A first look at the Commission’s proposal on basic bank accounts

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Last week the Commission published a proposal for a directive on basic bank accounts.

Social Platform called on the Commission to propose a legislative instrument to ensure a basic payment account for all (see letter to Commissioner Barnier and Dalli, position paper on financial inclusion). In fact after the adoption of the Commission Recommendation in 2011 there has not been significant progress through self-regulation, in particular in those countries where there is no legal right to a bank account.

Commissioner for Internal Market and Services Michel Barnier said: "In today's world, not having access to a basic bank account makes everyday life difficult and more expensive. Today’s proposal will finally give all European citizens access to a basic bank account and enable them to participate fully in the society they live in and take advantage of the benefits of the Single Market” (source: RAPID press releases).

  •     The Commission has published only one legislative proposal to achieve three objectives:
  •     To make it easier for consumers to compare the fees charged for payment accounts
  •     To establish a simple and quick procedure for consumers to switch from one bank account to one with another bank or provider
  •     To ensure EU consumers have the right to open a basic bank account irrespective of their place of residence and of their financial situation.

In the coming weeks Social Platform will analyze in detail the Commission’s proposal. At a first look, the following elements seem to be positive:

  •     Consumers cannot be discriminated against by reason of their place of residence
  •     An obligation for service providers to immediately inform in writing and free of charge of the refusal to open a basic bank account
  •     An obligation for service providers not to make access to a basic payment account conditional on the purchase of additional services
  •     The right to access to a basic bank account should be offered free of charge or for a reasonable fee; competent authorities in the different member states have to establish what constitutes a reasonable fee, according to some specified criteria.
  •     An obligation for member states to designate competent authorities to ensure and monitor effective compliance with the directive
  •     An obligation for member states to lay down the rules on administrative measures and sanctions in case of non compliance of the national rules set out when transposing the directive.
  •     On the contrary, the following elements seem to be a bit problematic:
  •     The obligation for member states is limited to at least one payment service provider: this puts in question the availability of the service throughout the whole territory of member states and therefore its universal access
  •     The right of access to a payment account with basic features is guaranteed only to consumers legally resident in the Union: this leaves open the problem for some groups, such as people awaiting the outcome of their asylum and/or migration application, migrants who are waiting the renewal of their residence permit and who might already work in the host country
  •     The directive does not provide specific measures to take into account the needs of vulnerable groups, such as users with no fixed address, including homeless people, and to pay specific attention to accessibility requirements.

These initial thoughts by the Secretariat will be discussed with members in the meeting of the Working Group on Services of General Interest on May 23.