Access to a basic bank account

No EU citizen can be negated the right to open a basic bank account to be able to fully partake of today’s social and economic society. Payment accounts intended to permit consumers to access basic payment services for their everyday payment transactions must be made available at a reasonable charge, regardless of place of residence or financial situation, the European Commission is insisting.

Though many of us take the right to open a bank account for granted, surprisingly enough, according to recent statistics, around 30 million adult consumers in the European Union do not have a bank account. Out of these 30 million, it is estimated that between six and seven million do not have a bank account because they have been denied access to one.

The main reasons are that they do not fulfil certain eligibility conditions such as residency requirements, proof of income, profitability, risk assessment or credit history. The main obstacle is often encountered by people who travel to and temporarily reside in another member state, such as temporary workers or students.

The Commission’s recent recommendation sets out the fundamental principles that should be put in place by member states at national level to guarantee access to suitable payment services. Consumers residing in the EU, irrespective of financial circumstances, should have the right to open and use a basic payment account, even in a member state where they do not reside permanently. The recommendation covers only individuals who are legally resident in the European Union and who wish to have an account for personal purposes, that is, not for activities linked to their trade, business, craft or profession.

The Commission has specified which payment services a basic payment account should include. Account holders must be able to receive, deposit, transfer and withdraw funds and will also be permitted to receive payments such as a salary, benefits or a pension into the account by means of credit transfers and to execute payment orders like pay bills, purchase goods and services or transfer money to third parties by means of direct debits.

The holder will not however be entitled to overdraft facilities. A payment card must be included, enabling the withdrawal of money from ATM machines and the purchase of goods and services from shops or online merchants who accept debit payment cards. Access to online banking services should also be provided where technically possible.

Service providers like banks will not be prevented from adding other services to a basic payment account though the offer of overdraft facilities as attached to this type of account is prohibited. Access to a basic payment account cannot, however, be made conditional on the purchase of additional services by the consumer.

Unless the account is provided for free, the charges requested by the service provider for the opening of such a basic account should be reasonable so that the consumer is not deterred from opening the account. Each member state must determine what constitutes a reasonable charge, taking into consideration criteria such as the national income level, the average charges for payment accounts or the total costs of the provision of the basic payment account.

Member states now have six months within which to adopt the necessary measures to bring industry in line with this recommendation. The Commission has promised to review the situation in a year’s time and should it then find the situation unsatisfactory, it would consider proposing binding measures to meet its objective.

The world is fast moving towards a cashless society. Having access to a bank account has become a pre-condition for being able to participate fully in today’s economic and social life. Statistics show that the availability of such a facility, often taken for granted by most of us, is not so easily available for others.

Through its recommendation, the Commission has vowed to set this right and it seems that it will stop at nothing until access to a bank account becomes a tangible reality for all and sundry.

mariosa@vellacardona.com

Dr Cardona, M’Jur, LL.D. is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is the deputy chairman of the Malta Competition and Consumer Affairs Authority as well as a member of the National Commission for the Promotion of Equality.