PAYMENT CLEARING HOUSE PARTICIPANT GROUP FOR IMMEDIATE SETTLEMENT. Payment Compensation Rules

Transcription

1 PAYMENT CLEARING HOUSE PARTICIPANT GROUP FOR IMMEDIATE SETTLEMENT Payment Compensation Rules Compensation Rules for IMMS Page 1 of 1 Version: 1/2011

2 INDEX 1. GENERAL SCOPE OF THIS DOCUMENT TARGET AUDIENCE OF THIS DOCUMENT ACKNOWLEDGEMENTS RELATED DOCUMENTS ABBREVIATIONS DEFINITIONS 4 2. RULES COMPENSATION CLAIM SCENARIOS VOSTRO ACCOUNTS LATE SETTLEMENT OTHER COMPENSATION CLAIMS ADMINISTRATION FEE ADMISSION OF FAULT COMPENSATION CLAIM TIME FRAMES DISPUTE RESOLUTION CURRENCY DE MINIMIS USE OF FUNDS CALCULATION METHOD OF COMMUNICATION METHOD OF PAYMENT PARTIES INVOLVED 9 Compensation Rules for IMMS Page 2 of 2 Version: 1/2011

3 1. GENERAL 1.1 Scope of this Document This document has been drawn up as the basis for the settlement of claims for compensation arising from payments in South African Rand between Participants who are members of the Payment Clearing House Participant Group for Credit Payment Instructions for Immediate Settlement (IMMS). This document supports the signed clearing and settlement agreement for the clearing of Credit Payment Instructions for Immediate Settlement currently in place. These rules only address claims between Participants vis-à-vis each other. The underlying principle regarding claims for compensation is that no Participant should benefit or be disadvantaged by the action/error of another Participant. The onus is on the impacted Participants to effect the appropriate adjustments to the underlying client accounts, based however, on the principle that all parties should be placed in the position they would have been in, had the transaction been correctly processed. 1.2 Target Audience of this Document The target audience of this document is the treasury front-office staff, IMMS operational staff, and the operational staff in the Vostro areas of all the Participants. 1.3 Acknowledgements This document is based on the Heathrow Group Recommendations dated 21 December Related Documents The following additional documents are relevant to this document as they all form part of a set of documents and agreements according to which the functioning of the National Payment System is governed. Involved parties include the SARB and all Participants: Operational Procedures and Service Level Manual for the SAMOS System PASA Settlement Agreement PCH Agreement for Credit Payment Instructions for Immediate Settlement (IMMS) SAMOS and SAMEX Conditions of Service Agreement SAMOS Procedure Manual SAMOS Service Agreement South African Reserve Bank Act, NPS Act and Banks Act Compensation Rules for IMMS Page 3 of 3 Version: 1/2011

4 1.5 Abbreviations The following abbreviations are used in this document: NPS PASA PCH SAMOS SARB STP ZAR National Payment System Payments Association of South Africa Payment Clearing House South African Multiple Option Settlement system South African Reserve Bank Straight Through Processing - South African Rand 1.6 Definitions Administration fee Adjustment Back valuation Beneficiary Beneficiary Participant Business Day Compensation Forward valuation Participant PASA A fee payable to the Participant who was requested to make the adjustment. It is intended to compensate the Participant for its administrative costs in making the adjustment. For the purposes of these rules this relates to any changes required due to payments being erroneously made, misdirected or made on an incorrect value date which results in a need for compensation. An action taken by Participants to facilitate the application of good value in respect of payments received/made on a date later than the value date on which the payment should have been made. See clause of the PCH Agreement. See clause of the PCH Agreement. Mondays to Saturdays, excluding Statutory holidays as defined in the Public Holidays Act. An amount paid by one Participant to another Participant for the purpose of placing these Participants into the position they would have been in, had the payment been effected correctly/timeously. An action taken by Participants to facilitate the application of good value in respect of payments received/made on a date earlier than the value date on which the payment should have been made. See clause of the PCH Agreement. The Payments Association of South Africa recognised as the payment system management body in terms of the National Payment System Act, No. 78 of Compensation Rules for IMMS Page 4 of 4 Version: 1/2011

5 Paying Participant Repo rate SAMOS SWIFT Use of Funds Value date See clause of the PCH Agreement. The rate set by the Governor of the SARB to regulate the level of interest rates in support of Monetary Policy. It is the rate at which the SARB is prepared to lend secured funds to Participants on a weekly basis. The rate is set at the Monetary Policy Committee meetings. See clause of the PCH Agreement. Society for Worldwide Interbank Financial Telecommunication. This term is used when claiming interest compensation from the Participant who had use of funds to which it was not entitled. See clause of the PCH Agreement. 2. RULES 2.1 Compensation claim scenarios The following are examples of adjustments involving Use of Funds compensation: By a Paying Participant to a Beneficiary Participant Paying Participant requests back valuation due to payment not being effected, or effected to the incorrect Participant; Paying Participant requests back valuation due to payment being effected on the incorrect value date. By a Beneficiary Participant to a Paying Participant: Funds are returned by the Beneficiary Participant on a value date other than the date received either because: the Beneficiary Participant is unable to apply funds due to insufficient or incorrect payment details supplied; or the Paying Participant effects a payment in error and requests return of funds. The error may be as a result of the payment being duplicated or effected to the incorrect Participant or effected for an incorrect amount. Paying Participant requests forward valuation due to a payment being effected on the incorrect value date. A distinction needs to be drawn between requests for adjustments or return of funds relating to Vostro accounts and those relating to other domestic interbank and corporate client payments as these are handled differently: Compensation Rules for IMMS Page 5 of 5 Version: 1/2011

6 2.1.1 Vostro Accounts The Participant requesting the adjustment or return of funds must provide full details of the affected transaction using an authenticated SWIFT message. In respect of back valuation adjustments the Paying Participant must pay Use of Funds compensation prior to the request being processed. The Participant receiving the request must immediately acknowledge receipt thereof via SWIFT. If not in relation to a past payment, payment of the amount requiring adjustment must occur on receipt of the acknowledgment. The Participant receiving a back valuation adjustment request must verify the details of the request and either perform the adjustment or raise an objection within 48 hours of receiving full details of the affected transaction and Use of Funds compensation. In the case of a return of funds request, the Beneficiary Participant is to seek to obtain the Beneficiary s authority to return the funds on a best efforts basis. If forthcoming, compensation must be paid within 48 hours of receiving such authority. The return of funds and associated compensation are to be paid separately. Where special circumstances prevail, the above time frames may be extended by a maximum period of 10 business days by mutual consent. Once the process has been completed, the Participant who performed the adjustment must immediately send a SWIFT confirmation to the Participant who initiated the adjustment request Late Settlement Late settlement is a back valuation mechanism whereby adjustments are facilitated in the impacted Participants late run processing environments. The Treasuries / Liquidity Desks of the Participants must handle all late settlements. Adjustments for amounts less than R10,000, will not be considered. The Participant requesting late settlement must telephonically contact the Participant to whom the request is being made before 10h00 on the business day following value date, provide full details of the affected transaction and agree the Use of Funds compensation to be paid in order for good value to be given to the underlying Beneficiary Other compensation claims All other compensation claims must be directed to the Treasuries / Liquidity Desks of the Participants. The Participant requesting the adjustment or compensation relating to return of funds must telephonically contact the Participant to whom the request is being made and provide details of the affected transaction. The request must be confirmed by means of an authenticated SWIFT message. Compensation Rules for IMMS Page 6 of 6 Version: 1/2011

7 The Treasuries / Liquidity Desks of the Participants will agree the procedure for payment of the Use of Funds compensation and allocate the request to the appropriate internal processing environment to perform the adjustment. Participants must ensure that the correct procedures are in place in their own environments to accommodate the process. The Participant receiving the request must immediately acknowledge receipt thereof via SWIFT. If not in relation to a past payment, payment of the amount requiring adjustment must occur on receipt of the acknowledgment. The Participant receiving a back valuation adjustment request will have 10 business days from the date thereof to verify the claim and either perform the adjustment or raise an objection. In the case of a return of funds request arising from the Paying Participant having effected a payment in error, the Beneficiary Participant must seek to obtain the Beneficiary s authority to return the funds on a best efforts basis. If forthcoming, and the funds are returned on a value date other than the date received, compensation must be paid within 10 business days. The return of funds and associated compensation are to be paid separately. Where funds are returned on a value date other than the date received due to the Beneficiary Participant being unable to apply, compensation must be paid within 10 business days. The return of funds and associated compensation are to be paid separately. Where special circumstances prevail, the above time frames may be extended by mutual consent. Once the process has been completed, the Participant who performed the adjustment must immediately send a SWIFT confirmation to the Participant who initiated the adjustment request. 2.2 Administration Fee Where an adjustment is requested before 10h00 on the business day following value date, no administration fee is applicable. Where an adjustment is requested after 10h00 on the business day following value date and up to 30 calendar days after value date, an administration fee of R per adjustment will be payable by the Participant who originally made the error. Where an adjustment is requested for periods between 30 and 60 calendar days after value date, an administration fee of R per adjustment will be payable by the Participant who originally made the error. Where the administration fee is greater than the Use of Funds, a request for compensation will be declined under advice to the claimant and neither party will pay or receive any funds. The administration fees as described above should be made separately from the Use of Funds paid. Compensation Rules for IMMS Page 7 of 7 Version: 1/2011

8 The administration fee payable is deemed to include VAT, where VAT is payable. A VAT invoice must be issued per case and settled within 2 business days of receipt. 2.3 Admission of Fault Payment or attempted payment of compensation as outlined in this document does not constitute and must not be construed as an admission of guilt, negligence or fault on the part of any of the Participants involved, nor does it imply any legal obligation. 2.4 Compensation Claim Time Frames The maximum period for claims for compensation is 60 calendar days after value date. Adjustment requests for periods in excess of 60 calendar days will be declined under advice to the claimant. 2.5 Dispute Resolution The dispute resolution provisions of the PCH Agreement for the clearing of Credit Payment Instructions for IMMS are hereby adopted. 2.6 Currency Compensation is to be paid in South African Rand (ZAR). 2.7 De Minimis Interest claims of less than the applicable administration fee are regarded as de minimis and not made. 2.8 Use of Funds Calculation The Use of Funds calculation formula to be applied to adjustments made is: (Amount of payment in ZAR) x (Repo Rate -0.25%) x (number of calendar days for which funds held) Method of Communication All requests for adjustments other than for late settlement must be in the form of an authenticated SWIFT message. Compensation Rules for IMMS Page 8 of 8 Version: 1/2011

9 2.10 Method of Payment Payment of Use of Funds and administration fees is to be effected by means of a MT202 credit payment instruction for IMMS. The Beneficiary of the payment must be a local Participant. Field 21 of the MT202 must quote the reference used on the original request for compensation and Field 72 must contain the REC code /DTBNK/ Parties Involved Compensation as outlined in this document is payable only between the Participants directly involved with the settlement (that is, the Paying Participant and the Beneficiary Participant). If there is a payment chain, each link of the chain must be considered separately. Compensation Rules for IMMS Page 9 of 9 Version: 1/2011