Luxembourg Payment Account Terms in Private Banking

Luxembourg payment account terms in private banking start with the definition of the account itself. Under Article 1, point 5, of the Luxembourg law of 10 November 2009 on payment services, as amended (“2009 Payment Services Law”), a payment account is an account held in the name of one or more payment service users and used for executing payment transactions. In private banking, this is typically the current account or cash account used for credit transfers, direct debits, cards, withdrawals, deposits and digital banking channels. A securities account, savings account or term deposit does not fall within that category if it does not allow direct execution of payment transactions.

The central distinction concerns the status of the account holder. A consumer is a natural person acting for purposes other than a commercial or professional activity. A non-consumer client may include a company, a wealth holding company, a société de participations financières (Soparfi), a société de gestion de patrimoine familial (SPF), a fund, a family vehicle or a person acting in a professional capacity.

The 2009 Payment Services Law is the general framework for payment-services framework contracts. For consumers, the protective rules apply in principle in full. For non-consumer clients, Article 59 of the 2009 Payment Services Law allows the parties to disapply all or part of Title III on transparency of conditions and information requirements. Article 78 of the 2009 Payment Services Law also allows certain rights and obligations under Title IV to be adjusted, including rules on charges, withdrawal of consent, burden of proof, unauthorised transactions, refunds, revocation, liability and notification time limits. The Luxembourg law of 13 June 2017 on payment accounts (“2017 Payment Accounts Law”) adds a specific consumer layer.

Payment account terms correspond to the framework contract accepted by the client when the account is opened. This document governs the provision of payment services and covers, among other points, charges, execution mechanics, security measures, liability for unauthorised transactions, the mechanism for changing the contract and termination conditions.

Must-know point: payment account terms should not be analysed as a single block applying indistinctly to all clients. They should be structured by reference to the account holder’s status: consumer or non-consumer client.

Three legal requirements structure these terms.

First, pre-contractual information must be provided on paper or another durable medium before the client is bound. Articles 70 and 71 of the 2009 Payment Services Law cover, among other points, the provider, service features, consent mechanics, the time of receipt of payment orders, any cut-off times set by the provider. These are deadlines by which a payment order must be received to be processed on the same business day. Execution times, charges, interest and exchange rates, communication, safeguards, liability, changes, termination and complaint routes must also be disclosed.

Second, the mechanism for amending framework-contract terms must comply with Article 73 of the 2009 Payment Services Law. Changes normally require two months’ prior notice and give the payment service user the right to reject the change and terminate the contract free of charge before it takes effect, unless a valid contractual adjustment applies to a non-consumer client.

Third, termination clauses must comply with Article 74 of the 2009 Payment Services Law. The user may terminate at any time, subject to any agreed notice period not exceeding one month, while provider termination of an indefinite framework contract requires at least two months’ notice if agreed, subject to contractual adjustments applicable to non-consumer clients.

For consumer payment accounts, the 2017 Payment Accounts Law adds controls on fee information documents and statements of fees under Chapter 2, account switching under Chapter 3, and payment accounts with basic features under Chapter 4. In practice, private banks should align account terms with tariff sheets, card terms, overdraft wording, digital banking channels, complaint wording and account-switching disclosures.

They should also monitor, as a regulatory watch point, the European PSD3 / PSR package. PSD3 means the proposed third Payment Services Directive. PSR means the proposed Payment Services Regulation. Together, these proposals are expected to strengthen the European payment-services framework, in particular on fraud, transparency and user protection.

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References:

• Law of 10 November 2009 on payment services, consolidated CSSF version (https://www.cssf.lu/wp-content/uploads/L_101109_psd_eng.pdf)
• Law of 13 June 2017 on payment accounts, CSSF version (https://www.cssf.lu/wp-content/uploads/L_130617_payment_accounts.pdf)
• CSSF, Payment accounts (https://www.cssf.lu/en/payment-accounts/)
• European Parliament, Legislative Train Schedule, Payment services regulation (https://www.europarl.europa.eu/legislative-train/theme-an-economy-that-works-for-people/file-revision-of-eu-rules-on-payment-services)