EU sets out retail bank switching and transparency proposals
The European Commission is to introduce 15-day account switching across the EU
The European Commission has published proposals designed to make it easier for European consumers to understand and compare the bank services they receive and switch bank accounts if they are not happy with their existing provider.
The proposals state that all payment service providers must provide consumers with fee information listing the most common services provided and the fees charged for each; a statement of fees charged during the last 12 months; and a glossary of terms used in relation to payment accounts.
Should the customer wish to change provider, banks will have to transfer all or part of recurring payment orders such as direct debits from one account to another account within 15 days, or 30 days if the switch is between banks in different countries. The service must be free of charge.
In addition, the proposal provides that consumers should be able to open a payment account with any payment service provider in the EU, even where they are not residents of the country in which the provider is located. The payment services provider cannot use the financial situation of the person as a reason to refuse an account.
The measures are intended to improve transparency and comparability of banking services and encourage greater competition in the banking sector. They are also designed to support citizens who need to open an account in another member state or switch from one bank to another.
“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,” said Tonio Borg, EU commissioner for health and consumer policy. “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 EU proposals echo similar plans in the UK to introduce account switching, which are due to take effect in September. The UK measures require banks to switch a customer’s account to an alternative provider within seven days free of charge.
In the UK, a poll by YouGov on behalf of BT found that the factors most likely to motivate consumers to switch banks were strong online banking services, the presence of a local branch and 24/7 availability of banking services. The same survey found that the most wanted products were peer review sections, web chat and compare my bank services.
The proposed EU directive will now go to the European Parliament and the Council of the European Union, where it will be discussed and a final text worked out. Once the two institutions agree on the final version of the text, the directive will be passed, at which point the individual member states of the EU will have to transpose it into their own national law – a process that can take up to two years.
A spokesperson for the EU Commission confirmed that the organisation aims to have the directive completed by the end of the year – meaning that consumers can expect it to be in effect across all EU member states by the end of 2015.
