Client right s in Europe s banking system Accessing Bank Funds The Bank where you already hold an account is the first place where you should ask for a loan. As you already have a history with the bank they know how much you earn and spend, if you pay your bills and credits in time they are able to better assess your creditworthiness. Accessing bank funds is also the cheaper way to finance your activity. As banks finance, themselves through clients deposits and primary sources of funding (Central Bank) they can offer credits with the best market conditions (low interest rate). Moreover, the banking institutions have lines of credits for entrepreneurs that want to start a business. And in some cases they have specifics credits for migrants. However, the requirements for this kind of credits are very stiff and they usually ask for guarantees and/or guarantors. (International regulation called Basel II or III). Clients (users) rights in Europe s Banking System Bank accounts have become in Europe in an essential part of our everyday life, allowing us to make and receive payments, shop online, and pay utility bills (telephone, gas, electricity). However, according to reliable studies, around 58 million EU consumers don t have a payment s account.
1. Bank accounts in the European Union Banks are private business that can decide whether to accept or refuse your request application for opening a bank account. Before accepting it, the bank needs to get to know you as a client. N.B. The money that you put in EU bank account is currently protected (up to 100.000 euro) in case of default of the bank. This process can take more time if you are new in the country, as the bank may require more due diligence (investigation) in assessing your request. This problem also exists with non-residents (people that don t live or spend short periods of time in the country where they want to open the account). Some banks may therefore have a policy not to accept nonresident clients. However, some banks offer banking products specially designed for non-residents. This only applies if you don t live in the country where the bank is established. This refusal is only acceptable if there is sound commercial justification. Banks must not discriminate against on the basis of nationality. REMEMBER: Be aware that you may be denied to open a bank account for commercial reasons, as banks are private business. Short-term residents may also find encounter some difficulties, as many entities require a long term residence proof. Insist on proof of long-term residence. 2. Documents required for opening a bank account All banks in Europe require you to be at least 18 years old to open a bank account, though most of them allow a minor to be co-owners of a parent account. Some banks can turn your application down if you have criminal convictions related to fraud or financial crimes or even if
another bank closed your account due to mismanagement, such as unpaid overdrafts. To ensure the process of opening your new account you have to bring certain documents with you to the bank. Even if the documents can change from one country to another, you usually have to present: A valid, government-issued photo ID (e.g. passport or ID card). This verifies you are who you say you are and allows the bank to match your name to your face. A Social Security Number or an Individual Taxpayer Identification Number. A document that verifies your current physical address. An acceptable proof of address is any current, official document on which your name and your address are both clearly printed. Your most recent utility bill (gas, electricity ) or cable bill should suffice. Other options to prove your address include a recent mortgage statement or rental contract. Proof of employment status (e.g. student card, employment contract, unemployment documentation). Bear in mind that documents that aren t in the official country s language may need to be officially translated, and it they are from outside the European Union, they may need to be authenticated using an Apostille stamp. While not all banks require every one of these documents, it is better to have them and not need them than the opposite. REMEMBER: In order to open a bank account, you will probably need these documents: Proof of Identity Social Security Number Proof of Address Proof of employment status
3. Payments, transfers and cheques If you make an international payment in euro, within the EU, banks should provide clear information on any charges or fees applicable. They should not charge you more than they would for a national transaction of the same value in euro. Even banks based in EU countries outside the euro area must apply this rule. This rule applies to all electronically processed payments in euro, including: Transfers between bank accounts in different EU countries Withdrawals from cash machines/atms in EU countries Payments by debit or credit card across the EU Remittances. N.B. Your electronic payments in euro in the euro area should be received within 1 working day (rule extended to countries no using the euro as of 31st October 2016). The EU rules on bank charges for payments in euro do not apply to cheques. There are sometimes very high transaction fees for cashing a cheque from another EU country. Furthermore, cheques are no longer accepted as a method of payment in some EU countries. REMEMBER: In the EU, national and international (inside the EU) payments should be charged the same. However, this rule doesn t apply to cheques, so think it twice before paying by cheque.
4. Consumer credits and loans Before agreeing to offer you a loan, banks will assess your creditworthiness. This assessment shows if you will likely be able to repay the loan. Banks will do their assessment on the basis of different criteria, including: Your financial situation (assets, debts, etc.) The value of the properties the loan is secured against. When taking out a credit or a loan, remember there are EU rules in place to protect you before you sign the contract and to guarantee you a way out, should you need it. a) Before signing a credit contract Before taking any decision you should compare offers from different banks. Banks have to give you a standard document called the Standard European Consumer Credit Information form, where you will find the terms and conditions of any credit contract you consider. N.B. Under EU rules, the bank has to give you at least 7 days to assess the offer (some EU countries' national law will give you more time). It includes: Main contract s features Credit amount and its cost The Annual Percentage Rate (APR; a single figure representing the total cost of the credit: interest, commission, taxes and any other kinds of fees) Number, frequency and size of all your payments A note on important legal aspects.
b) Withdrawing from a credit contract You can withdraw from the agreement within 14 calendar days of signing it. You don't have to give the credit provider any explanation, but you'll have to refund the money you borrowed, plus interest and any non-refundable charges already paid by the credit provider. c) Paying off your loan early You have the right to pay off your credit earlier than stated in your contract; however you need to be aware that you may have to compensate the credit provider for the income they have forfeited. N.B. This compensatory payment must not exceed the total amount of interest actually forgone. REMEMBER: There are EU rules in place to protect you before you sign the contract and to guarantee you a way out. However, before taking any loan you need compare different offers and read carefully the Standard European Consumer Credit Information form. 5. Other (obliged) services Before holding a loan or a mortgage, some banks will require that you also buy other financial services as a bank account from which you will repay the loan, a credit insurance which comes into play if you are faced with circumstances that prevent you from repaying your debt for instance, in the case of death, illness or job loss. The bank can require that you have credit insurance and may propose it with your loan agreement. However this cannot be made a condition for you to hold the credit, as you are always free to look for better conditions from other insurers as long as the level of guarantee offered is equivalent to what is required by the lender. REMEMBER: Before obtaining a loan or a mortgage some banks will require that you also acquire other financial services. Those requirements have to be detailed upfront.
6. Unfair treatment When you shop in the European Union whether online, over the phone, through a catalogue or in your local shop you are protected, by certain consumer rights, of unfair commercial practices, unfair pricing and unfair contract terms. If you ever have a problem with a banking service or in general with any service you purchase in any EU country, regardless of whether you made your purchase online or offline, there are several ways in which you can seek redress: Informal dispute resolution: you might first wish to explore ways of settling your dispute directly with the trader, or with the help of a consumer organization in your country. Out-of-court procedures: you can try to solve your problem through alternative or online dispute resolution. Formal legal action: a small claims procedure and payment order can help you recover money from a trader. REMEMBER: The EU protects you with consumer rights against unfair treatment. For more information about unfair treatment you can visit: http://europa.eu/youreurope/citizens/consumers/unfairtreatment/index_en.htm