Ban imposed by certain national authorities on the use of the term “neobank” for payment institution

Does the divergence of positions among national authorities regarding the freedom to use the term "neobank" for payment institutions not compromise the consistent application of EU law in the banking sector and the objective of convergence of supervisory practices, and does it not hinder competition and the development of cross-border activities?

Differences of opinion among national competent authorities regarding the use of the term "neobank" by payment sector actors do exist. Some authorities recognize that the term "neobank" refers to new players providing payment services. For example, the Bank of Spain does not prohibit authorized entities from using the term "bank". ( https://clientebancario.bde.es/pcb/es/blog/neobancos.html and FAQ: https://www.bde.es/wbe/en/punto-informacion/contenidos/advertencias-publico/las-entidades-no-autorizadas-intrusos/ ).  Other authorities, such as the ACPR in France   ( ACPR Review, "Reminder of the rules for using the term 'neobank'", April 2021 ) and the CSSF   in Luxembourg have taken a more or less direct stance against the use of the term "neobank" ( specifically Rule 45  of CSSF Circular 26/906 Central Administration, Internal Governance and Risk Management addressed to all Payment Institutions and Electronic Money  Institutions : “The management body shall ensure that the use of any terminology relating to services reserved for Credit Institutions, such as banking services, deposits, bank or neo-bank, bank account, etc., or to other (financial) Institutions carrying out activities not covered by Payment Institution or Electronic Money  Institution licenses, is prohibited in all its forms ).  This situation creates legal uncertainty for Payment Institutions and Electronic Money Institutions, because the terminology used in communication is an important factor in their growth and their ability to compete with Credit Institutions. Furthermore, the ban imposed by certain national authorities constitutes an obstacle to competition and development of cross-border activities and harms the proper functioning of the internal market, which is the objective pursued by Directives (EU) 2015/2366 (PSD2) and 2009/110/EC (EMD2). Moreover, it contributes to confusion regarding how customers should understand the activities of new players and casts doubt on their reliability, which is contrary to the objective of consumer protection   ( Règl. (UE) n° 1093/2010, art. 9 ).