Overview: Implementation of PSD2 in Norway

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PSD2 came into effect in the European Union on January 13, 2018. PSD2 is important as it aims to further harmonise the EU payments market and break the banks' de facto monopoly on the provision of payment services and the use of their customer data. Below is a review of developments to date as they relate to transposing PSD2 into Norwegian law, including an update on the most recent developments.

Simonsen Vogt Wiig will over the next few days summarise the most important legal developments in 2018 and our expectations for 2019. Today we are focusing on FinTech in general, and PSD2 specifically.

On November 16, 2015, the Council of the European Union passed legislation known as the «Second Payment Services Directive» (2015/2366/EU) (PSD2). Norway is not a member of the European Union. However, Norway is part of the «European Economic Area» (EEA), which was established by the EEA Agreement. The EEA Agreement allows for the extension of the European Union’s single market to non-EU member countries. As a member of the EEA, EU legislation, such as PSD2, does not automatically become Norwegian law, but must be incorporated into the EEA Agreement and subsequently be transposed into Norwegian law by an enactment of the Norwegian parliament.

As a result of certain Norwegian constitutional complications (pertaining to ceding authority to the supranational European Securities & Markets Authority), the incorporation of a number of EU Directives into the EEA Agreement was put on hold for an extended period of time. Even though these complications have now been resolved, there is currently a backlog of directives awaiting incorporation into the EEA-agreement, among them PSD2.

Anticipating the incorporation of PSD2 into the EEA Agreement, the Norwegian Ministry of Finance on September 29, 2015 charged the Norwegian Financial Services Authority (FSA) with preparing a white paper for the transposition of the public law part of PSD2 into Norwegian law. More specifically, the ministry was directed to focus on the operational requirements placed on payment service providers under PSD2. The Norwegian FSA issued its white paper in April of 2017. On June 22, 2018, after a consultation period, the Ministry of Finance issued a proposal (Prop. 110 L (2017-2018)) to the Norwegian parliament, suggesting the implementation of some of the public law parts of PSD2 through amendments to the Norwegian Financial Entities Act (Finansforetaksloven). The proposed amendments were passed by the Norwegian parliament on November 13, 2018, were sanctioned by the King in Council on November 23, 2018.

The amendments now await a decision by the King in Council as to the date they will become effective. This legislation does not require incorporation of PSD2 into the EEA Agreement to become effective. At the time of writing of this update, the Ministry of Finance has no information about when the signed legislation will become effective, but this is generally expected to take place sometime in early 2019. The new legislation introduces into Norwegian law the concepts of ‘payment initiation service provider’ (PISP) and ‘account information service provider’ (AISP), both central concepts in PSD2.

Also in anticipation of the incorporation of PSD2 into the EEA agreement, and in parallel with the abovementioned work of the Ministry of Finance, the Norwegian Ministry of Justice & Public Security on September 7, 2017 issued a white paper (Høringsnotat Snr. 17/4746) that included a proposal for the transposition into Norwegian law of the private law part of PSD2 (the part focusing on the relationship between the payment service providers and the customers). The white paper proposes to implement the private law part of PSD2 in an entirely new Financial Contracts Act (Finansavtaleloven) that would also contain the implementation of the payment accounts directive (2014/92/EU) and the directive on credit agreements for consumers relating to residential immovable property (2014/17/EU).

In the interest of trying to ensure a level playing field for industry actors in Norway and the EU as soon as possible, a number of proactive financial industry organisations have urged the Ministry of Justice & Public Security to accelerate the implementation of Norwegian legislation corresponding to PSD2, without awaiting the incorporation of PSD2 into the EEA Agreement. With a view to this, on July 5, 2018 the ministry proposed to temporarily implement the most important aspects of the private law part of PSD2 in a regulation to the current Norwegian Financial Contracts Act, using as a legal basis the new section 9a of the recently amended Financial Contracts Act (one of the not yet effective amendments passed by the Norwegian parliament on November 13, 2018).  Under this scenario the regulations would enter into force upon the abovementioned amendments to the Financial Entities Act becoming effective (expected in early 2019). This temporary implementation through amendment and regulation under the Financial Contracts Act would at a later date be replaced by similar provisions in a new and fully revised Financial Contracts Act.

Importantly, EU countries are under no obligation to treat Norwegian payment service providers on an equal footing with local actors if PSD2 has not been incorporated into the EEA Agreement. As a result, if the new Norwegian legislation takes effect prior to PSD2 being incorporated into the EEA Agreement, it is not certain that Norwegian payment service providers will be able to passport their services into the EU, and if they are, it is not clear to what extent and on what conditions they will be able to do so.

Follow this link to see the passed amendments (signed but not yet effective legislation) to the Financial Entities Act.

Follow this link to see the proposed set of regulations to the new section 9a of the Financial Contracts Act.