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12 months to SEPA - no rush?

Last week, Deutsche Bank ran a SEPA outreach event, bringing the practicalities of migration to SEPA compliance to a large group of their current and prospective clients.

The end date of course is February 2014. But with code freezes typical at year-end, for all intents and purposes SEPA compliance projects need to be complete a year from now.

For non-Euro countries including the UK, the end-date is 2016. That may sound reassuringly distant and makes it all too easy to put the SEPA file back on the shelf;  however firms should not allow themselves to be lulled into a false sense of security.  After all, how many UK firms hold Euro accounts, or collect from customers in the Eurozone? The outside chance of regulatory respite has passed – EC legislation takes far longer than a year. Breakup of the Euro – extremely unlikely though that is – won’t stop it. SEPA is upon us, and we had better be ready.

As an FSA regulated PI, I am a customer of several Eurozone banks. This is the first bank-initiated SEPA outreach programme to which I have been invited. We have another – this time self-initiated - scheduled for December.  Earthport’s experience doesn’t seem anomalous. When members of the audience were asked how many participated in a bank-initiated SEPA outreach event to date, fewer than 10% had – and more than half of those were panellists. This result is, of course, of somewhat questionable statistical validity (like so many other polls), since the audience was of limited size and self-selecting, but given the seniority of participants and the well-known nature of the organisations they represented, it is nonetheless notable.

Furthermore, only about half the audience knew who in their own firms was responsible for their SEPA programme. Whether this meant their firms have yet to start, or merely that internal stakeholder communication is yet to be done, or perhaps because success has many fathers and the competition is underway, was harder to tell. While no-one claimed to be finished, most are well into implementation.

Panellists discussed the main SEPA challenges and their experiences with migration. In particular, details and challenges that have only come to light during the delivery project were raised.  For example, one participant remarked on the large number of back-office systems he needed to change, not only to handle the straight-through-process (STP) transactions, but also to deal with the new Returns codes. Simple stuff, but nonetheless the change management and testing had a multi-month duration.

Panellists from SAP, Earthport and Slimpay described the approaches they are taking and their progress to date. SAP’s recommendation to customers is to make sure they have the right releases, and understand how and where to deploy them. Earthport, for its part, described challenges associated with credit transfers, including ensuring senders validate their BIC and IBAN data ahead of the end date to avoid reductions in STP rates that may otherwise occur. Slimpay described the e-signature approach they are taking to SEPA Direct Debit (SDD) mandate migration. Though there may be lingering doubts about the legal certainty of e-signatures, every bank with which they have lodged one to date has accepted it. The time to fix the legislation has passed- it’s now time for pragmatism.

Credit is due to Deutsche Bank for putting effort into driving adoption.  But with 12 months to go, 68% of credit transfers and 98% of DDs still to migrate, 90% of corporates yet to have their first seminar with their banks, 50% of corporates remaining uncertain as to whom is to be held accountable, it is fortunate that 90% of work gets done within the last 10% of a project’s timeframe.

By all means dispute my numbers (note to readers in the Nordics; you certainly have the right to). But the broad message is: we have an awful lot to do in a very short space of time. If by February 2014 a bank still has customers who haven’t migrated, the law says they must cease providing legacy payments services to them. That is not a conversation anyone is going to enjoy. And the banks didn’t ask for this; it shouldn’t be their sole responsibility to drive it to conclusion.

You can download Deutsche Bank’s detailed ‘Ultimate Guide to SEPA’ here. This is not an endorsement, as doing so would contravene Finextra rules, but it should be commended for its attempt to highlight the urgency. If you know of others, perhaps you might post a link to them as a comment to this blog?


“I love deadlines. I love the whooshing noise they make as they go by.”
Douglas Adams, The Salmon of Doubt


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