Intesa Sanpaolo Response to the Consultation Document on Financial inclusion: Ensuring access to a basic bank account

Transcription

1 International Affairs Intesa Sanpaolo Response to the Consultation Document on Financial inclusion: Ensuring access to a basic bank account Intesa Sanpaolo Group, created as from 1 January 2007 as a result of the merger of Banca Intesa and Sanpaolo IMI, is the largest banking group in Italy and one of the major players in the European market. Intesa Sanpaolo welcomes the European Commission s open consultation process and would like to submit the following comments. Question 1: Do you share the Commission's overall objective to ensure that, by a certain date, every EU citizen or resident has access to a basic bank account? What could constitute the main challenges in meeting this objective? Intesa Sanpaolo shares the Commission s objective to guarantee, by a certain date, adequate access to basic bank accounts. In our view these are the main challenges: First of all, financial exclusion is a moving target as its forms and causes are continuously influenced by social, economic and demographic changes. Moreover, as correctly highlighted by the Commission, the causes of financial exclusion are manifold and diversified according to the different national environments; therefore any strategy aimed at combating it should be multifaceted. Question 2: Do you agree with the description of the causes and consequences of financial exclusion? Please provide additional information if available. The description on the factors which play a role in causing financial exclusion is shareable. As far as the supply factors are concerned and considering our range of products (see also our response to question 3), factors such as marketing and 1

2 price tend to become increasingly irrelevant, as accessibility and simplicity are the key features of our leading products. We also would like to stress the importance of the following factors: - fiscal policy often impose a tax burden on bank accounts and may create an important deterrent; - In many regions cash remains by far the most important means of payment; fostering the use of electronic means of payment is therefore crucial in overcoming some of the societal or cultural factors; - Financial education is also a crucial factor; - Money Laundering rules/identity checks. Moreover, financial exclusion is particularly relevant in selected groups (e.g. immigrants). In this respect, ensuring the availability of accessible, simple and low cost products is in general the most effective approach for serving the needs of these groups. However, sometimes a targeted approach should be considered (e.g. our Bank has set up Multiethnic Points in several cities and is increasingly offering multilingual information to clients; see also our response to question 3). Question 3: Do you think that one can reconcile financial service providers' legitimate need to make profit with any social obligation they may have vis-àvis excluded groups? Should financial service providers play a stronger 'social' role in the society, in particular in combating financial exclusion? Intesa Sanpaolo considers corporate social responsibility as an integral part of its strategy. In our view, financial services providers can and particularly a leading banking Group like Intesa Sanpaolo, which can have a significant impact on the society and environment in which it operates should also play a social role 1. We believe that this social role and in particular the strategies aimed at reducing financial exclusion - should also be seen as an opportunity to enter segments which have prospects of development (e.g. young people, immigrants). In this regard, the bank has a wide range of offers, tailored so as to suit various needs, with specific products and services, to promote access to financial services for the underprivileged, or customers who have difficulty in obtaining loans (immigrants, young people, families, the unemployed, workers on temporary contracts, etc.). 1 In order to meet the needs of socially disadvantaged categories or of those not adequately served by traditional banks, Intesa Sanpaolo has set up Banca Prossima, a bank that is exclusively dedicated to social enterprises and to the Third Sector. 2

3 Young People: Helping young people to build their future is a commitment the Bank considers a priority, and therefore it has designed a number of specific solutions to assist them in carrying out their projects 2. In the area of bank accounts Zerotondo Under 26 is a bank account designed for our young clients (age under 26). Zerotondo is a zero-fee account, with no handling fees and zero commissions on bank transfers and payment transactions carried out via the Internet, telephone and ATM; moreover, all the debit cards associated with this account are free of charge. Zerotondo subscribers pay a 2.5 commission only for transactions performed at the branch. However, this commission is not applicable for Zerotondo Under 26 subscribers, who can therefore enjoy zero-fee transactions, even at the branch Senior: In order to serve the needs of elderly clients, we endeavored to make their relationship with the Bank, as simple and economical as possible. For those aged above 65 years, Intesa Sanpaolo offers Facile Senior a bank account that ensures simplicity and the possibility to perform transactions via the Internet, telephone, ATM and the branch at a low cost fixed in advance Immigrants: Intesa Sanpaolo Group has a growing multi-ethnic customer base. Multiethnic Points have been set up in several cities to facilitate immigrant access to the banking world, providing linguistic and technical assistance. This initiative has earned the Bank the Welcome Award Customers who need a current account can choose among various products, the one that better suits their needs. In particular, they have access to the bank account Facile, which puts together simplicity and low cost, allowing the access to unlimited transactions, debit card (Carta Bancomat) and remote banking services. Alternatively, Zerotondo (mentioned above) is a good choice for those who are more familiar with POS payment cards and internet and telephone banking. Special attention has been given to remittances: in particular, through the GetMoney to Family service the account holder can send funds abroad rapidly and economically, thanks to agreements stipulated with 20 banks operating in the 18 main countries of origin of foreign residents in Italy, for a total of 23,000 branches. 2 See also our response to question 12. 3

4 The People Family card allows the family members of the account holder, still resident in their country of origin, to withdraw cash from the banks adhering to the Cirrus circuit In addition to the above mentioned Facile and Zerotondo, our accessible and low-cost bank accounts, we also offer Conto Start, developed in the framework of the Patti Chiari initiative. Patti Chiari is a consortium set up in 2003 under the leading role of the Italian Banking Association. All participant banks share strategies to improve the relationship with their customers. The consortium, in order to ensure the availability of a product readily accessible, simple and inexpensive, has agreed to offer a basic bank account. Conto Start is a basic banking service which is particularly suitable for those who have basic banking needs: Bancomat ATM, automatic crediting of salaries or pensions, payment of utility bills and credit transfers, with no cheque book or overdraft facility. Moreover, we are planning the launch of an innovative prepaid card which will combine the functionalities of a payment card with some of the functions of a bank account. It will be a simple product, able to satisfy those customers with basic banking needs As to the consequences of financial exclusion, we are broadly in agreement with the Commission s analysis. Question 4: In your experience, where voluntary codes of conduct are in place, are they well applied? The Italian experience with the Patti Chiari initiative (promoted by the Italian Banking Association), aimed at simplifying relations between banks and customers by providing the latter with tools that make it easier to make choices, has proven to be effective in promoting best practices, ensuring comparability of products and improving transparency. The basic bank account ( Servizio bancario di base ) promoted by the Patti Chiari consortium is currently included in the catalogue of 74 participating banks, corresponding to almost branches, and so far it has been subscribed by more than clients. In general, in order to be effective, voluntary codes should - on the one hand - set clear and measurable targets; on the other, they should rely on some form 4

5 of monitoring of their implementation, which can be set up and carried out by the adhering firms. In the area of bank accounts, we believe that establishing voluntary codes with measurable and monitorable targets is an effective approach which should be taken both at national and EU level. Question 5: Should all providers be obliged to offer basic bank accounts to all citizens throughout the EU? Question 6: Should basic bank accounts be provided on a commercial or notfor-profit basis; i.e. should they be free of charge? In case you favour the latter option, who should bear the costs? Question 7: Could the role of alternative commercial and not-for-profit financial services providers in addressing financial exclusion be enhanced? What could be done to encourage more such providers to help with access to basic bank accounts? As correctly highlighted by the European Commission, financial inclusion is both a societal challenge and a business opportunity. Therefore this is an area where all stakeholders can converge towards shared objectives and solutions. In fact, working with a wide variety of partners, including governments, consumer organisations and regulators, will be a major success factor. On the contrary, an approach where the principle of contractual freedom is disregarded and providers are obliged to offer a basic bank account can be counterproductive. A basic bank account should be accessible, simple and inexpensive. Question 8: Should regulators be required to consider the impact of regulation on financially excluded groups? Question 9: What is the most effective role public authorities can play in combating financial exclusion e.g. providing an understanding of the problem; assessing the efficiency of policy measures implemented and their impact on financial inclusion; promoting and supporting market initiatives; contributing to the provision of financial services; raising awareness; intervening in cases of exclusion (e.g. via tax incentives, subsidies or regulatory penalties); introducing legislation? An impact assessment of the legal requirements regarding customer identity and money laundering seems appropriate. 5

6 Public authorities should also consider the discouraging role that fiscal policies imposing a tax burden on bank accounts may have. As to the role public authorities can play in combating financial exclusion, we believe that they should act as facilitators, analysing the evolution of financial exclusion, raising awareness and supporting market initiatives. Question 10: Should financial inclusion be addressed at EU level? How could the responsibilities and competences between the national and EU level be shared? What could/should be the Commission's role? In our opinion, the European Commission should monitor Member States policies in this area and help them in identifying those practices that, at national level, have proven to be most effective, and can, therefore, be successfully implemented into other jurisdictions. The European Commission should also identify industry initiatives and best practices in order to promote them at the EU level. In this respect, encouraging self-regulation by the industry in the form of an EU Code of Conduct seems a sensible option. However any Commission s activity in the area of financial inclusion should take into account the fact that solutions need to be adapted to the specificities of the different cultural, social and regulatory framework. In fact, it is currently quite difficult even to establish an EU-wide definition of customer needs and requirements; consequently, it is hard to define the concept of basic product (what could be considered as a basic product in a given market, could have no appeal in a more advanced and sophisticated one). Question 11: What could the Commission do to address the potential difficulties in opening basic bank accounts cross-border? This issue needs to be tackled in the framework of the wider issue of the restrictions to cross-border access to bank accounts, which lies outside the issue of financial inclusion. We commend and support the European Commission initiatives aimed at removing these restrictions. We would also like to point out that customers with basic needs are probably also those less likely to engage in a cross-border deal and in the far reaching comparison between the products that this would imply. 6

7 Question 12: Should the concept of financial inclusion cover financial services other than the provision of basic bank accounts? It is true that the bank account often represents the entry point to a wider range of financial services, and therefore a priority area when dealing with financial inclusion. However, the concept of financial inclusion certainly covers other financial services. As highlighted in our response to question 3, Intesa Sanpaolo has a wide range of product tailored to suit the needs of those groups that are more likely to face financial exclusion 3. 3 These are some examples: Bridge : Bridge is a fixed rate student loan granted on scholastic merit, which does not require a guarantee from the student or his family. The student starts repayment of the sum used one year after graduating or completing the course. The bank assumes the risk, which is protected by a fund constituted by the participating universities; Mutuo Giovani : a flexible and accessible mortgage credit designed for young people which can be granted also to atypical workers; After 12 regular payments, the installments can be suspended during periods of low financial resources, for a maximum of 6 consecutive months; this facilitation can be used three times during the duration of the loan, which can be extended or reduced by a maximum of 5 years. Prestito Giovani : is a personal loan allowing young people to finance their projects or purchases. It is particularly flexible; after 12 regular monthly payments it is possible to postpone an installment, paying it together with the following installment at no extra charge. Progetto Imprenditori Immigrati PR.IM.I.: it facilitates immigrants access to financing, helps to avoid immigrants having recourse to informal sources of financing that may force them into conditions of weakness and expose them to criminality, provides support for growth expectations of one of society s most dynamic sectors. Microcredit schemes: microcredit is designed for those who want to start an entrepreneurial activity or who want to improve their skills and don t have the possibility to get a normal loan from a bank, due to their lack of guarantees or track record. Guarantee funds has been set by the Compagnia di San Paolo and other Foundations and the Bank distributes, at particularly advantageous rates, the required loan, assuming a part of the credit risk (multiplier 2). Anticipazione Sociale: when a business goes bankrupt, unemployment benefits may be delayed by 5 to 6 months with respect to the application made to the Ministry of Labour and Social Policies. The Bank has therefore launched a project in collaboration with the Lombardy Region and the Lombardy Anti usury Foundation to prevent workers falling into the hands of money-lenders, opening a credit line in the person s current account, which makes funds available in monthly installments proportionate to the amount of the unemployment benefits to be paid. Repayment is made when the social services pay the arrears due. 7

8 For any further comments or questions, please contact: Alessandra Perrazzelli Head of International Affairs Stefano Mazzocchi Regulatory Advisor Francesca Passamonti Regulatory Advisor Intesa Sanpaolo S.p.A. International Affairs Square de Meeûs, 35 B 1000 Brussels Brussels, 6 April