In today’s world, European citizens cannot fully participate in society without a basic bank account. Bank accounts have become an essential part of our everyday life, allowing us to make and receive payments, shop online, and pay utility bills (telephone, gas, electricity).
Whilst single market legislation has ensured that banks can operate throughout the European Union and offer their services cross-border, this mobility is not mirrored for citizens who are often unable to open an account in another Member State or to easily switch from one bank to another. Furthermore, consumers often pay above the odds for the services they receive from their bank and struggle to have clarity on the various fees charged.
It is in this context that the European Commission publishes today its proposal for a Directive on the transparency and comparability of payment account fees, payment account switching and access to a basic payment account.
Commissioner for Internal Market and Services Michel Barnier said: “In today’s world, not having access to a basic bank account makes everyday life difficult and more expensive. Today’s proposal will finally give all European citizens access to a basic bank account and enable them to participate fully in the society they live in and take advantage of the benefits of the Single Market. By making it easier to compare fees and change bank accounts, we also hope to see better offers from banks and lower costs. The proposal will also benefit the financial services industry by providing additional incentives to offer products cross-border and enter new markets.”
The Commissioner for Health and Consumer Policy Tonio Borg said: “This proposal allows consumers across the EU to access bank account services, to compare them and, if they are not satisfied, to switch to another provider. Our aim is that consumers are better informed about fees both before and after they open an account, and that they can change their provider rapidly and easily if they so wish. This proposal will also favour competition in the retail financial services sector and reward businesses that offer consumers a better choice and price.”
The Commission proposals tackle three areas:
• Comparability of payment account fees: by making it easier for consumers to compare the fees charged for payment accounts by banks and other payment service providers in the EU;
• Payment account switching: by establishing a simple and quick procedure for consumers who wish to change from their payment account to one with another bank or payment service provider;
• Access to payment accounts: by allowing EU consumers who want to open a payment account, without being residents of the country where the payment service provider is located, to do so. Moreover, these provisions will allow all EU consumers, irrespective of their financial situation, to open a payment account that allows them to perform essential operations, such as receiving their salary, pensions and allowances or payment of utility bills etc.
Improving the transparency and comparability of fees together with a smoother switching process should enable consumers to benefit from better offers and lower costs for their bank accounts. At the same time, the financial services industry will benefit from increased mobility of clients, with reduced barriers to entry, including cross-border.