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Document 52013SC0165
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features
/* SWD/2013/0165 final */
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features /* SWD/2013/0165 final */
1.
Introduction
Every citizen of the European Union should have the right of
access to basic banking services throughout the EU, irrespective of their
nationality and / or place of residence since access has become an essential
condition for participation in economic and social life. Such access is not
available to all. Improved access to basic banking services would enable every
consumer to fully benefit from the internal market, by for example, encouraging
the free movement of persons and facilitating the purchase of goods
cross-border. Furthermore, unclear bank fee information makes it difficult
for consumers to make informed choices about which account is best-value for
them. Since offers are difficult to compare, EU consumers tend to refrain from
switching payment accounts, potentially to an account better suited to their
needs. Finally, EU consumers who seek to acquire banking services across
borders are often hindered by requirements or practices in domestic markets
that place non-residents at a disadvantage. As a consequence, competition in
the retail banking sector is hindered. Clearly, these issues and their effects
are interrelated, both for the individual and the wider economy. This impact
assessment aims to address these problems and thereby: i. Improve the proper
functioning of the internal market and avoid the distortion of competition in
retail banking. The uneven playing field between
market actors results in reduced competitive rivalry and missed opportunities.
Without intervention, there is a risk of further fragmentation in the provision
of payment accounts, threatening long-term market integration. ii. Empower consumers
by enabling them to make informed choices. In a
competitive and efficiently functioning single market with a high level of
consumer protection, EU citizens would have all the tools necessary, and thus
be empowered to search for the best product for their needs, whether in their
own or in another Member State. iii. Allow all European
citizens the opportunity to benefit from the single market by promoting
economic and financial inclusion and through EU-wide access to basic banking
services. Access to basic account services will
facilitate financial inclusion enabling all consumers to participate and
benefit from the internal market (including its digital environment). Improving
access to this key service constitutes an action of the European Platform
against Poverty and Social Exclusion (a flagship initiative of Europe 2020),
which is designed to combat social exclusion.[1]
The focus of this impact
assessment is on payment accounts held by consumers. Accounts held by
businesses including small or micro enterprises, unless held in a personal
capacity, are outside the scope of this impact assessment. This impact
assessment does not cover savings accounts, which may have more limited
payments functions.
2.
Context
Previous efforts have been made to address these issues. In
2007, the Commission asked the European Banking Industry Committee (EBIC) to
make it easier for consumers to move their accounts from one bank to another.
In response, EBIC developed the Common Principles for Bank Account Switching.[2] Implementation
by national banking associations was to be completed by the end of 2009.
However, research has shown that their implementation is inadequate[3] and that the
Common Principles fail to properly address all barriers to cross-border
mobility. In August 2010, the Commission asked EBIC to improve the
clarity, comparability, and transparency of account fees and ensure that fee
information is easily available to consumers. Despite significant efforts being
made until the end of 2011 to agree a principles-based self-regulatory code for
payment services providers, the initiative failed to produce any results. In July 2011, the Commission adopted a Recommendation on
access to a basic payment account[4]
which set out principles guaranteeing consumers access to an account throughout
the EU. Despite being asked to comply with the Recommendation by January 2012,
only three Member States[5]
have a framework in line with the Recommendation. Accessing account services is
also key to fighting social exclusion.[6] Against the background of these self-regulatory and
regulatory failures, the European Council and Parliament have underlined the
importance of ensuring that the single market works for all citizens. In particular, in its Resolution on a single
market for Europeans[7],
the European Parliament called on the Commission to submit by June 2011 a legislative
proposal on guaranteeing access to certain basic banking services and to
improve the transparency and comparability of bank charges by the end of 2011. The March 2012 European
Council welcomed the Commission’s intention to propose a new round of measures
on payment accounts designed to open up new growth areas in the Single Market.
Similarly, a recent European Parliament report with recommendations to the
Commission on Access to Basic Banking Services[8]
asks the Commission to come forward with a legal proposal in this area by
January 2013. In addition, the Single Market
Act (SMA) II adopted on 3 October 2012 identified a legislative initiative on
bank accounts in the EU as one of the 12 priority actions to generate real
effects on the ground and make citizens and businesses confident to use the
Single Market to their advantage.[9]
Its aim is to "give all EU citizens access to a basic payment account,
ensure bank account fees are transparent and comparable, and make switching
bank accounts easier".[10]
Furthermore, the Commission announced proposals in the area of transparency and
comparability of bank fees and bank account switching as part of the
Commission's Work Programme for 2013.[11]
3.
Problem definition
3.1.
Access to a basic account services
Research estimates
the number of EU citizens with no payment account at between
30 and 68 million.[12]
Many of those
without a payment
account do not
need or want one.[13]
This may be caused by psychological factors in part, as many consumers may
simply be scared away by the price, bureaucratic complications of accounts,
etc. It is however, estimated that around half of those who do not have an
account want one.[14] The reasons why consumers cannot access an
account vary. Ineffective, inconsistent or non-existent regulatory
framework Despite Member States being asked to comply with the Recommendation
on access to a basic payment account[15]
by January 2012 and a Commission review being announced for mid-2012, as
illustrated by reports by the European Commission and Parliament,[16] regulatory
failures have made the Recommendation’s application sub-optimal and its effects
on the marketplace non-existent. Limited bank profitability from certain groups of consumers Misaligned incentives between the account provider and the
consumer lead to rejection of the consumer’s application for a payment account.
This is particularly true for both vulnerable consumers who may be perceived by
banks as unprofitable and for many mobile consumers on who little information
may be available. Limited and more costly access to products and services A consumer without an account may find it more difficult and
expensive to purchase any other financial product as payment accounts often act
as a gateway to other financial products and services, e.g. home insurance.
Such consumers have limited opportunities to make use of e-commerce as the
majority of transactions require a credit card or bank transfer. Other means of
payment usually more expensive and inconvenient.[17] Indeed, a study shows that
22 % of newly banked consumers had shopped by telephone or internet since
opening their account.[18] Low awareness of availability of basic payment accounts In those Member States where basic payment accounts exist,
they are often not actively marketed due to the misaligned incentives between
providers and consumers. Discriminatory rules on accessing payment accounts The main reason why consumers are rejected for an account is
the absence of any regular income; 40 % of consumers who were refused
cited this as the reason. Other common grounds for refusal are non-residence
and lack of appropriate documentation. Low consumer confidence in the financial system Some vulnerable consumers may refrain from opening an
account because of the risk that, if in debt, any positive balance will be
seized. Restrictions on the use of basic payment services The different characteristics of a basic payment account
create a barrier to the internal market, e.g. a basic payment account can only
conduct ‘domestic’ transfers or use ‘domestic’ ATMs. For mobile and vulnerable
consumers living in border areas or working and living in more than one Member State, this represents a significant problem.
3.2.
Presentation and
ease of comparison of bank fees
There is an inherent level of complexity in the features of
payment accounts and in their pricing structures, which leads to information
asymmetries and hinders consumer choice and competition amongst providers. A wide range of services and fees Payment accounts cover a wide range of services and charging
structures may be complex. Fee complexity impacts upon a consumer’s ability to
understand what fees represent. Yet understanding fees is a prerequisite to
comparing different offers. Pricing models Some pricing models appear to have simpler charging
structures (e.g. package based, indirect revenue-based) than others
(transaction based, account-based). Although national markets often exhibit a
prevalence of one pricing model over others, more than one model is in use in a
number of Member States. While this diversity provides a broader choice of
products and is not a negative feature, it further adds to the complexity of
choosing an appropriate product. Simplicity and transparency of fees The use of differing terminology referring to the same type
of services may make it difficult to compare bank offers. Research[19] found that
while two thirds of financial institutions provided fee information on their
websites, 69 % of banks did not provide clear information and further
contact was needed to obtain clarifications on the fees as disclosed. Price dispersion in payment accounts within and across
Member States Wide price variations have been observed for payment
accounts, calling into question the degree of price competition in the market. Price
variations also feed the perception that payment accounts are not fairly
priced, denting consumer confidence and trust in the sector. Customer price discrimination Price discrimination occurs between different customers so
that their cost for a product with comparable features would not be the same.
Further, introductory pricing offers adds another barrier to clear and
comparable bank offers and makes it more difficult for a consumer to understand
longer-term costs associated with holding an account. Ineffective, inconsistent or non-existent regulatory
framework The current regulatory framework varies widely across Member
States, in terms of scope and depth. While credit institutions are required to
provide consumers with contractual terms and conditions when opening an
account, many Member States do not mandate specific presentation requirements.
Requirements on ex-post information also differ widely. Uncoordinated national
actions results in an uneven playing field within the internal market, meaning
that EU citizens do not enjoy the same level of consumer protection.
3.3.
Payment account switching
Potential and actual customer mobility creates competition
between providers and encourages them to offer better quality and cheaper
products. However, research[20]
has shown that this is not the case for payment accounts. The factors currently
limiting switching are as follows: Inadequate information The Common Principles[21]
require the provision of information on the switching process, but this does
not happen. Research[22]
found that whilst in 86 % of the cases, information was provided either in
a branch, online or by telephone, the level of information provided varied
widely. In a third of enquiries, no information on switching was available on
the bank’s website. In 45 % of cases, no detailed information on the
process was provided and in 80 % of cases, no explanatory documentation
was given. Complexity of switching process Difficulties transferring standing orders and direct debits
represent one of the major barriers to account mobility; research[23] found that in
two thirds of cases, consumers were told that the bank could not assist them
with the transfer of standing orders. Account
switching costs consumers time and effort. In 2009, around 21 million consumers did
not switch accounts because the cost and effort involved was too large.[24] It is often unclear how long
the process will take and what will happen to direct debits/credits in the
‘transitional period’. Research also shows that the deadlines set in the Common
Principles are not respected.[25] Direct financial costs Consumers switching current accounts bear direct financial
costs such as the cost of maintaining two accounts, for the duration of the
switching process. Other direct costs that may be incurred are an account
balance transfer fee and correspondence costs. Psychological factors Consumer perceptions can deter switching. In the Netherlands, despite there being an account redirection system since 2004, switching rates
are low. One reason is there remains a perception that the process is
difficult, despite the fact that those who have switched using the redirection
service found it easy.[26] Restricted cross-border switching The self-regulatory Common Principles do
not apply to cross-border switching, which continues to be characterised by
separate opening and closing of account procedures at a cost to switchers. Yet
a cross border switching service would have considerable benefits. About 12.3
million EU citizens above the age of 15 permanently reside in another Member State and a switching service would facilitate their mobility. Considering the high
price dispersion of payment accounts, all consumers – mobile and non-mobile –
would have the opportunity to shop around and save money by opening a payment
account in another Member State.
4. Interlinks
Access to a payment account is essential in the modern
economy. In a truly functioning internal market, access should be available
across domestic borders, anywhere in the EU. If an EU citizen from Poland moves to the UK, but is unable to open an account, transparent information on fees and an
effective switching process will be of no value to them. The Commission inquiry into the retail banking sector[27] found that
low levels of customer mobility was directly related to higher bank
profitability and that the impact of customer mobility in the payment account
market on market power, (measured on total retail banking profitability), was
such that a 1% increase in market churn[28] gave rise to a
corresponding similar decrease in banks' pre-tax profitability ratio. Opaque fee structures raise barriers to a smooth switching
process, making it difficult or even impossible in the case of cross-border
comparisons, to seek out a better product. The actual switching of accounts can
only take place once the consumer has made a choice of product, based on
transparent and easy to understand fee information. Barriers to switching can
therefore be the final straw for many consumers at the end of a long process.
Put another way, cross-border fee transparency and/or switching mechanisms
cannot be truly effective unless barriers to accessing markets across borders
are removed for consumers. Combined, the problems identified in these three areas,
financially exclude certain consumers and inhibit consumer mobility,
competition and efficiency in payment account markets. However, they also
create very practical problems in terms of time, effort and financial costs for
consumers and industry alike seeking to move across the EU, creating
impediments to growth and undermining the flexibility of the economy.
5. Objectives
The over-arching objective of
this initiative is to create an efficient and competitive Single Market
(Article 114.1 of the Treaty) with a high level of consumer protection (Article
114.3 of the Treaty) that fosters balanced economic growth with greater
economic inclusion. The objectives of this Impact Assessment are described in
the table below. General · To enhance consumer confidence · To broaden consumer choice both in terms of the quality of the products available and in terms of price reductions · To facilitate financial inclusion and thereafter customer mobility · To facilitate the cross-border activity of payment account providers · To ensure a level playing field between market actors Specific || Operational Access to basic account services To facilitate access to basic account services (not oblige everyone to have a payment account) || § Reduce the number of unbanked Europeans by 6.4 million by 2020[29] § Ensure access to all basic payment means for all consumers with basic payment accounts § Facilitate cross-border access to basic banking services for 3.5 million consumers by 2020[30] § Improve consumers' awareness on basic payment accounts Presentation and ease of comparison of bank fees To ensure that EU consumers receive clear, complete and comparable information on bank fees || § Consumers are able to understand bank offers and assess value for money § Payment account offers are easily comparable § Help consumers choosing the offer best matching their needs § Increase consumers awareness of charges actually paid § The burden of switching to consumers is reduced Switching of payment accounts To ensure that EU consumers are able to switch payment accounts with ease and in a timely manner. || § Switching is a smooth and easy process § Consumers are assisted and informed of the switching process in an adequate manner § The number of misdirected/missed payments during switching process is reduced to less than 5% of recurrent transactions § The direct financial costs of switching to consumers is reduced § The duration of switching process is maximum 14 days § The mobility of payment account users is increased
6. Need
for EU action
As payment accounts are the financial services product most
likely to be purchased cross-border,[31] identifying adequate
solutions to the problems outlined above is vital. The consequences of inaction are serious,
including the inhibited development of a fully-functioning internal market with
significant impacts upon consumers, business and the wider economy. The regulatory and self-regulatory initiatives discussed in
section 2 above have failed. Despite public announcements that a review of the
account markets was underway[32], there are few, if any,
initiatives in the pipeline at the national level to improve the situation. The
Commission has committed to acting in the event of a failure of these
initiatives. According to the subsidiarity principle, EU action may only
be taken if the envisaged aims cannot be achieved by Member States alone.
Whilst it may be the case that EU intervention cannot easily address some of
the more intangible features of cross-border take-up of banking services, such
as language or distance, EU intervention is justified to achieve the outlined
objectives for several reasons: To improve the proper functioning of the internal market and
avoid the distortion of competition in retail banking An EU initiative will best address factors that prevent the
pursuit of business or raise the cost of doing business in another Member State relative to the costs faced by domestic providers. This will maximise efficiency gains,
prevent the creation of new barriers and strengthen the retail financial
market. The
current uneven playing field between market actors results in reduced
competitive rivalry and missed opportunities. This is compounded by low customer mobility and
inefficient switching mechanisms that create obstacles to market entrants
gaining new clients. Action/inaction
from Member States alone is likely to result in different sets of rules,
leading to uncompetitive markets and unequal levels of consumer protection in
the EU. Finally a
common approach is needed to define requirements for the presentation of bank
fees in a comparable manner that encompasses both domestic and cross-border
markets as separate standards focussing only on cross-border activity may
further fragment domestic markets. To empower consumers by enabling them to make informed
choices and enable them to take advantage of the single market The problems identified lead to consumer
detriment through low consumer confidence, higher costs and reduced customer
mobility, both domestically and cross-border, and thus represent a cost for
society as a whole. In a competitive and efficiently functioning single market
with a high level of consumer protection, all EU citizens will have the tools
necessary to search for the best product for their needs anywhere within the
EU. Allow all European citizens access to essential services and
the opportunity to benefit from the single market by promoting economic and
financial inclusion Without EU action it will be difficult to
bring the advantages of the single market to all EU citizens. A level playing
field at EU level will help consumers reap the full benefits of the integration
of the European financial sector by facilitating financial inclusion enabling
all consumers to fully benefit from the internal market (for example by
participating in e-commerce and, therefore, in the digital market, including
more competitive cross-border goods and services). Access to essential services
including basic account services[33]
contribute to active inclusion strategies aimed at the re-integration of the
people furthest from the labour market. Therefore, it forms part of the
delivering actions identified by the European Platform against Poverty and
Social Exclusion, one of the flagship initiatives of Europe 2020 aimed at
achieving inclusive growth in the EU. An initiative based on Article 114 of the TFEU would help to
achieve the objective of the establishment and proper functioning of the
internal market with a high level of consumer protection and to avoid distortion
of competition in the field of retail banking. It will respect the principles
of subsidiarity and proportionality, as it is clear that the envisaged aims
cannot be achieved by Member States alone. EU intervention in the areas of
payment accounts is justified on this basis.
7. Policy
options, impact analysis and comparison
The tables below summarise the policy options. The retained
options are highlighted.
7.1 Access
to basic account services
Option || Summary 1 || No EU action 2 || Ensure that the provisions of the Recommendation are applied. 3 || Modify the provisions of the Recommendation relative to the beneficiaries A: Introduce a universal right to a basic payment account B: Introduce a right to a basic payment account for national residents C: Introduce a right to a basic payment account to non-residents with a link to the country where they wish to open an account 4 || Improve the features of the basic payment account A: Enlarge the list of basic services to include internet banking and online purchasing B: Enlarge the list of basic services to include a small overdraft or a ‘buffer’ facility C: Indicate a minimum account balance that cannot be seized D: Ensure that the features of the payment account are not of a discriminatory nature. It is crucial to ensure access to a basic
payment account for all citizens, particularly vulnerable consumers. The
introduction of Option 2 would be most effective for both residents and
non-residents. It is assumed that Options 4A, B and C would attract a number of
unbanked consumers and improve access to different means of payment because
each of them provides for an additional account feature. Option 4A would be
most likely to attract additional consumers and Option 4D would also attract
many unbanked consumers, and especially mobile consumers, since it would allow
for the account to be used in the same way all over the EU. The combination of
Options 2, 4A and 4D are the most effective in tackling the problems in the
market and achieving the objectives set. Options 4A and
4D are in line with the European Parliament recommendations, “The
legislation should enable the user of a basic payment account to make any
essential payment transactions such as receiving income or benefits, paying
bills or taxes and purchasing goods and services via both physical and remote
channels using mainstream national systems.”[34]
7.2 Presentation and ease of comparison of bank fees
Option || Summary 1 || No EU action 2 || Introduce a standard price list as part of account opening procedures. Fees common to all Member States would be identified at EU level and supplemented nationally to cover the 20 most representative fees or at least 80 % of key charges incurred. 3 || Introduce the requirement to develop glossaries for bank fee terminology A: Non-harmonised terminology B: Not based on fully harmonised terminology 4 || Introduce the requirement to set up independent fee comparison websites at Member State level A: a single official website in each Member State B: Comparison sites licensed under an accreditation scheme 5 || Introduce the requirement to provide representative examples of the cost of holding a payment account A: Banks set up own representative examples B: Member States prescribe representative examples 6 || Establish customer usage profiles and provide a cost simulation to prospective personal current account holders A: Banks set up own customer profiles B: Member States prescribe customer profiles 7 || Introduce EU standardised forms for the provision of ex-ante information on fees 8 || Introduce an obligation for banks to provide ex-post information on fees incurred 9 || Introduce EU standardised forms for the provision of ex-post information on fee Option 2 obliges the provision
of lists of account fees. These would be developed at EU level and supplemented
at national level, using standardised terminology. This would facilitate the
comparison of different offers and empower consumers to verify, understand and
compare fees. It will contribute to a level playing field between providers
competing in the market as all EU providers would need to comply with the same
requirements. Option 8 is considered effective, especially if packaged with
Option 2, as it will provide ex-post information on the same fee items, which
will allow consumers to understand their fees and empower them to make the
right choices. With the information provided through Options 2 and 8,
Option 4B, the comparison website tool, reduces search and switching costs
to consumers and allows them to compare account offers. Option 4B is more effective
for Member States than 4A, as it does not force Member States to set up a new
website, but reinforces existing websites.
7.3 Payment
account switching
Option || Summary 1 || No EU action 2 || Ensure that the switching services follow the Common Principles 3 || Improve the effectiveness of the Common Principles A: Improve the existing Common Principles at domestic level B: Broaden the scope of the improved Common Principles to EU-wide cross-border switching 4 || Introduce an automatic redirection service for all receipts and payments A: Domestic B: EU 5 || Introduce payment account portability A: Domestic B: EU The most effective long-term set of options would be Option 3B
combined with Option 5B. This would represent an efficient step towards a
better integrated, functioning internal market. However, further research
should be conducted to analyse the technical possibilities and risks related to
the introduction of 5B. For this purpose, a mandate could be given to European
Banking Authority to engage in further analysis to elaborate a technically
feasible and efficient way within a certain time period. The current preferred
option is Option 3B.
8. The
Package of policy options
The rationale for selecting a 'package' comprising
policy options covering the three areas covered by this impact assessment is
strictly and fundamentally linked to the general objectives. Only a combination
of actions in the three areas can establish the right to a basic payment
account to EU citizens, provide common standards to ensure transparent and
comparable bank account fees and make (cross-border) switching of bank accounts
easier. The impact assessment considers four packages that group policy options
reflecting different degrees of EU intervention. The resulting preferred
package group the preferred sets of policy options identified for each of the
three areas in section 7 above. Above all options assessed, this package is
considered to better enhance the functioning of the internal market, ensure a
high degree of equivalent consumer protection to all EU
citizens and foster economic growth alongside greater financial inclusion. A package of options that omits even one of these elements may
risk creating a single market that is not accessible to all EU citizens,
further entrenching market fragmentation, endangering competition and
restricting efficiency gains.
9. Cumulative impacts
The three tables below provide a disaggregated overview of
costs and benefits for the preferred options in each of the three areas.
Several types of costs generated by the preferred set of options for credit
institutions and Member States are expected to be cumulative (e.g. updating of
IT systems and cumulating recurring costs of additional compliance staff). The
methodology to assess the efficiency of options considers both quantified and
non-quantified costs and benefits to stakeholders, as described in this
section. Total EU costs (million EUR/year) || Option 2 || Option 4(A) || Option 4(D) Consumer: || 108-542 || 22-108 || 22-108 One off costs || 0 || 0 || 0 Recurring annual costs || 108-542 || 22-108 || 22-108 Payments services provider: || 71-356 || 15-74 || 19-94 One off costs || Not || 0 || 0 Recurring annual costs || 71-356 || 15-74 || 19-94 Member State : || 3.02 || 0 || 0.38 One off costs || 1.13 || 0 || 0.14 Recurring annual costs || 1.89 || 0 || 0.24 Enterprise: || 0 || 0 || 0 Access
to a basic payment account Total EU benefits (million EUR/year) || Option 2 || Option 4(A) || Option 4(D) Consumer: || 542-2711 || 236-1179 || 68-339 One off benefits || Non quantifiable Recurring annual benefits || 542-2711 || 236-1179 || 68-339 Payments services provider: || 18-89 || 2-11 || -1.8 to -9 Recurring annual benefits || 18-89 || 2-11 || -1.8 to -9 Member State : || 18-89 || 2-11 || 2-11 One off benefits || Non quantifiable Recurring annual benefits || 18-89 || 2-11 || 2-11 Enterprises || 32-160 || 16-80 || 4-20 Recurring annual benefits || 32-160 || 16-80 || 4-20 Total EU benefits (million EUR 2013 -2022) || Option 3B Consumer: Change switching behaviour Reduction direct/indirect costs Credit institution: Cross-border cost savings Business opportunities || 3 655.4 Marginal Not quantifiable Total EU costs (million EUR) || Credit institution: one-off recurring Member State : one-off recurring || 67 – 129 2 041 – 2 649 3 19 Ease of comparison of bank fees and requirements
covering presentation
Payment account switching Total EU benefits (million EUR 2013-2022) || Option 2 || Option 4.B || Option 8 Consumer benefits: Change switching behaviour Better account management Credit institution: Cross-border cost savings Business opportunities || 584.87 Not quantifiable || 731.08 Not quantifiable || 1 462.16 2 702.57 Not quantifiable Total EU costs (million EUR 2013-2022) || || || Credit institution: one-off recurring Member State: one-off recurring || 95.95-163.03 183.17-245.40 0.05-0.08 0.06-1.17 || 0.32-0.65 4.77-9.53 0.36-0.66 3.48-6.74 || 192.42-326.31 260.37-492.45 0.07-0.11 0.81-1.59 The assessment of a preferred policy instrument favoured a
binding policy instrument for all areas. This assessment does not change when preferred options are
packaged. On a cumulative basis the three sets of preferred options are
complementary and do not result in diverging impacts. The package of preferred options will make a real difference
for consumers. The measures on access will reduce the number of unbanked
citizens while at the same time creating a fully functioning internal market
for payment accounts that is efficient and competitive. Consumers will benefit
from improved access to their funds regardless of their geographic location;
experience an increased level of security through lower levels of cash
transactions; an increased choice of goods and services where electronic
payments are obligatory; the possibility to access employment and accommodation
more easily and a reduced sense of financial, economic and social exclusion. A
strong positive effect on consumer confidence will underpin demand for payment accounts and encourage
consumer mobility both at national and cross-border level. The expected effects
of competition will include cost efficiencies for credit institutions
(since they could implement the same IT systems, processes, staff training
procedures etc. in all Member States within which they operate, resulting in
economies of scale), easier market entry for foreign providers, and greater
potential for market expansion of competitive providers. Non-quantifiable
benefits for credit institutions will include: an increased customer base to
which to market other products (e.g. home insurance); the reduced cost of and
risks from cash based payments; and the benefits from a contribution to capital
and funding. The preferred policy options will entail costs for credit
institutions, but the overall impact will be reasonable. Providers are
projected to incur more costs – or at least quantifiable costs – than benefits,
in the short term. These costs will be limited by several factors. First, a number
of the policy options are already implemented in several Member States. Second,
substantial synergies are expected between the different policy options (e.g.
adapting IT systems, internal communication and staff training). Third,
providers would be able to cover their costs by adjusting prices of payment
accounts. Fourth, the more accounts opened over time, the lower the incremental
costs of access, switching and transparency. Member States
and wider society as a whole would benefit from lower costs for social security
payments or less fraud related to benefits and tax. More generally, promoting
competitive banking markets would improve the efficiency of the single market,
which, at a time of economic crisis, would be particularly valuable. These benefits
would reinforce each other improving and stimulating consumer and business
confidence thus stimulating growth. This proposal has no implication for the budget of the EU or
those of EU agencies. This package will benefit EU businesses significantly.
They are unlikely to incur any costs but could benefit substantially from
improved access to payment accounts. The preferred options will create the
conditions for a bigger market for their goods and services. Moreover,
non-discriminatory instruments and online facilities in relation to payment
account services would trigger a potential increase in cross-border trade. The main administrative burden will arise from the internal
processes of credit institutions being adapted to cater for information
requirements for both consumers and authorities. This comprises mainly the cost
of adapting information systems and materials. There will be the cost to Member
States of organising and running public information campaigns to raise consumer
awareness of their rights. The administrative burden placed on consumers should
reduce as they will no longer need to provide as much documentation and
evidence to open an account.
10. Conclusion
A legislative package on payment accounts that accommodates
national specificities while ensuring access to basic payment services, the
comparability and transparency of account fees and facilitates payment account
switching will meet the objectives set out in this impact assessment and
satisfy the resolutions of the European Parliament and the call for action in
the Single Market Act II. The Commission should review the appropriateness and
effectiveness of the package after its implementation. This review could
include a public consultation, mystery shopping exercises and analysis of consumer
complaints. Regard would also be given to indicators such as the number of
unbanked consumers, use of electronic payment methods and the number of
consumers switching. [1] The European Platform against Poverty
and Social Exclusion: A European framework for social and territorial cohesion
[COM(2010) 758], and accompanying document [SEC(2010)1654]. [2] The Common Principles for Bank
Account Switching, http://www.eubic.org/Position%20papers/2008.12.01%20Common%20Principles.pdf. [3] Consumer Market Study on the
consumers’ experiences with bank account switching with reference to the Common
Principles on Bank Account Switching, GfK, January 2012, BEUC and national
studies in UK, Ireland and Austria. [4] Commission Recommendation 2011/442/EU
of 18 July 2011, 2011/442/EU, 18.7.2011. [5] Belgium, France and Italy. [6] COM(2010)758 and SEC(2010)1654. [7] European
Parliament Resolution 2010/2278(INI) [8] European
Parliament Resolution 2012/2055(INI). [9] http://ec.europa.eu/commission_2010-2014/barnier/headlines/news/2012/10/20121003_en.htm [10] "Single Market Act II - Together for new growth",
COM(2012) 573 of 3 October 2012, page 16. [11] "Commission Work Programme
2013", COM(2012) 629 of 23 October 2012, Annex I, page 5. [12] Study on the costs and benefits of
policy actions in the field of ensuring access to basic account – Final Report
(CSES, July 2010, p. 14) and calculations based on the Special Eurobarometer on Retail Financial Services (European Commission, February 2012). [13] Special Eurobarometer on Retail
Financial Services, European Commission, February 2012, p. 31. [14] Commission services calculations based
on Eurostat, Measuring Financial Inclusion, The Global Findex Database,
the World Bank, April 2012, and Special Eurobarometer on Retail
Financial Services, European Commission, February 2012. [15] Commission Recommendation 2011/442/EU,
18.7.2011. [16] European Parliament Resolution
2012/2055(INI) [17] Banking services and poorer households, Financial Services Taskforce, December
2010. [18] Nothing is free: A survey of the
social cost of the main payment instruments in Hungary, National Bank of Hungary, p. 27. [19] Preparing the monitoring of the impact of
the Single European Payments Area (SEPA) on consumers, Van Dijk Management Consultants, 2008. [20] The Consumer Market Study on the consumers’
experiences with bank account switching with reference to the Common Principles
on Bank Account Switching,
GfK, January 2012 and studies by BEUC and at national level (UK, Ireland, Austria). [21] http://ec.europa.eu/internal_market/finservices-retail/docs/baeg/switching_principles_en.pdf [22] Consumer Market Study on the consumers’
experiences with bank account switching with reference to the Common Principles
on Bank Account Switching, GfK, January 2012. [23] Ibid. [24] Consumers' views on switching service
providers, Eurobarometer 243, European Commission, p. 18. [25] Cf. footnote 21; Tarifs et mobilité
bancaires: le désolant palmarès des Banques, UFC Que Choisir, 2010; Kontowechsel:
Wie funktioniert er?, VKI, March 2010. [26] ICB Final report recommendations, ICB, September 2011, p. 220. [27] Report on the retail banking sector
inquiry, SEC(2007) 106, European Commission, 31.1.2007;
http://ec.europa.eu/competition/sectors/financial_services/inquiries/sec_2007_106.pdf [28] Defined as the share of customers who change
providers in a given year. [29] EU 2020 strategy aims to reduce a number
of poor and socially excluded by at least 20 million by 2020 through, among
others, improved access to essential services and tackling financial exclusion. http://ec.europa.eu/social/main.jsp?catId=751&langId=en [30] Ibid. [31] Cf. footnote 9. [32] Cf. footnote 4. [33] Together with various enabling services,
such as healthcare, childcare, social housing, or life-long-learning. [34] Cf. footnote 15.