Switching bank accounts from one local bank to another has become easier than ever before. A set of common principles for bank account switching adopted by the European Banking Industry Committee last year and recently implemented in almost all member states, seek to ensure that consumers do not encounter any obstacles which could deter them from switching their bank accounts from one bank to another, should they wish to do so.

In line with these principles, banks will provide consumers with a guide which will explain to them what steps need to be taken in the switching process, by whom and within which timeframe. Consumers who want to switch their bank account can choose the new bank as a primary contact point. This bank will then act as an intermediary between the consumer and his/her old bank as well as some creditors.

In particular, the new bank will get the necessary information about the consumer's recurrent payments such as direct debits and standing orders from the old bank and ask the old bank to terminate these payments on the old account. It will reinstall these recurrent payments on the new account and will either inform the third parties such as utilities providers about the consumer's new account details or assist him/her in doing so. It will also assist the consumer in requesting the old bank to close the old account and transfer the remaining balance.

The common principles provide for precise deadlines for both the old and new bank. The old bank has to provide all the available information about the consumer's recurrent payments within seven banking days upon receiving the request either from the new bank or from the consumer. The new bank has to set up recurrent payments on the new account within seven days of receiving the necessary information. Within the same seven days, the new bank will either inform third parties about the consumer's new account details or assist him/her in doing so.

The provision of information on recurrent payments by the old bank to the consumer and to the new bank will generally be free of charge. The closure of an old account will also, as a rule, be free of charge. Fees, if any, for other switching-related services must be appropriate and in line with costs.

All EU banking associations, with the exception, so far, of the Romanian one, have taken the steps to implement these self-regulatory principles in their respective member state. In Malta, these principles have been implemented by the Malta Bankers' Association and hence bind local banks.

Assured of receiving the necessary assistance from all parties involved, there is now nothing which should hinder consumers from shopping around and obtaining the best deal for their banking requirements. This also means that, despite the turbulent times that the banking community has just been through, banks must be prepared to compete more effectively than ever before in order to retain their current clientele.

Dr Vella Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is also a visiting lecturer at the University of Malta.

mariosa@vellacardona.com