New recommendations have been issued by the European Commission to push banks in all member states to guarantee access to their basic services to more customers.
According to the EU executive, too many people are still turned down by banks as they try to open a basic bank account. The Commission warned that if the trend persisted, it would enact new legislation.
According to Brussels, nearly 30 million adult Europeans still do not have access to a basic banking service, which makes everyday life difficult and more expensive.
Without a bank account, paying bills, getting a job and receiving pay or benefits, transferring money and buying goods and services is a challenge.
Nearly seven million people are denied access to an account either for reasons of absence of proof of income or identity, non-traceability of funds, and negative risk evaluation.
They are generally low-income earners or students and pensioners who reside temporarily in a state other than their home member state, and where banks turn them down for an account.
Only five member states – Belgium, Denmark, Finland, France and Sweden – have adopted legislative proposals so far to encourage the introduction of such accounts.
The EU’s internal market Commissioner Michel Barnier said everyone should have a right to open a bank account.
“It is important to put an end to practices that exclude people from access to such a basic and essential service, and thus enable them to participate fully in the society they live in and to enjoy the benefits of the single market,” he said.
The Commission’s new recommendation invites member states to guarantee that consumers who reside legally in the EU have access to a basic personal bank account at a ‘reasonable cost’. Such an account should enable the holder to receive, deposit, transfer and withdraw funds and allow for the execution of direct debits and credit transfers. The holder should have a payment card but not overdraft facilities. The member states are free to determine who should offer this service on their territory and what they consider a ‘reasonable cost’ on the basis of criteria, such as national income and average charges for payment accounts.
In its recommendation, the EU executive is also encouraging public awareness and information campaigns at national level on the existence of basic payment accounts, their pricing conditions, procedures for opening an account, and for lodging a claim in case of denial.
Although this is only a recommendation, Mr Barnier emphasised that if no progress is registered the Commission will have no other option but to impose legislation.
“We have set conditions, an obligation to achieve a result and strict deadlines,” Mr Barnier said.
In six months, the member states will have to report on their progress. In a year’s time, the Commission will assess whether sufficient advances have been made. In the absence of progress, the executive may decide to propose legislation.