RegulationMay 15 2013

Proposal to give choice of Europe-wide banking

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Last week the EC issued proposals for a directive on the transparency and comparability of payment account fees, payment account switching and access to a basic payment accounts throughout the European Union’s member states.

Michel Barnier, commissioner for internal market and services, said the moves were aimed at driving competition better to give consumers more choice and lower costs.

Under the proposals anyone in the UK can open a basic bank account, even if they have been made bankrupt or unemployed, with at least one provider in any EU member state, regardless of whether they are domiciled in the UK or not.

A statement by the EC said the single market legislation to ensure that banks could operate throughout the EU and offer their services on a cross-border basis had not been mirrored for customers.

It said: “Citizens often pay above the odds for the services they receive from their bank, and struggle to have clarity on the various fees charged.”

Mr Barnier said: “This proposal will 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 single market.

“By making it easier to compare fees and change bank accounts, we also hope to see better offers from banks and lower costs. The proposals will also benefit the financial services industry by providing additional incentives to offer products cross-border, and enter new markets.”


The proposed directive, which will need to be ratified by member states, followed concerns by consumer watchdog Consumer Focus (now renamed Consumer Futures) last year on the provision of basic bank accounts for undischarged bankrupts in the UK with only Barclays allowing customers to sign up.

A spokesman for the British Bankers’ Association said: “From a preliminary analysis, we are pleased that the key aims of this proposal will not lead to many noticeable changes for customers in the UK because banks in Britain have already made many of these improvements.

“Our customers already have access to free current accounts. Fees are clear where charged, there are standard charging scenarios for overdrafts to help customers to compare accounts, and the industry is bringing in a £750m account switching service later this year that will allow anyone to change accounts for free with the minimum of hassle.”

Adviser View

Jaskarn Pawar, director of Northamptonshire-based IFA Investor Profile, said: “This could be an interesting development, and could lead to pan-European bank account comparison services. I would imagine it could also lead to a certain amount of harmonisation eventually on what type of interest rates are being offered.”