ELM 6.2 Purpose
One purpose of this chapter is to ensure that a firm redeems on demand any e-money issued by it. This will ensure that a consumer who finds that for the moment there is nothing he wishes to buy using e-money he has bought is not left with an asset that he cannot use and that he cannot turn back to cash to spend elsewhere. This will increase confidence among consumers in e-money as a product.
The purse limit in ELM 6.9.1 R protects holders of e-money by restricting the financial loss a holder of e-money may suffer if he loses his consumere-money card or if the firm becomes insolvent. It takes into account the fact that the compensation scheme does not apply.
This chapter implements article 3 of the E-Money Directive and article 33a of the previous version of the 1Banking Consolidation Directive (Directive 2000/12/EC)1.
The purpose of the rules about redemption in ELM is that holders of e-money issued by the firm should have the right to redeem that e-money at par in a simple and easy way. If any fee is charged for redemption, it should be limited. Holders should have the right for redemption proceeds to be paid in the currency in which the e-money is denominated and paid immediately in banknotes and coins or by transfer to a conventional bank account. Therefore a firm should not have a contract with a holder of e-money under which the holder is only entitled to redeem e-money on different terms.
However, ELM 6 does not require a firm to redeem e-money in a way that the holder does not want; it requires that the holder should be entitled to have the e-money redeemed in accordance with ELM 6. Thus if, at the time that a holder of e-money is exercising a redemption right, the holder asks the firm to pay the proceeds in a currency other than the one in which it is denominated, the firm may do so. Similarly, the holder may ask the firm to pay the proceeds of redemption in a way different from that in ELM 6.5.