution. A further 8% arrived with in 3 days after the time indicated.
About 50% of the beneficiary banks applie d a value date that was earlier than the
date on which the transfer was credited to th e receiver’s account. In total this applied
to 12.2% of transfers received. This pr actice appears to have occurred more
frequently with transfers that took longer to arrive than originally indicated. By value
dating the incoming transfer to a date within the time period specified by the sender'sbank, the banks are trying to meet the Di rective's requirement that the receiver
should be compensated in the form of  lost interest for late transfers.
163.7.2.2. Accuracy in relation to charges quoted:
Based on the information that was provi ded to the senders, an average overall
transfer cost of approximately EUR 20 woul d have been expected. This is roughly
20% lower than the actual average cost of EUR 24.09.
This divergence between the price offered in advance of the transfer and the actual
charges levied is due to the fact that ba nks did not know the cost of the beneficiary
charges in advance or that the institutions  quoted only the sender bank element of the
transfer costs.
Approximately half of the senders were  quoted costs within 20% of the actual
amount. In a further quarter of the cases  the actual amount was between 20% and
60% higher than quoted. For the remaining senders (approximately 25%) actual costs
were more than 60% higher than the amount quoted by their bank, usually becausethe beneficiary charges had not  been included in the quote.
3.7.3. Cases of concern
Italy failed to transpose Article 5 into national legislation. The Decree provides for
no specific undertaking from the institution in  relation to time, commission fees and
charges.
Whilst the institutions’ undertakings regarding execution time are quite satisfactory,
this is not the case for the banks’ (binding ) offers concerning charges and fees. This
deficiency is indeed linked to the banks ’ problem of knowing the charges of the
receiving bank.
3.8. Article 6 – Obligations  regarding time taken
Article 6 deals with the time limit for executing a cross-border credit transfer.
Paragraph 1 covers the period of the tran sfer between the originator's and the
beneficiary's "institution", while paragraph 2 concerns the relationship between thebeneficiary’s institution and the beneficiary. The first sentence of each paragraphemphasises that, as required by the principl e of contractual freedom, it is the agreed
time limit which counts above a ll else. Only in the absence of such a time limit,
statutory time limits are introduced by default: they are, respectively, 5 days(originator/beneficiary's institution) and 1 day (beneficiary's institution/beneficiary'saccount).
The originator will have to be compensated by his own institution if the agreed time
limit or the five-days period allowed for the first stage of the transfer(originator/beneficiary's institution) is exceeded. On the other hand, the beneficiary
must be compensated by his institution, if the delay occurs during the second stage of
the transfer (beneficiary's institution/bene ficiary's account). Where the originator or
the beneficiary has caused the delay, no compensation is payable (Article 6(3)).
Compensation takes the form of interest for late payment. Wider liability,
particularly for consequen tial damage, is neither introduced nor excluded by the
Directive; it will depend on the general legislation governing relations between theoriginator, the beneficiary and their respective institutions (see Article 6(4)). Thelevel of interest for late payment must be calculated according to a "reference interestrate" (Article 2(k)). This rate must be fixed by the Member States at a level
17"representing compensation"; in other wo rds, it should be a normal penalty rate,
which may be a statutory rate or may be  based on the rates charged by banks for
emergency funding to cover delayed transfers.
3.8.1. Transposition in Member States
No problems of inadequate or incomplete legal transposition into national legislation
of the Member States have been identified.
3.8.2. Practical application of provision in Member States
Transfers took on average 2.97 days. 95.4% of transfers arrived within six working
days, which is the default time specified in the Directive. 99.7% of the transfers
arrived within 15 working days.
The longest average transfer times were from Sweden (4.61 days), the UK (4.19
days) and Denmark (4.07 days). The shortest were from Ireland (1.67 days), Greece(1.82 days) and France (1.99 days).
When considering the timing commitments ma de by the banks, 89.8% of transfers
arrived on-time and 98.4%  within three days of the time specified by the sender's
bank.
In most cases the value date credited to the receiver was identical (or one day later)
with the booking date on the receiver's ba nk account; this was, however not always
the case. In 12.2% of cases (mainly transfer s which took longer to arrive), the value
date was several days earlier than the booki ng date. In these cases, the originating
bank underestimated the time it took for money to arrive and the funds were not
actually available for the beneficiary on the value date.
In cases where transfers were more than one day late (compared to the agreed  time
limit), the senders contacted their bank to ask why the transfers had arrived late andwhether they were entitled to compensation. Banks gave a variety of responses, themost common response being that the re ceiver should contact his bank, as the
sender's bank had no control over the booking/val ue date at which the receiver's bank
was credited. No bank offered the sender comp ensation for transfers that arrived late.
The matter was taken further with those institutions, where the credit transfers took
extremely long. One bank finally paid some compensation “as a gesture ofgoodwill”. In another case, the sender di d not want to contact her bank again
“because of the awful way they trea ted her with her previous follow-up”.
3.8.3. Cases of concern
Apart from singular and very specific cases , where the transfer took extremely long,
the situation concerning execution times is quite satisfactory.
However, the institutions’ performance when asked to pay compensation for late
payments was very bad: the banks were e ither ignorant about their obligation to pay
compensation or unwilling to do so.
183.9. Article 7 – Obligation to  execute the cross-border transfer in a ccordance with
instructions
The originator's institution, any intermediary institution and the beneficiary's
institution are obliged to effect the tran sfer for the full amount (save where the
originator has specified that the costs ar e to be borne wholly or partly by the
beneficiary). Thus, the "OUR" option (i.e . all charges borne by the originator)
becomes the default rule, while the other transfer options11 should remain the
exception. Accordingly, in general, any other deduction from the amount transferred
is illegal and the relevant amounts should be repaid. This pr ovision of Directive
97/5/EC aims at clarifying the distribu tion of charges between originator and
beneficiary and bans the practice of double charging.
3.9.1. Transposition in Member States
No problems of inadequate or incomplete legal transposition into national legislation
of the Member States have been identified.
3.9.2. Practical application of provision in Member States
According to the study, 81.7% of all bene ficiaries received the full amount of the
transferred sum. 16.2% of the beneficiarie s received less than the original amount of
the ordered transfer, because charges were  deducted by the beneficiary bank or an
intermediary institution.
2.0% of the beneficiaries received even mo re than expected. This was generally
because the sender's bank sent a higher amount to cover charges levied by the
receiver's bank. If the receiver's bank did not levy such charges, then the receiver was
actually credited with a higher amount than expected.
The most common reason why receivers were charged was that transfers were not
sent as “OUR” transfers. Some banks did not send any transfer in the “OUR”-modedespite the originator’s orders. Some banks informed their customers that they wereunable to send “OUR” transfers. Some banks had not sent the transfers in the “OUR”
mode by default as specified in the Directive .
In those 239 cases where the beneficiary ha d been charged, the sender went to his
bank to ask whether the transfer had been sent "OUR”. The vast majority of thesetransfers had not been sent in the "OUR" mode despite the fact that they wereobliged to do so in the absence of a different, explicit agreement. Only three banks(representing 37 transfers) agreed to immediately re-credit the receivers’ charges.
16 sender banks (representing 42 transfers) c onfirmed that the transfers had been sent
in the "OUR" mode and suggested the receivers to contact their banks. On furtherenquiries, the most common receiver bank's  response was that the transfer involved
had not been sent OUR, contradicting what  the originator's bank had told to the
sender. Other receiver banks claimed th ey had not deducted any charges and
suggested that an intermediary bank must have made a further charge. Finally, one
                                                
11Particularly "SHARE", where each party bears his own co sts, and “BEN”, where all charges are to be levied
from the beneficiary
19bank in Germany, one bank in the UK and one bank in Spain re-credited the
receivers for all deductions.
3.9.3. Cases of concern
Although the situation concerning double ch arging has considerably improved, the
provisions of the Directive which aim at completely abolishing the practice oflevying charges on the beneficiary side (ex cept on the originator’s explicit order) are
not completely complied with by the banking industry. In analogy to what hasalready been said under point 1.7.3, this de ficiency is linked to the banks’ lack of
knowledge about what the receiv ing bank will actually charge.
It is, however, alarming that some institutions ignore or do not comply with the
obligations to refund any charges wrongf ully deducted, obligations which are laid
down both in the Directive and the national implementing legislation.
3.10. Article 8 – Obligations upon institutions  to refund in the ev ent of non-execution
of transfers
This Article introduces the principle of strict liability of the originator's bank to pay
refund in case of a "lost" transfer. Th is “money-back guarantee” is limited to an
amount up to 12.500 euro and cannot be abroga ted by contract. This is a "no-fault
liability" and, therefore, an obligation not  limited to error or ille gal behaviour on the
part of the banks concerned; it suffices for a credit transfer to fail to reach itsdestination to trigger this mechanism: the originator is reimbursed by his bank, which
may recover the funds from the responsible institution. This mechanism saves theusers of payment systems from having to  contact a number of banks in a transfer
chain in order to establish which one is liable, a procedure for which the banks are
much better equipped than their customers.
Wider liability, particularly for conseque ntial damage, is neither introduced nor
excluded by the Directive; Art. 8 clearly states that this ‘money-back-guarantee’ is“without prejudice to any other claim which may be made”. Thus, any sum
exceeding 12.500 euro as well as other damages resulting from the non-execution ofthe transfer will have to be claimed through normal court proceedings and willdepend on the general legislation governin g relations between the originator, the
beneficiary and their respective institutions
3.10.1. Transposition in Member States
In the Netherlands there is a different limit on the refund to that in the Directive
(€12,500). The money-back-guarantee equals  the general scope of the Dutch
implementing legislation, i.e. 50.000 euro.
Under Spanish legislation, an intermediary  institution is subject to the Article 8
obligation to refund only where it has itself 'received' the credit transfer funds (as
opposed to ' accepted the cross-border credit transfer order ' (as is provided by the
Directive)). Other national transposing laws refer to cases where the transfer 'did not
arrive' (Austria), 'was not executed' (Germany), 'where the payment was nottransferred' (Finland) and 'where the f unds were not credited' (United Kingdom).
The Directive includes no specific provisi ons as to the conditions under which the
fault of an intermediary credit institution (e.g. in the event of a delay in a credit
20transfer) will create liability for the orig inating credit institution. In some Member
States (Germany, United Kingdom) specific provisions exist in that respect. InGermany, for example, the originating credit institution will be liable for the fault ofan intermediary credit institution unless the principal cause lies with the intermediarycredit institution chosen by the customer.
12
Among the examples of non-execution of cr edit transfers set out in the Directive,
Article 8 provides in partic ular that, where a cross-border credit transfer was not
completed because of non-execution by an intermediary institution chosen by theoriginator, that latter institution must 'as far as possible' refund the amount of the
transfer. In other words, the Directiv e does not provide that the intermediary
institution is liable vis-à-vis the originator. Germany's implementing legislation
creates in addition direct liability of the intermediary institution vis-à-vis the
customer. This exceeds the protection offered to the consumer by Directive 97/5/EC.German law includes similar provisions providing for the direct liability ofintermediary institutions vis-à-vis originating institutions.
3.10.2. Practical application of provision in Member States
Two out of 1480 transfers executed in the framework of the study for this report
never reached their beneficiary.
The “money-back-guarantee” did not work: one of the lost transfers had not been
refunded to the beneficiary by the executi on more than six months after the refund
was requested by the originator; the other lost transfer has been – reluctantly –
refunded to the originator.
3.10.3. Cases of concern
Whilst the provision regarding the “money -back-guarantee” has been adequately
transposed into national legislation, the resu lts of the study indicate that in all cases
of lost transfers the institutions executing these cross-border credit transfers wereeither ignorant of their obligation to ref und lost payments or they were unwilling to
do so.
The fact that the Dutch money-back-guarantee has a much higher threshold than in
the other Member States might result in a situation the implications of which mayneed further analysis.
3.11. Article 9 – Situation of force majeure
This article specifies that institutions participating in a transfer transaction are
released from their obligations in two cases: first, when there is a suspicion ofmoney-laundering  and, second, in a situation of force majeure .
3.11.1. Transposition in Member States
A number of Member States have implemented the definition of “ force majeure”  in a
manner that clearly diverges from the text  of the Directive , namely “abnormal and
                                                
12Save where intentional or grossly ne gligent action is involved, or for risks specifically accepted by a credit
institution
21unforeseeable circumstances beyond the control of the person pledging force
majeure, the consequences of  which would have been una voidable despite all efforts
to the contrary”. In countries with diverg ing provisions (Italy, Portugal and Sweden),
the level of protection offered to consumers of cross-border credit transfer services is
lower or higher than that envisaged by Co mmunity law. In Germany, for instance, an
obligation to refund is imposed even where the amount of the credit transfer is nolonger available.
Certain Member States (Bel gium, Finland, Greece, Ireland, Portugal, Sweden and the
United Kingdom) have expressly referred in their implementing legislation to theMoney Laundering Directive (Directive 91/ 308/EEC) or equivalent provisions, when
implementing Article 9 of Directive 97/5/EC. In two cases (Finland and the UnitedKingdom), implementing provisions specifically provide for a limitation in liabilitywhere an institution has not complied with the provisions of Directive 97/5/ECbecause of money laundering concerns. In  one Member State (Sweden), institutions
may take longer to execute the cross-border transfer.
Other Member States (Austria, Denmark, Fr ance, Germany, Italy, Luxembourg, the
Netherlands and Spain) make no specific re ference to money laundering legislation
in their legislation implementing Article 9. In practice, the absence of reference tonational money laundering legislation does not give rise to legal issues and is not
deemed to constitute inadequate implementation of Directive 97/5/EC.
Directive 91/308/EEC has been fully imp lemented in the Member States.
Notwithstanding the absence of express re ference to Directive 91/308/EEC in certain
implementing legislation for Directive 97/5/EC, its terms are mandatory and a matterof public policy. Consequently, where a failure to fulfil a duty under Directive97/5/EC arose because of a legitimate suspicion that a cross-border credit transferwas, in reality, a money laundering tran saction, the institution would, most likely,
invoke, in its defence, the public policy basis of Directive 91/308/EEC. Whether the
defence would succeed would depend on the particular facts, circumstances andnational provisions invoked, since complian ce with money laundering rules should
not become a general pretext for avoidi ng obligations under Directive 97/5/EC.
3.11.2. Practical application of provision in Member States
No problems regarding the application of Ar t. 9 of the Directive have been reported
in the Member States.
3.11.3. Cases of concern
None.
3.12. Article 10 – Settlement of Disputes
The Directive determines certain requirements for the execution of cross-border
credit transfers. If bank customers can enforce these standards only by way of courtprocedures, the Directive would not improve  the situation for them; hardly anybody
would go to court for a complaint (e.g. concerning a case of double charging of 20
euro).
Article 10 of Directive 97/5/EC aims to give to customers an efficient tool to claim
the rights under this Directive, by obliging Member States to “ensure that there are
22adequate and effective complaints and redress procedures for the settlement of
disputes” between customers and credit institutions. Existing procedures can be used,where appropriate.
Procedures should be adequate and effective: complaining to such an alternative
dispute settlement body about cross-border cr edit transfers should be more expedient
and less costly for the customers than to go to court, i.e. the procedure in placeshould really be an alternative.
3.12.1. Transposition in Member States
Practice differs from Member State to Member State as to the procedures applicable
to complaints and redress schemes. These differences concern the access to thecomplaints and redress sc heme (only upon exhaustion of existing remedies or
whether and under what conditions direct access is available), the formalities formaking a complaint, the impact (if any) on separate legal proceedings, whether thedecisions are binding or non- binding, etc. These differences do not, however, cause
any problem, as long as the procedures as  such are “adequate and effective”. The
details of the different schemes in th e Member States are given in Annex 3.
When implementing Art. 10 of the Directive, Member States have mostly used
already existing procedures for banking or financial services in general. They have
not established dedicated redress or co mplaint schemes specific to cross-border
credit transfers with the exception of Italy, where a Decree
13 provides for the
establishment of particular schemes to deal with the settlement of disputes regardingcross-border credit transfers. The German  scheme is also, in part, dedicated
specifically to cross-border transfers (as well as covering settlement finality inpayment and securities transactions (Directive 98/26/EC)).
Consumers are represented only in a minority of the redress/complaint schemes
which have been imple mented under Article 10.
France had originally continued to rely on existing schemes set up by the individual
banks; this did not, however, cover all institutions executing cross-border credittransfers. France was, therefore, late in implementation. In the meantime, the “loi
Murcef”
14 will make mediation obligatory in conflicts between consumers and credit
institutions, including cross-border transfer cases.
Austria has not yet established a redress scheme but has only appointed a working
group to set up a such scheme. Austria is , therefore, late in implementation.
Portugal has not yet established a ba nking ombudsman scheme . The implementing
legislation allows parties to refer to ar bitration, but, in practice, this is often
impractical due to the high costs which ar e likely to be involved. Existing Portuguese
ombudsman schemes for financial services  have only limited geographical areas of
competence and can deal with claims of low value. Portugal is, therefore, late inimplementation.
                                                
13Ministerial Decree No. 456 of 13 December 2001, implementing into Italian law Art. 10 of Directive
97/5/EC (OJ of 3 January 2002)
14Law No. 2001-1168 of 11 December 2001 (OJ of 12 December 2001)
233.12.2. Practical application of provision in Member States
Until December 2001, very few disputes concerning cross-border credit transfers
have been brought before the national complaint and redress schemes. This is partlydue to the fact that customers appear relu ctant to take matters beyond several verbal
or written complaints to the bank. In many cases the disputed amount is rather low
compared to the administrative time and ch arges involved; this prevents customers
from pursuing further action. Many customers s eem also to be afraid to “upset” their
banks, or to damage their future banking relationship.
On the other hand, customers very rarely know about the existence of complaint and
redress schemes; the institutions’ customer information in this respect is virtuallynon-existent (cf. point 3.5.2).
3.12.3. Cases of concern
The lack of existence of appropriate redress procedures in Austria and Portugal is a
matter of major concern.
There is a general lack of information a bout the existence of complaint and redress
schemes: when customers do not know a bout the possibilities of enforcing their
rights given to them by the Directive and the national implementing laws, they do notknow how to react in case of any malfunc tioning or misapplica tion of the relevant
provisions. Mostly they are unlikely to address their complaints, which are normallylow-value disputes, to a court. Howeve r, better information about rights and
procedures provided for by the Directive should help to enhance competition and to
improve the presently unsatisfactory situation.
3.13. Other issues
3.13.1. Sanctions
The Directive contains no specific oblig ation on Member States to provide for
sanctions for failure to comply with the terms of national imple menting legislation. It
should be noted, however, that the obliga tion to provide for appropriate sanctions
does not need to be included in a EU-legal  text. A judgement of the European Court
of Justice
15 already established that Member States were obliged to provide for
sanctions in their transposing laws, regard less of whether sancti ons were explicitly
mentioned in the original Directive or not.
Only few Member States, such as Aust ria, the United Kingdom and Denmark did
indeed include a specific reference to sanc tions in their legislation. In addition, in
relation to specific customer undertakings , Austrian legislation provides another
form of “sanction”: where specific undert akings requested by the customer are not
complied with, Austrian credit institutions may not charge fees/commissions for theexecution of the credit transfer.
Another important question (arising from Belgian legislation) is whether sanctions
should be imposed for failure to comply with all or only some of the obligations
derived from Directive 97/5/EC. In Belgiu m, by way of illustration, no penalties are
                                                
15C-354/99 of 18 October 2001
24expressly imposed by the implementing legislation on a credit institution's failure to
provide information to customers subseq uent to a cross-border credit transfer.
Some Member States (e.g. Denmark) make  reference to criminal sanctions imposed
by other legislation not specific to cross- border credit transfers. For obvious reasons,
provisions relating to criminal sanctions may not be found in Community law and do
not appear in Directive 97/5/EC.
3.13.2. Right to Cancel or Terminate Transfers
The Directive is silent as to the right of credit institutions to cancel credit transfers
that have been properly requested by a customer. In Germany, specific provisions
have been included to deal with this eventuality.
German legislation also includes detailed pr ovisions allowing the customer to cancel
a requested credit transfer and a right for both the credit institution and the customerto terminate a credit transfer.
4. C
ONCLUSION
4.1. Assessment of the transposition in Member States
The deadline for transposition of Dir ective 97/5/EC was August 14, 1999. Most
Member States met that deadline and all have implemented the Directive since.
Certain differences exist between national regimes and the regime introduced by
Directive 97/5/EC. These have been  identified in Section 3 above.
4.1.1. Main differences between nati onal regimes and Directive 97/5/EC
4.1.1.1. Article 2 - definitions
Differences concern the omission of definitions of Article 2  of the Directive ,
or the use of definitions different from those in the Directive. Most of these
omissions or differences should not re sult in inadequate implementation. The
different definition of 'date of acceptance' in Spain may give rise to difficulties; hereacceptance is presumed on the business day 'following' the order, and not on the datewhen all conditions of the order are fulfilled. The calculation for the execution timesthus starts only one day after the time foreseen by the Directive.
4.1.1.2. Article 3 – provision of information pr ior to a cross-border credit transfer
A number of issues associated with the provision of information prior to a request
for a cross-border credit transfer, under Article 3 of Directive 97/5/EC, were also
identified. These concern mainly Austria: Austrian legislation does not oblige toprovide information in a 'readily comprehensib le form', there is no reference to 'value
date' and information regarding complaints and redress schemes (reflecting theabsence of such schemes in Austria).
254.1.1.3. Article 4 – Provision of informati on after a cross-border credit transfer
Subsequent information duties under Article 4  of Directive 97/5/EC have not
been fully implemented in Austria, Denmar k and Ireland. In each case, there is an
omission or limitation of rights which reflects inadequate transposition and whichcould have a material effect, for instance the partial or inadequate implementation byAustria and Ireland of the information requirement for clear information in writingincluding where appropriate by electroni c means (in the case of Denmark, only the
reference to 'where appropriate' has been omitted and is probably de minimis ).
4.1.1.4. Banks' undertakings in relation to requests  for cross-border credit transfers Article 5
Inadequate implementation by Italy: not withstanding the general obligation under
Italian law to provide information prior to transfer, the Italian implementinglegislation fails to provide that the in stitution will be bound by undertakings it gives
(if any) in relation to time, commission fees and charges.
4.1.1.5. Article 9 “Force majeure”
With regard to money laundering , it should be noted that several Member States
have not made specific reference to Directive 91/308/EEC, when implementing the
force majeure  provisions of Article 9  of Directive 97/5/EC. Institutions caught
between fulfilment of duties under nati onal provisions imple menting Directive
97/5/EC and national provi sions implementing Directive 91/308/EEC are likely to
give precedence to money laundering comp liance. This would, in turn, provide them
with a public-policy orientated defence in the event of a claim under the cross-border
credit transfer provisions. This issu e is discussed in section 2.6.5 above.
4.1.1.6. Article 10 “Complaints and redress procedures”
Three Member States do not appear to have implemented Article 10 adequately i.e.
by ensuring that there are “adequate and effective complaints and redress
procedures ”, as follows:
/g183 France, which continues with individual sc hemes. This situation has, however, in
the meantime been remedied by the adop tion of the “loi Murcef”, which will
make mediation obligatory in conflicts between consumers and credit institutions.
/g183 Austria has simply appointed a workin g group to set up a scheme. This does not
constitute adequate implementation.
/g183 Portugal has general arb itration schemes, but, give n the difficulties involved in
arbitrating disputes which are often for relatively modest sums, in effect has no
scheme competent to hear complaints arising from cross-border credit transfersunder Directive 97/5/EC. The scheme provisionally notified to deal with
complaints stemming from cross-border credit transfers is only competent forarbitration and me diation in Lisbon.
264.2. Assessment of the application of the provisions in the Member States
4.2.1. Provision of information before  and after a cross-border transfer:
The institutions’ performance concerning the provision of information  was not
satisfactory:
/g183 Only 16 out of the 40 senders were provi ded with a brochure or some other form
of printed information in advance  of the transfers being carried out. The printed
information that was provided gave info rmation on costs, but generally lacked
information on timing, exchange rates, value dates and redress procedures, as
specified in the Directive.
/g183 The information provided to  senders and receivers subsequent to the transfers
being carried out was generally good. The most frequent omission was that fewer
than half of receivers were quoted the original amount of the transfer.
4.2.2. Execution times
The institutions performance concerning execution times  was on average well
within the limits of the Directive: 95.4% of transfers arrived within six working days
and 99.7% arrived within 15 working days. Transfers took an average of 2.97 days.This constitutes a significant reduction from prior studies.
4.2.3. Obligations to compensate for late payments
However, the obligation to compensate  for late payments was generally not met by
the institutions: no bank offered the sender compensation for transfers that arrivedlate. When asked to pay compensation, ins titutions generally ignored or denied any
obligation to compensate for late payments.
4.2.4. Obligation to execute the cross-border transfer in accordance with instructions
The institutions' performance concerning the distribution of charges  had also
improved compared to former studies. However, in 16.2% of the transfers,unexpected receiver deductions, mostly caused by double charging , still occurred.
The vast majority of these transfers had not been sent in th e “OUR-mode” (i.e. all
charges to be borne by the originators).
4.2.5. Refund of unlawfully  deducted charges
Generally, customers had to in sist very hard to receive refund of unlawfully
deducted charges . Whilst some of the banks invol ved in double charging rectified
the affected transfers by re-crediting the receivers’ charges, others did not assist theircustomers in any way as they are obliged to do. Instead, they claimed that thereceiver or intermediary banks had taken the charges. Very often, customers “gaveup” following up their case because of the impolite treatment by the institutions.
4.2.6. “Money-back guarantee”
The banks’ performance concerning the “money-back guarantee”  was not
satisfactory. The two cases in the study wh ich should have triggered this money back
guarantee, have not been handled as envisaged in the Directive. One missing transfer
27has never been refunded, the other one wa s only reluctantly refunded after several
months and “as a gesture of good-will”.
4.3. Proposals for the revision of the Directive
As already announced by Commissioner Bolkestein vis-à-vis the European
Parliament in autumn 2000 (discussion of Peijs report16 in the Plenary Session), the
Commission intends to propose to shorten the default maximum execution time from
presently 6 bank working days to a much shorter period. Given the technicalpossibilities of an improved infrastructure, such shorter delays – which would bemore in line with current practices at national level –seem only logical. Taking intoaccount the present average delay of 2.97 days for a cross-border credit transfer, theshortening of delays should not cause t oo many difficulties to the banking industry.
Furthermore, the Commission promised to raise the threshold of the "money-back
guarantee" to €50.000, in order to align it with the general scope of the Directive.
Both measures are destined to further develop the Internal Market for retail payments
and to align conditions of  national and cross-border payments. The European
Parliament already signalled that  it will support the Commission on these
amendments to the Directive 97/5/EC in the European Parliament Resolution on theCommission’s Communication on Retail Payments in the Single Market
17 .
In addition to that, some further concerns have been identified in this report, which
need to be addressed.
However, the Commission does not consider it appropriate to propose only a revision
of the Directive for the few issues identified in this report. There are several furtherreasons to review the EU legislation governing payments in the Internal Market ingeneral in order to truly achieve a Single Payment Area within the European Union.Precedence should be given to a wide cons ultation on a coherent and comprehensive
legal framework going beyond some is olated patchwork proposals. The main
additional justifications for such an initiative are:
/g183 The adoption of the “Regulation on Cross-Border Payments in euro”
18 has
determined an essential element of how payment services (nationally and cross-
border) have to be offered to customers: price discriminations are illegal and theInternal Market for payments has to be considered as a “domestic” market. Thedirective, however, imposes on banks certain requirements for cross-border
transfers which do not apply for domestic transfers. An example of this is that thedirective establishes “OUR transfers” as the default norm, in cases where nospecific instructions are given by the sender; however, in most, if not in allMember States, the “OUR option” is not  a frequently used way to make domestic
transfers. Therefore, the Commission shoul d further investigate how to reconcile
this and to propose a coherent payment option for the internal market.
                                                
16European Parliament Resolution on the Commission Communication to the Council and the European
Parliament on retail Payments in the Single Market of 26 October 2000; COM(2000) 36-C5-0103/2000-2000/2018 (COS)
17COM(2000) 36 final
18Reg. 2560/2001 of 19 December 2002 (O J 344 of 28 December 2001, p.13)
28/g183 A study completed in 2001 on the tran sposition and application of the
“Recommendation on Electronic Payment Instruments19” concludes that there are
serious deficiencies which need to be addressed. The Recommendation states that,if the Commission finds the implementati on unsatisfactory, it intends to propose
appropriate bindi ng legislation.
/g183 The Commission will come forward with proposals relating to the issue of
“refunds” covered in the Recommendation 97/489 and other EU legislative acts.
/g183 Payment instruments and payment systems are to a large extent still subject to
diverging national rules. This situation can constitute an obstacle to an efficient
Single Payment Area in the Internal Market resulting in inefficiencies orhindering the integration of the necessary infrastructure and further consolidationwith a view to lowering the costs of transactions. A strategy to target a widerpayment transaction market than the national one could lead to “collaborativesourcing” and “economies of scale”. Ther e is also the phenomena of outsourcing
and concentration of payment business in so-called “transaction factories”.
Furthermore new players are looking for access to the payment markets and which
– as non-banks – frequently encounter  “regulatory obst acles” or “legal
uncertainty”. These issues need to be analysed.
/g183 The developments in information technol ogy (IT) have an important impact on
the development of payment instruments,  payment infrastructures and payment
markets. The considerable costs of IT for this transaction business require wellreasoned strategic decisions which are to be taken when considering the
developments of the infrastructure envi ronment (standards, technical platforms
etc) and possibilities for co-operation. E- money institutions and the mushrooming
of proposals for new electronic payment in struments are phenomena for which the
consequences on the legal frame work need to be examined.
/g183 Notably as a response to the Regulation on Cross-Border Payments in euro,
European banks recently launched a common vision of "Euroland - our Single
Payment Area". It calls for joining forces for the benefit of European consumers,industry and banks and includes the request for a commitment by regulators todeliver their part. Their "Blueprint" on the Single European Payment Area
(SEPA) is expected to contain a range  of legal prerequi sites or desirable
developments addressed to public authorities, incl. European institutions. TheCommission intends to address these ideas in the discussion on this legalframework once they are known.
The Commission's services - in the spirit of the Communication on Better Regulation
- have already widely circulated in an  informal discussion document in order to
collect ideas and suggestions for such a possible framework. On the basis of those
contributions the Commission will establish a Consultative Paper which will presentits assessment on possible future provisions for a legislative proposal afterwards to
the Council and Pa rliament in 2003.
                                                
19Rec. 97/489 of 30 July 1997 (OJ L 208 of 2 August 1997, p. 52)
29ANNEX 1 – National Implemen ting Measures – State of play on 27 September 2002
Table 1: Table of national implementation measures (by title and with additional details
as available)
MEMBER STATE IMPLEMENTING LEGISLATION
Austria Federal Act on Cross-Border Credit Transfers, N° 123: Bundesgesetz über
grenzüberschreitende Überweisungen , adopted by Parliament and published on July 22,
1999 ( Überweisungsgesetz – Bundesgesetzblatt , Part I, page 159).
Belgium Law on Cross-Border Money Transfers: Loi relative aux virements d'argent
transfrontaliers , adopted on January 9, 2000, published and  supplemented by Royal
Decree amending Royal Decree of March 23, 1995 on price indications for homogenous
financial services.
Denmark Act on Cross-Border Credit Transfers, N° 237: Lov om graenseoverskridende
pengeoverforsler  of April 21, 1999.
Finland Law on Credit Transfers, N° 821/1999:  Tilisiirtolaki , adopted on July 28, 1999, published
on August 4, 1999.
France Law on savings and financial security, N° 99-532: Loi relative à l 'épargne et à la sécurité
financière  (Section 78, Part II, Chapter V), published on June 29, 1999 ( JORF , page
9507), supplemented by implementing Regulation n°99-09, published on July 27, 1999(JORF , pages 11160-11161), with corrigendum on August 21, 1999 ( JORF , pages 12559-
12560), and codified in the French Monetary and Financial Code as Section L 133-1.
Germany Act on Bank Transfers: Überweisungsgesetz , adopted on July 21, 1999
(Überweisungsgesetz, BGBI, Teil IS. 1642 ).
Greece Presidential Decree 33/2000, adopted on February 8, 2000 and published on February 16,
2000 (Gazette, N°. 27, Vol. A).
Ireland Statutory Instrument N°. 231: The European Communities (Cross-Border CreditTransfers) Regulations 1999.
Italy Legislative Decree N°. 253: Attuazione della dire ttiva 97/5/CEE sui bonifici
transfrontalieri , adopted on July 28, 2000, published on September 11, 2000 ( Gazzetta
Ufficiale della Repubblica Italiana, Serie General, N° 212 ).
Luxembourg Law adopted on April 29, 1999, amending the law of April 5, 1993 on the financial sector.
Publication in the Mémorial of May 12, 1999. Entry into force on May 16, 1999
The Netherlands Act for Cross Border Transactions: Wet grensoverschrijdende betaaldiensten , adopted in
October 1998 and published on November 12, 1998 (Gazette 686/1998), implemented byRoyal Decree of July 28, 1999 ( Stb. 1999, 341).
Portugal Law-Decree 41/2000 of March 17, 2000: Decreto-Lei nº 41/2000 de 17 de Março ,
published on March 17, 2000 ( Diario da republica, Serie A, N° 65, page 1022).
Spain Act 9/1999: Ley 9/1999, de 12 de abril, por la que se regula el régimen jurídico de las
transferencias entre estados miembros de la uníon Europea , adopted on April 12, 1999
and published on April 13, 1999 (Gazette N°. 88, page 13653), supplemented by
Ministerial Order of November 16, 2000: Orden de 16 de noviembre de desarrollo de la
Ley 9/1999, de 12 de abril por la que se regula el régimen jurídico de las transferenciasentre Estados Miembros de la Unión Europea así como otras disposiciones en materia degestión de transferencias en general .
30MEMBER STATE IMPLEMENTING LEGISLATION
Sweden Law SFS No. 1999:268 on credit transfers within the European Union: Lag om
betalningsöverföringar inom Europeiska ekonomiska samarbetsområdet , adopted on May
12, 1999 and published on June 1, 1999.
United Kingdom Statutory Instrument N°. 1876: The Cross-Border Credit Transfers Regulations 1999,made on June 30, 1999.
Table 2: Implementing Legislatio n (by date of implementation):
MEMBER STATE DATE OF
IMPLEMENTATIONLEGAL DEADLINE
(14 A UGUST 1999)POLITICAL UNDERTAKING
(1 J ANUARY 1999)
Austria August 13, 1999 Yes No
Belgium February 9, 2000 No20No
Denmark April 21, 1999 Yes No
Finland August 14, 1999 Yes No
France August 14, 1999 Yes No
Germany August 14, 1999 Yes No
Greece February 8, 200021No No
Ireland August 14, 1999 Yes No
Italy September 26, 200022No No
                                                
20Although it is worth noting that prior to the entry into force of Belgian implementing legislation, the Belgian
Association of Banks issued advice to its members th at they should apply the provisions of Directive
97/5/EC, in advance of a formal, legally binding obligation
21The situation in Greece is more complicated than in other Member States. Greek implementing legislationwas adopted on February 8, 2000, but is expressly stated to have retroactive effect, and to 'have entered into
force' on August 14, 1999. Viewed correctly, this re mains a failure by Greece to comply with its obligation
to implement Directive 97/5/EC by the statutory deadline of August 14, 1999
22This is the date of entry into force for the main body of Italian implementing legislation. Certain exceptionsexist to this date of implementation (see further at S ection 9 of Part II of this Report). These include, for
example, the date of entry into force of provisions introducing obligations upon credit institutions to provideinformation to consumers of cross-border credit transfer  services. The date of entry into force of these
provisions is the later date of October 12, 2000
31MEMBER STATE DATE OF
IMPLEMENTATIONLEGAL DEADLINE
(14 A UGUST 1999)POLITICAL UNDERTAKING
(1 J ANUARY 1999)
Luxembourg May 16, 1999 Yes No
The Netherlands August 14, 1999 Yes No
Portugal March 23, 2000 No No
Spain May 3, 1999 Yes No
Sweden August 14, 1999 Yes No
United Kingdom August 14, 1999 Yes No
32ANNEX 2 - National complain ts and redress schemes – Up dated on 27 September 2002
Austria:
Arbeitskreis "Ombudsstellen der ös terreichischen Kreditwirtschaft"
Wirtschaftskammer ÖsterreichWiedner Haupstrase 63A-1045 WienTel. +43.1.501.05.31.32Fax. +43.1.501.05.272e-mail: BSBV@WKOESK.WK.OR.AT
Belgium:
Association Belge des Banques (ABB)
Square de Meêus 35B – 1040 BruxellesTel. +32.2.507.68.11Fax +32.2.507.69.79email: ombudsman@abb.bvb.be
Médiateur auprès de la Poste
Dienst Ombudsman De PostW.T.C. Tour IIChaussée d'Anvers/Antwerpsesteenweg 59B - 1000 Bruxelles/BrusselTel. +32.2.204.81.00 (FR)Tel. +32.2.204.82.00 (NL)Tel. +32.2.204.83.00 (DE)Fax +32.2.204.84.00
Denmark:
Pengeinstitutankenævnet
Østerbrogade 64, 4DK - 2100 København ØTel. +45.35.43.63.33Fax +45.35.43.71.04
Finland:
Advisory office for Bank Consumers
Museokatu 8 A 7FIN - 00100 HelsinkiTel. +358.9.4056.1230Fax +358.9.4056.1235e-mail: pankkialan.asiakasneuvont a@rahoitusalankl.fi
33Consumer Complaint Board
Box 306Kaikukatu 3FIN - 00531 HelsinkiTel. +358.9.7726.7900Fax +358.9.753.4880e-mail:  kirjaamo@kuluttajavl.fi
France:
Normally Mediators are set up by individual banks – the French Banking Association can
help to identify the right scheme.
Association Française des Banques
18 rue La Fayette75009 ParisTel: +33.1.48.00.52.52Fax: +33.1.42.46.76.40
Germany:
Deutsche Bundesbank
SchlichtungsstellePostfach 10 06 02D - 60006 Frankfurt am MainTel. +49.69.9566-40.50Fax +49.69.9566-40.56email: schlichtung@bundesbank.de
Bundesverband Deutscher Banken
OmbudsmannPostfach 040307D - 10062 BerlinTel: +49 30 16633161 (or 62)Fax: +49 30 16633169email: ombudsmann@bdb.de
Bundesverband Öffentlicher Banken
Ombudsmannsystem für den grenzübe rschreitenden Überweisungsverkher
Postfach 110272D - 10832 BerlinTel: +49 30 81920Fax: +49 30 8192222email: Postmaster@voeb.de
34Greece:
Commission for Consumer's Protection of Public Enterprise s and Organisations
Presided by the Secretary General of Commerce20, Caningos Str.GR - 101 81 AthensTel: + 301 383.79.82Tel. + 301 384.17.73Fax: + 301 382.96.40
Hellenic Banking Ombudsman
12-14 Karagiorgi Servias StreetGR - 105 52 AthensTel. +30.1.33.76.700Fax +30.1.32.38.821e-mail:  contact@bank-omb.gr
Ireland:
The Ombudsman for the Credit Institutions
8 Adelaide CourtIRL - Dublin 8Tel. +353.1.478.37.55Fax +353.1.478.01.57
Italy:
Ombudsman Bancario
Via delle Botteghe Oscure 46I - 00186 RomaTel. +39.06.67.67.353Fax +39.06.67.67.400e-mail: abi@abi.it
Luxembourg:
Commission de Surveillance du Secteur Financier (CSSF)
110, Route d'ArlonL - 2991 LuxembourgTel. +352.26.251.203Fax: +352.26.251.601e-mail: banques@cssf.lu  , direction@cssf.lu
Netherlands:
Stichting Geschillencommissie Bankzaken
Surinamstraat 24NL - 2585 GJ 's GravenhageTel. +31.70.310.53.10Fax +31.70.365.88.14
35Portugal:
A special Banking Ombudsman will be created.
Until then, complaints could be addressed to:Centro de Arbitragem de Conflitos de ConsumoMercado Chão de Loureiro (1st floor)Largo do Chão do LoureiroP - 1100 LisboaTel. +351.1.888.36.23Fax +351.1.888.37.67e-mail: lis-arbitragem@ip.pt
Spain:
Banco de España
Servicio Jurídico / Se vicio de Reclamaciones
Alcalá, 50E - 28014 MadridTel. +34.91.338.57.58Fax +34.91.338.65.22
Sweden:
The National Board for Consumer Complaints
P.O. Box 174S - 101 23 StockholmTel. +46.8.783.17.00Fax +46.8.783.17.01e-mail:  staffan.lind@arn.se
United Kingdom
Financial Ombudsman Service
South Quay Plaza183, Marsh WallLondon E14 9SRTel. +44.207.942.0942Fax +44.207.942.0943e-mail: enquiries@financial-ombudsman.org.uk
EFTA-countries
Iceland:
Customer Complaint Committee
c/o Financial Supervisory AuthoritySuðurlandsbraut 32IS-108 ReykjavíkTel.: (354) 525-2700Fax: (354) 525-2727e-mail: urskfjarm@fme.is
36Norway:
The Norwegian Banking Complaints Board
Universitetsgaten 8Post Box 6855, St. Olavs PlassN - 0130 OSLOTel. +47.22.20.30.14Fax +47.22.20.31.90e-mail:  per.fiskerud@bankklagenemnda.no
Liechtenstein:
Financial Services Authority
Herrengasse 8FL-9490 VaduzPrincipality of LiechtensteinTel.:+423.236.62.21Fax: +423.236.62.24e-mail: isolde.sigmeth@afd.llv.li