A bank account for everyone
Around 58 million consumers over the age of 15 in the EU do not have a payment account; 25 million of them would like to have one, and 2.5 million have been denied access to one.
These figures, which the European Commission published in connection with its Proposal for a directive on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features [COM(2013)266 final], are thought-provoking.
The days of pay packets, which many have only heard about from parents and grandparents, are long gone. Today, salary is paid into the employee’s account by bank transfer. The developments in recent decades show a constant move towards cashless payments, both in the commercial world and in the public sector. Today, many financial debits – rent, electricity bills, gas bills, etc. – are paid via direct debit or bank transfer.
Legal right to a basic account
The proposal for a directive, presented by Internal Market Commissioner Michel Barnier and Consumer Affairs Commissioner Tonio Borg on 8 May, aims to ensure that every citizen in the EU has the right of access to a payment account with basic features. At least one payment service provider in each Member State will be required to offer consumers a basic account; an account solely with online banking facilities will not be sufficient. The basic account will have to include the following payment services: receiving and making payments; cash withdrawals; execution of payment transactions within the EU – direct debits, payment transactions through a payment card, including online payments, and credit transfers. Overdrafts will not be possible with this type of account. The new directive is also intended to remove obstacles for consumers who are active across borders. The Commission states that many citizens have faced difficulties in opening a payment account due to their not having a permanent address in the Member State where the payment service provider is located. In future, legal residence in the EU will be sufficient on its own.
Is customer loyalty an impediment to the internal market?
A customer’s loyalty to a company is basically considered as a positive sign; it suggests a certain level of customer satisfaction. The Commission confirms that consumers with a bank account tend to remain loyal to their bank, and it refers to a Eurobarometer survey on financial services for private customers from 2012. Here the Commission wants to make it easier for consumers to switch between payment accounts, in order to stimulate competition between the payment service providers. The reasons for the low level of mobility are considered to include unclear information about fees and the lengthy and complex procedures for switching between payment accounts. In future, it will be sufficient to authorise the new bank to initiate and manage the switch from the old account. The new bank must then act rapidly and cost-effectively. This account-switching service will also apply cross-border. For consumers, cross-border purchasing of financial products is even more complicated than switching accounts.
At the same time, the lack of consumer mobility makes it more difficult for financial service providers to acquire new customers and, particularly in the cross-border context, could make it less attractive to enter new markets. The Commission considers that this leads to higher prices and lower quality of service for the consumer.
The proposed directive is intended to help in this area too. Transparency and comparability of information about payment accounts are to be improved. In addition, there will in future have to be at least one website in each Member State allowing comparison of the fees charged by payment service providers at the national level for their services in connection with payment accounts.
Evaluation and prospects
The Commission’s proposal for a legal right to a basic payment account is to be welcomed. Nowadays, having a bank account is a basic element for participation in society and in economic life. Without an account, it is difficult to obtain a contract of employment or even a rent agreement. Paying a bill in cash at a bank counter often entails paying a fee. For those on a low income or in debt, this can make things particularly difficult. For banks, the basic payment account as envisaged in the proposal for a directive might not be profitable, as it is not packaged with an overdraft and other services and it entails an administrative burden. The Commission’s proposal will now be discussed in the Council and the Parliament.
Translated from the original text in German