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Is there a need for BPO 2.0?

04/01/2017

Looking back through old files can be quite a revelation. We were both members of the Uniform Rules for Bank Payment Obligations (URBPO) Drafting Group, with Gary Collyer serving as Chair.

 

As agreed in the original memorandum of understanding signed between ICC and SWIFT in September 2011, and the terms of reference provided to the Drafting Group, the scope of the rules lies solely in the bank-to-bank space.

 

Accordingly, the rules do not cover the interaction between a bank and their corporate client. This is considered to be the competitive space between banks.

 

It is made very clear in article 1 of the URBPO that a Bank Payment Obligation (BPO) relates to an underlying trade transaction between a buyer and a seller. However, as stated in article 6, a BPO is separate and independent from the sale or other contract on which the underlying trade transaction may be based.

 

A set of guidelines was created to assist banks in the creation of customer contracts or agreements for use with BPO related services or products. These can be found at http://www.iccwbo.org/About-ICC/Policy-Commissions/Banking/Task-forces/Bank-Payment-Obligation-(BPO)/

 

The intent of the document is not to provide a contractual text but to offer a suggested list of categories, and the individual components within those categories, that should be considered when drafting a customer contract or agreement.

 

Comment was often made during the formulation of the rules and thereafter as to whether or not a future version should include corporates. For a number of those involved back in 2011, it was always envisaged that a phase 2 would incorporate corporate interaction: buyer and obligor bank, seller and recipient bank.

 

However, a review of recent commentary would suggest that this concept has been lost in the mists of time. Is it time to resurrect it? It certainly may be worth investigating in order to ascertain if such an approach could give the BPO an additional kick-start.

 

 

 

More detailed information on this subject can be found in the BPO training module at www.tradefinance.training


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