ELM 6.5 Methods of redemption
A firm must give a person who is exercising a redemption right against the firm the right to have the proceeds of redemption paid to him:
- (1)
in cash; or
- (2)
by electronic transfer to an account with a bank or other financial undertaking nominated by that person.
A firm must ensure that the exercise of the redemption right will not be unreasonably difficult for anyone entitled to exercise it.
Subject to ELM 6.5.2 R, the firm may choose which of the methods of redemption in ELM 6.5.1 R to offer.
ELM 6.5.1 R reflects article 3(1) of the E-Money Directive and article 33a of the previous version of the 1Banking Consolidation Directive (Directive 2000/12/EC)1. Neither ELM 6.5.1 R nor ELM 6.5.2 R takes precedence over the other. A firm must therefore organise its affairs so that it can comply with both rules.
If the methods by which the firm offers to redeem e-money are the same as those by which it is made available to the public, those methods of redemption are likely to be reasonable for the purposes of ELM 6.5.2 R. If a firm distributes e-money it issues through its branches, restricting the places where it can be redeemed to those branches is likely to be reasonable for the purpose of ELM 6.5.2 R.
A firm does not necessarily breach ELM 6.5.2 R if it does not offer the redemption right at each automated teller machine at which persons may withdraw cash by using e-money issued by the firm. For instance, a firm may issue e-money in the United Kingdom that can be used to withdraw cash from automated teller machines abroad. It may be reasonable for the firm not to offer the redemption right at the automated teller machines abroad.