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Access to a bank account guaranteed

All EU citizens, irrespective of their place of residence or nationality, are being guaranteed the right to open a basic bank account. The payment accounts package, as recently approved by the European Parliament, also ensures that fees and rules for all payment accounts are transparent and comparable so that it is easy for consumers to switch from one account to another.

The European Commission recently proposed a new law with a threefold objective. The primary aim is that of ensuring that all EU consumers are entitled to open a basic payment account wherever they want in Europe.

They will enjoy such a right irrespective of their credit history or any other financial difficulty, as well as irrespective of whether or not they are residents of the country where the credit institution offering the account is located.

This will mean that students residing temporarily or employees working temporarily in a host member state will be entitled to open a bank account in the host state.

Through such an account, consumers would be able to effect deposits and withdraw cash as well as execute payment transactions throughout the EU, including online transactions or transactions via a payment card. This means that all EU citizens are being guaranteed the right to perform essential payment operations, such as receiving a salary, a pension or the payment of utility bills, as well as effecting direct debit transactions.

A debit card will be part and parcel of this account, and access to online banking services will also be provided. But no overdraft facilities will be attached to such an account. It will be up to each member state to determine whether such basic payment accounts should be offered to consumers for free or at a reasonable fee. Member states will also enjoy the discretion to require consumers who wish to open such a basic payment account in their territory to show a genuine interest for doing so.

Banks will still be entitled to refuse access to such an account if the potential client fails to satisfy the criteria found in the anti-moneylaundering and terrorism financing regulations. Similarly, credit institutions can refuse to provide another basic bank account to those consumers who already have one with another bank located in the same country.

The directive ensures that anyone who opens any type of payment account is able to understand the fees and interest rates attached to such an account in order to be able to compare account offers. Credit institutions will be obliged to provide clients with a standard fee information document detailing the fees for the most representative services linked to the account. Standard terms will be used in order to facilitate comparison between payment accounts offered by different providers. A glossary providing the definitions of the services listed in the fee information document will also be made available to consumers free of charge.

Moreover, consumers who have a payment account must be provided at least annually with a statement of fees containing information on the fees and interest paid by the consumer on the account, as well as any interest earned in the previous year. This statement of fees will also make use of standard terminology. The obligatory use of standard terms will, however, only apply to a set of the most represent-ative services, and payment service providers can continue to use non-standard terminology in contractual or commercial documentation for all other types of services.

The directive also stipulates that when using brand names or terms, payment service providers would need to refer to the corresponding standard terms in contractual, commercial and marketing inform-ation to consumers.

The proposed directive, as approved by Parliament, also ensures that in each EU member state there should be at least one independent website comparing the interest rates and the fees charged by credit institutions for payment accounts. This website must be freely accessible to all consumers.

More than 58 million EU citizens … currently have no access to a bank account

Another objective of the proposed directive is that of regulating the switching of payment accounts from one service provider to another. Such switching is already being voluntarily regulated by the banking industry, which has adopted a procedure to facilitate this process for consumers.

Nonetheless, the Commission has now deemed it necessary to legislate on the matter primarily for the sake of harmonisation. The proposed directive establishes a simple and quick procedure for consumers who wish to switch their payment account from one service provider to another within the same member state. Banks are obliged to facilitate the process of switching for consumers by following a certain procedure, and if they decide to charge a fee for certain services, such as closing the old account, the fees applied should be reasonable.

The ball is now in the court of the Council of Ministers to approve these new rules.

Bank accounts have become an indispensable way of participating fully in the economic and social life of modern society. Though many of us may take the right to have access to a bank account for granted, statistics show that more than 58 million EU citizens, the majority of which hail from countries such as Bulgaria and Romania, currently have no access to a bank account.

These new rules may therefore be the best way forward in order to address such defaults for the sake of all EU citizens.

mariosa@vellacardona.com

Mariosa Vella Cardona is a freelance legal consultant specialising in European law, competition law, consumer law and intellectual property law.

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