Retail Bank Account Package

Transcription

1 EPFSF Briefing Retail Bank Account Package In 2007 a European Commission retail banking inquiry pointed to the existence of obstacles to customer choice and mobility, notably (a) lack of transparency and comparability of bank fees and (b) high switching costs incurred by consumers when they change their bank account providers. Over the last years, a number of initiatives have been undertaken at national level to help consumers. Regarding switching, the European Banking Industry Committee agreed in 2008 on a number of Common Principles to be implemented at national level to help consumers wishing to switch current accounts providers. However, a 2012 EU-wide mystery shopping conducted on behalf of the European Commission came to the conclusion that the switching process would not yet be working fully satisfactorily. Concerning the issue of ease of comparison of bank fees and requirements covering their presentation, the Commission invited the European banking industry to develop consumer-friendly solutions. In May 2011, EBIC presented a proposal that was, however, perceived as failing to meet the expectations from the EU Commission. As regards the difficulties faced by some EU citizens in accessing basic banking services. The European Commission issued in 2011 a Recommendation on Access to a Basic Payment Account inviting Member States to introduce measures to guarantee the right to a basic payment account at a reasonable price. The European Commission published its Follow-up Report to the Recommendation in august 2012, concluding that only a few Member States appear to be close to complying with the principle. On 8 May 2013, the European Commission published a proposal for a Directive addressing three areas: comparability of payment account fees; payment account switching; access to payment accounts with basic features. Discussions regarding the European Commission proposal have started at the European Parliament. The European Parliament s Economic and Monetary Affairs Committee (ECON) which is the Committee leading the file prepared a draft report. Mr. Klute MEP is the Rapporteur in charge. The final ECON report should be adopted by mid-november Page 1 of 5

2 Comparability of payment accounts fees The proposed Directive aims at helping consumers to compare offers within the EU market regarding the fees charged by banks and other payment service providers for payment accounts in the EU. The European Commission s proposal for a directive establishes that: Member States shall ensure that the competent authorities determine a provisional list of at least 20 payment services accounting for at least 80% of the most representative payment services subject to a fee at national level. This list is based notably on several criteria such as services which generate the highest cost for consumers per service and the highest cost overall as well as the highest profit for payment services providers per service and the highest overall profit. The list shall contain terms and definitions for each of the services identified; Payment service providers provide the consumer with a fee information document and a glossary containing the list of the most representative services, free of charge and at all times on a durable medium; Payment service providers provide the consumer with a detailed statement of all fees incurred on their payment account at least annually; These documents must be drafted using EU standardised terminology and standard formats. Finally, the proposal requires at least one website comparing fees charged by payment service providers for services offered on payment accounts at national level, to allow consumers to easily compare prices and conditions for payment accounts offered on the market. Payment account switching The proposal for a Directive aims at establishing a simple and quick procedure for consumers to change payment accounts from one payment services provider to another at national and crossborder levels. Interaction with the Single European Payment Area (SEPA) objectives: SEPA includes 28 EU countries (including the Euro 17 countries) and 3 European Economic Area countries (Iceland, Liechtenstein and Norway). It is an ambitious project strongly supported by the European Commission and the European Central Bank. It will enable 500 million citizens in 33 countries to make cross-border transactions without being required to open a bank account in another Member State and improves the efficiency of all payments, both domestic and cross-border. SEPA will become a reality for everyone from 2014 (euro countries) and in 2016 (non-euro countries). From the industry and other EU stakeholders point of views, the rationale behind any harmonised system related to switching bank accounts crossborder is weakened to a large extent. According to the European Commission s proposal, if banks decide to charge a fee for certain services, such as closing the old account, the fees applied should be reasonable. Access to payment accounts with basic feature The proposed Directive aims at allowing all EU consumers legally resident in the Union to open a payment account with basic features without having to be resident in the Member State where the account is opened. It is important for vulnerable consumers to access financial services to enable them to participate in the economic and social life of a modern society. The proposal for a Directive would like to create a right for all consumers to access basic payment account services irrespective of their financial situation. Interaction with Anti-Money Laundering and fight against financial crime: To enable banks to comply with identification and Know-Your-Customer requirements to prevent identity theft, financial fraud, money laundering and terrorist financing, banks will still be entitled to refuse access to a basic payment account to consumers if they do not comply with the rules on money laundering and terrorism financing or if they already have an account guaranteeing the basic payment services with a bank located in the same country. Page 2 of 5

3 Before opening a payment account with basic features, payment services providers shall verify whether the consumer holds or does not hold a payment account in their territory. Member States shall ensure that at least one payment service provider in their territory offers a payment account with basic features to consumers. Member States will determine whether payment accounts with basic features should be offered to consumers for free or at a reasonable fee. A reasonable fee should be identified at national level on the basis of a set of criteria, such as national income levels, average fees paid for an account in that Member State and the cost associated with the provision of payment accounts. Conclusion Generally speaking it can be wondered whether the Directive is not too prescriptive in the level of details and should not be principles based allowing Member States to adapt to domestic market and realities. The access to and use of basic financial needs such as a bank account and simple transactions are decisive to the integration of people in the current European society. The industry is broadly supportive of granting financially excluded citizens access to a payment account with basic features at a reasonable cost. Nonetheless, measures to address the specific causes underlying the significantly different levels of unbanked people should be designed at national level. The proposal s objective to grant a payment account with basic feature to any citizens of the EU in virtually all 28 Member States will prove very challenging from an industry perspective. Indeed, without a clear link between the Member State and the citizen that wishes to open an account into this Member State, it will be very difficult for payment services providers to conduct all the necessary checks required by anti-money laundering and fraud prevention rules. Those verifications notably avoid to have accounts opened and used for criminal or fraudulent purposes (which should also be reasons to unilaterally terminate a framework contract). The cross-border aspect is not the main issue to be targeted from a consumer perspective. Access to basic payment accounts (designed for the financially excluded) and access to regular payment accounts (designed for internationally mobile people) respond to two different objectives. These two issues require distinct tools and approaches and should be tackled separately. Adopting EU-wide definitions would not tackle the fundamental differences of languages, cultural specificities and needs. Given the range of banking models in the EU market and the differences amongst customer s use of banking services in each Member States, harmonising vocabulary will not necessarily lead to accurate comparability. Implicitly encouraging a focus on price alone will not always lead to the best consumer outcomes. The provision of information in relation to fees and charges at the national level is considered to be of benefit to customers as it will inform them of the various options available from payment service providers. However, from the industry point of views, different charging models have been adopted in different Member States, making a requirement to list at least 20 payment services accounting for 80% of the most representative services subject to a fee in that Member State impractical. The proposal should take into consideration the Payment Service Directive which already provides disclosure requirements, ensuring that a consumer notably receives information on all payable charges, the breakdown of the amounts of any charges and the actual or reference exchange rate to be applied to the payment transaction. In many areas the legislative proposals should reflect a proper balance between legitimate consumer interests and the complexity as well as costs from an industry perspective, notably as regards cross-border switching. Furthermore, it should also be taken into account the fact that once SEPA will be in place there will be less need for customers to switch bank accounts crossborder since they will be able to manage payments cross-border in a much faster and costefficient way. Page 3 of 5

4 The directive enshrines the principle that customers will not bear any financial loss from mistakes or delays by the account providers involved in the switching service. However, the banking sector believes that the payment service providers cannot be liable for mistakes or delay in updating payers/creditors payment account details when this is obligation has been passed on to another payment service provider, or for the breach of consumer s obligation. Page 4 of 5

5 Briefing notes are prepared by the Financial Industry Committee to the European Parliamentary Financial Services Forum. For further information on the subjects raised in the briefs please contact the Secretariat or the Chair of the Financial Industry Committee. Chair of the Financial Industry Committee Secretariat Guido Ravoet, EBF Chief Executive Catherine Denis, EPFSF Director Avenue des Arts 56, B-1000 Brussels Avenue des Arts 56, B-1000 Brussels Tel: / Fax: Tel: / Fax: g.ravoet@ebf-fbe.eu cdenis@epfsf.org Financial Industry Committee Association for Financial Markets in Europe (AFME) Association of Private Client Investment Managers and Stockbrokers Banco Bilbao Vizcaya Argentaria (BBVA) Banco Santander Barclays BlackRock BNP Paribas CitiGroup Chartered Financial Analyst Institute (CFA Institute) Commerzbank AG Crédit Agricole Danske Ban The Depository Trust and Clearing Corporation (DTCC) Deutsche Bank AG Deutsche Börse AG Euroclear European Association of Public Banks (EAPB) European Banking Federation (EBF) European Central Securities Depositories Association (ECSDA) European Federation of Accountants (FEE) European Federation for Retirement Provision (EFRP) European Fund and Asset Management Association (EFAMA) European Mortgage Federation (EMF) European Payment Institutions Federation (EPIF) European Savings Banks Group (ESBG) European Structured Investment Products Association (EUSIPA) Federation of European Securities Exchanges (FESE) Futures and Options Association (FOA) Goldman Sachs International HSBC ING International Swaps and Derivatives Association (ISDA) Insurance Europe Intesa Sanpaolo JP Morgan KPMG Lloyds Banking Group NASDAQ OMX NVB Dutch Banking Association PricewaterhouseCoopers (PwC) Prudential Plc Royal Bank of Scotland Société Générale Standard & Poors State Street UBS AG UniCredit Group VISA Europe Western Union International Bank WKO Vienna Economic Chamber Steering Committee Burkhard Balz MEP Sharon Bowles MEP A. F. Correia de Campos MEP Philippe De Backer MEP Herbert Dorfmann MEP James Elles MEP Frank Engel MEP Sari Essayah MEP Diogo Feio MEP Elisa Ferreira MEP Vicky Ford MEP Ashley Fox MEP Jean-Paul Gauzès MEP Ana Maria Gomes MEP Sylvie Goulard MEP Roberto Gualtieri MEP Malcolm Harbour MEP Roger Helmer MEP Monika Hohlmeier MEP Gunnar Hökmark MEP Danuta Maria Hübner MEP Anne Jensen MEP Ivailo Kalfin MEP Othmar Karas MEP Sean Kelly MEP Mojca Kleva MEP Wolf Klinz MEP (SC Chair) Philippe Lamberts MEP Boguslaw Liberadzki MEP Baroness Sarah Ludford MEP Olle Ludvigsson MEP Astrid Lulling MEP Arlene McCarthy MEP Gay Mitchell MEP Bill Newton Dunn MEP Antonyia Parvanova MEP Sirpa Pietikäinen MEP Godelieve Quisthoudt-Rowohl MEP Paul Rübig MEP Antolín Sánchez Presedo MEP Olle Schmidt MEP Richard Seeber MEP Peter Skinner MEP Theodor Dumitru Stolojan MEP Kay Swinburne MEP Michael Theurer MEP Ramon Tremosa i Balcells MEP Rafal Trzaskowski MEP Angelika Werthmann MEP Auke Zijlstra MEP Page 5 of 5