Date Subject Response from the Dutch Ministry of Finance to the EC 'Consultation on bank accounts'

Transcription

1 Ministry of Finance > Postbus EE Den Haag The Netherlands Financial Markets Policy Directorate Korte Voorhout CW Den Haag Postbus EE Den Haag Inquiries dhr. drs. P.B.R. Kroes LLM T F p.b.r.kroes minfin.n1 Date Subject Response from the Dutch Ministry of Finance to the EC 'Consultation on bank accounts' Dear Sir, Madam, End. 1. Annex - Response of the Dutch ministry of Finance to the EC 'Consultation on bank accounts' The Dutch Ministry of Finance welcomes the opportunity to comment on the Commision's working document 'Consultation on bank accounts' of 20 March Please find our comments in the Annex. If you would like further information, I would be more than happy to oblige. Dire or Fi ancial Markets directorate

2 Annex Response of the Dutch ministrv of Finance to the EC consultation on bank accounts 1. Transparency and comparability of bank account fees Question 1: Do you consider that the information pro vided by banks on bank account fees is presented to consumers in a sufficiently clear manner and easy to compare between banks? What good practices could you identify? What are the persisting shortcomings? Do you think that amendments to the transparency obligations in the Payment Services Directive (2007/64/EC) could address those shortcomings? Information about bank account fees is available at the banks' websites, at physical bank branches and at the banks' call centres. In general this gives a clear overview of each service they offer and the prices which have to be paid for it. Furthernnore there is a website which compares tariffs between banks ( A shortcoming is the comparability of the different overviews of tariff structures of the banks. The banks do not use the exact same format and do not use the same terminology. However, the largest Dutch consumer interest organisation, the Consumentenbond, provides comparison studies of current bank accounts/ packages to their members. They offer an online comparison tool on their website, and results of their researches also appear in the press, in their magazines and books, and on their website. Moreover, three well known and respected public authorities, the Consumentenautoriteit (Netherlands Consumer Authority), the Nederlandse Mededingingsautoriteit (Netherlands Competition Authority) and the Onafhankelijke Post en Telecommunicatie Autoriteit (Independent Post and Telecommunications Authority) have set up a consumer information website ( and information phone number, providing consumers practical advice about their rights as consumers. ConsuWijzer focuses on several services, such as energy, public health and financial services. The current provisions of the PSD, with the options for Member States on periodic disclosure, coupled with national legislative and self-regulatory measures and actions taken by public authorities and non-profit organisations, would provide a solid basis for improving the transparency and comparability of bank fees. As many of them are relatively new (1-3 years old), we are of the opinion that those initiatives should be given a chance to succeed. Question 2: Do you think that standardising bank account fee terminology could help to pro vide more transparent and comparable information on fees? If terminology were to be standardised, should that standardisation cover all fees or only some of them? 1f only some of them, on the basis of which criteria should they be chosen? Should terminology be standardized at EU level or at a nationale vel? Page 2 of 9

3 Following the previous answer standardizing bank account fee terminology could help to increase transparency. For certain basic services a standardization on EU level could be reached. Key point is that the terminology should be of practical use for the majority of individual consumers. However, standardising bank account fee terminology should not lead to the obligation for product standardisation. To stimulate innovation and competition, banks should be allowed to differentiate their offer from other banks as long as it is clear to consumers what service is concerned. What is important is that the consumers have sufficient information to make an informed choice.it should be borne in mind that standardization contains the risk of deteriorating competition in the banking sector. In order to be of value for consumers, standardised terminology should meet local consumer preferences and usage of payment methods. Therefore, consumers would benefit most if terminology used for personal current account is defined on national level. In the longer term, national terminologies used in the EU countries can become more aligned with each other as cross-border competition increases and consumers may hold a current account with a bank in another Member State. Question 3: Do you think that glossaries of terms and standardised lists of bank fees would facilitate comparability? 1f so, what format and content should this information have? What body/forum would you consider appropriate to develop such a glossary/standardised list of fees? Yes, providing glossaries of terms in plain and understandable language, and standardised lists of bank fees could facilitate consumers in assessing personal current account fees of banks, compare them with their actual needs and choose the service that fits their needs best. Key point for consumers is to establish an easy overview that provides transparency and comparability. Several formats can be used to provide consumers with glossaries and standardised lists of bank fees. The format doesn't have to be a specific one, as long as the same format is used by all banks. Most important is that this information is easy to find for consumers and is structured in a logical way. The content should of course be the services offered by banks, but it should also include the services offered for one business area, so for example payment services. Banking or payments associations could develop such a list. Glossaries and standardised lists of bank fees should be made available on national level, possibly in cooperation with other stakeholders depending on the legal context, consumer expectations and payment habits. For example, they can be developed and regularly updated by the national banking community, in close cooperation and consultation with consumer interest groups and the national public authority dealing with the banking industry and its clients. In the Netherlands there would typically be a prominent role to play for the National Forum on the Payment System (Maatschappelijk Overleg Betalingsverkeer or MOB).' 1 The National Forum on the Payment System (MOB) discusses all aspects regarding payments in order to promote a safe, efficient and accessible payment system in the Page 3 of 9

4 In the longer term, the national glossaries and standardised list of bank fees used in the EU countries can be more aligned with each other. Question 4: In order to further increase bank account fee transparency and comparability, which of the following tools should be considered: i) comparison websites managed by public authorities standardised cost simulations to be pro vided by banks iii) standardised representative examples to be pro vided by banks iv) surveys by consumer organisations/financial ombudsman v) any other tools you consider relevant? Should any of them be made compulsory? What would be the likely costs? We think that such tools could be useful, but do not see strong reasons to make these compulsory. i. Comparison websites Comparison websites provided by independent public authorities, where consumers can find information concerning the prices of current accounts, is a good instrument for increasing transparency and comparability on personal current bank account fees. However, although comparison websites can be useful for consumers, they should not be considered as the ultimate oracle in assessing the quality of the offer of an individual retail bank. The latter would promote competition based purely on price, which in our view is not the right approach. Therefore, it is our opinion that such websites should be accompanied by a clear explanation for all potential users that the ranking is based purely on price and does not take into account any other potentiel benefits, such as quality of service, reliability of the provider, etc. Standardised cost simulations Cost simulations, which take into account the client's banking habits for estimating the likely costs of a personal current account, are useful only in the situation where more complex bank account fees structures are used, i.e. where fees for current personal bank account services are transaction-based. In countries where the personal current account offering is typically package-based (all-inclusive flat-fee packages), standardised cost simulations will have not much added value to consumers. In this case the bank account fee to be paid, is precisely known by the consumer or viewable on the (ex-ante) product offering page on the bank's website, and remains the same irrespective of the actual payment behaviour. Standardised representative examples Our answer to this question corresponds with our answer concerning standardised cost simulations (ii). iv. Surveys by consumer organisations/ financial ombudsman Netherlands. This Forum brings together all stakeholders, including retail organizations, the consumers'association, commercial banks and the national central bank. Page 4 of 9

5 Objective and reliable comparisons of personal current accounts by consumer organisations or financial ombudsman is a good instrument for increasing transparency and comparability on personal current bank account fees. Taking this into account, we are of the opinion that none of these tools should be made mandatory. When there exists a significant consumer need for these initiatives, the market will respond to this and will provide for suitable solutions. Question 5: What level of detail should the information on actual fees paid have and how frequently should it be pro vided to the account holder? Would having comparable information on the fees actually paid encourage consumer mobility, including on a crossborder basis? The answer to the last question cannot be answered in front. It is worth while providing consumers on a yearly basis information on the cost of basic payment services. Each individual bank should inform its customers of the actual fees paid by him on the type of transactions and services related to his personal bank account. This information should either be transmitted to an individual consumer automatically on a periodical basis (at least one a year) or can be included on his bank statements. When significant differences in actual fees paid for comparable personal current bank account services exist, this would probably encourage consumer mobility between banks. If a European consumer would face no barriers to open a bank account in another EU country, then comparable information on the fees actually paid could encourage cross-border consumer mobility. Question 6: What other measures/instruments should be considered in order to improve the transparency and comparability of bank fees? Please describe and indicate at which level (national or EU) you consider they should be taken. Standardised bank account fee terminology, glossaries of terms, standardised lists of bank fees, comparison websites, standardised cost simulations, standardised representative examples and surveys by consumer organisations/ financial ombudsman should give consumers enough opportunities to assess personal current bank account fees of banks, and compare them with their actual needs. In our view, it is not necessary to consider additional measures/ instruments. The above mentioned initiatives can be coordinated and developed at national level (principle of subsidiarity). On an EU-level, high level principle-based soft-law regulation (such as self-regulation) should be constructed in such a way as to allow for sufficient flexibility, necessary to address national demands and customer expectations with suitably adjusted solutions. Question 7: Do banks in the Member State where you have a bank account offer a switching service? If yes, is it in line with the Common Principles on bank account switching described above? Is information on the conditions of switching presented in a consumer friendly manner? Page 5 of 9

6 Yes, there is a switching service available in the Netherlands. It is mainly in line with the Common Principles. It exceeds the Common Principles by its applicability to business users. On the other side, not all standing orders are transferred to the new bank and the new bank will assist in closing the old account and/or transferring the remaining balance from the old account to the new account. Information is available on the website of the largest and most common banks. Additionally, a specific website exists ( which informs consumers and companies in a customer friendly way on the features of the switching service. Question 8: 1f a switching service in line with the Common Principles is offered by banks in the Member State where you have a bank account, does it remove all obstacles to bank account switching? 1f not, what obstacles remain? Pro vide examples of good practices and persisting obstacles encountered. The switching service, which is well appreciated by Dutch banking customers, removes most obstacles when switching to another bank. The obvious obstacle that remains is the fact that the customer stilt gets a new account number, which can only be removed by the implementation of account number portability. Question 9: Should the Common Principles remain voluntary? What do you consider are the advantages or disadvantages of making them compulsory at EU level? What would be the likely costs? As the account switching service that is in operation in the Netherlands works well, from the Dutch point of view there is no need to make the Common Principles compulsory. If legislation would be implemented, there would be expenses related to supervision and enforcement. Question 10: Should switching principles/measures also cover cross-border switching of bank accounts? Taking into account the emergence of the Single Euro Payments Area, it would make sense to extend the principles to cross-border switching. Question 11: According to you, how important is the risk of having receipts, bi/is and payments misdirected when switching bank accounts? What measures could be considered to make the switching process safer? It is fairly important that incoming and outgoing transfers are not misdirected, as the account holder counts on the service's proper functioning. However, no such problenns have occurred in the Netherlands. When applying for the switching service, customer authentication is of major importance, as is secured communication between the old and the new bank. Question 12: What obstacles, if any, are stil/ faced by account providers that are smaller or established in another Member State to expand their client base or to enter new markets? Are these connected to problems with switching facilities? Page 6 of 9

7 The largest obstacle would be that the switching service cannot be used crossborder. Therefore a new bank that wishes to compete in another Member State must implement a new banking system, requiring a substantial investment. Question 13: What other measures should be considered to improve bank account switching? Please describe. Recently the Dutch switching service has been evaluated. Although most customers that had been using the service were very satisfied, a number of improvements were identified: augmentation of customer familiarity with the switching service and its features, extending the switching service with standing orders and improving easy access to the related information. Question 14: Do you dispose of information on consumers encountering difficulties in access to a basic bank account? What types of obstacles are signalled by the consumers preventing them from having access to a basic bank account? In the Netherlands almost everyone has access to a basis bank account. The Netherlands have put self-regulatory measures in place since The foundation for those self-regulatory measures is a covenant between the Dutch Banking Association and other partjes such as The Salvation Army. The four largest banks in the Netherlands are currently participating in this initiative in which they committed themselves to provide a basic payment account to persons who meet the requirements as prescribed in the covenant. The basic bank account is offered to all consumers, even to those with a bad credit history (BKR) or a history of fraud (EVA). The applicant needs a valid ID and a Dutch social security number to open a basic bank account. Furthermore, the Dutch Parliament has approved an act named Wet gemeentelijke schuldhulpverlening that will come into force in July This act regulates among other things that a person with structural debt problems, who meets certain requirements, always has access to a basic payment account. The right for this type of creditors to open a basic payment account is expected to come into force on 1 January Banks in the Netherlands are committed to provide forementioned creditors with a basic payment account. In the Wet gemeentelijke schuldhulpverlening this basic payment account is defined as an account which includes a payment service without the possibility for a deficit. Therefore, there are no major obstacles in the Netherlands preventing consumers from having access to a basic bank account. Question 15: Are you aware of any measures taken by banks or other institutions in the Member State where you have your residence to facilitate access to a basic payment account? Have these initiatives been successfully enforced? See also the answer on question 14. The `Covenant on a Package of Primary Payment Services' is periodically monitored and evaluated. Last evaluation study was performed together with not-for-profit organizations on behalf of the Dutch Ministry of Finance and showed positive results.2. 2 Nederlandse Vereniging van Banken and Stichting Leger des Heils Weizijns- en Gezondheidszorg, Een bankrekening voor iedereen - Evaluatierapport inzake de werking van het NVB Convenant inzake een pakket primaire betaaldiensten, September 2004 (Dutch Banking Association and Dutch Salvation Army, A Page 7 of 9

8 Moreover, in 2010 the partners of the covenant launched the website and gave renewed attention to the basic bank account within their own organisations and beyond to emphasise the importance of access to basic payment services for everyone. Furthermore, following the Comnnission Recommendation3 the Dutch Ministry of Finance and the four largest banks in the Netherlands who are currently participating in this initiative held a session about the relation between covenant and the recommendation. As a result the partners of the covenant decided to bring the text of the covenant more in line with the recommendation4. Question 16: Do these measures also facilitate access to a basic payment account for non-residents? The `Covenant on a Package of Primary Payment Services' applies to Dutch residents of 18 years and older, who do not yet have a bank account and whose identity can be affirmed as indicated by national and European rules and regulations concerning anti-money laundering, combating of financing of terrorisnn and other customer due diligence measures. In The Netherlands a basic bank account is similar to a regular bank account, only the client cannot apply for overdraft or other credit products. For non-residents applying for a bank account, Dutch banks will assess on an individual basis if a bank account can be provided. Normally, EU residents are able to open a bank account at Dutch banks, when they have a valid ID such as a passport. Question 17:.1f consumers stijl have difficulties in opening a bank account, what are the reasons for that? See also the answer on question 16. The possible grounds for rejection are outlined in paragraph 4 of the covenant. The Dutch Financial Services Complaints Tribunal (Kifid) is appointed as competent authority for dispute settlement. Should issues concerning the provision of bank accounts emerge, then the involved bank(s) will discuss these with social welfare organizations and public authorities with the purpose to solve the issues. Question 18: lf more needs to be done what additional measures should be envisaged? Should the problem be tackled at national or EU level? Access to a basic payment account is not an issue in the Netherlands or most other Member States, in our view this is not an issue which warrants a European approach. The problems described by the Commission are concentrated as also stated in earlier consultation documents by the Commission and the impact assessment. The reasons and effects for the consumer of not having a bank account vary from country to country and depend on a number of socio-economical factors, including banking account for everyone - Evaluation report of the functioning of the NVB Covenant on a Package of Primary Payment Services). 3 Commission Recommendation 2011/442/EU on access to a basic payment account, , 4 Page 8 of 9

9 the use of cash or the presence of a grey economy. It should be noted that social and cultural factors not related to financial exclusion cannot be easily removed. The question whether the problem should be tackled at national or at EU-level, cannot be seen separately from the level of residents having a bank account within the various EU-countries. This level varies significantly between the various member states; from 100% to 97% for DK, FI, NL, FR, DE, BE, AT, SE, SI, EE, LU, ES, UK and IE; from 94% - 79% for PT, CY, MT, EL, PL, CZ, SK, IT, LV, LT and HU; from 53% to 49% for RO and BG. As the problem is concentrated the disadvantages of an European approach are larger than the advantages. Moreover, in our view some elements of the recommendation are not essential for the functioning of the internal market. Page 9 of 9