Banks 'must come clean' on fees

Banks in the European Union have until mid-September to come clean on fees they charge customers or face mandatory transparency rules.

"We think the fees should be easy to understand across the board, with comparable fees charged for comparable services. That is not the case today," Michel Barnier, the region's financial services commissioner, told a news conference.

Full transparency on fees would make it easier for customers to compare charges and switch to a cheaper account, helping to drive down the high charges seen in some EU states.

"I am disappointed with the response from European banks with the request I put to them a year ago asking for more transparency," Mr Barnier added.

If banks don't take his request seriously by September 15th, Barnier will take "legislative action with a view to introducing more standardisation across European markets".

Banks must give clear terminology on what customers are charged for and by how much,Mr Barnier said as he also gave lenders a year to make it easier for everyone to open a cheap basic account anywhere in the 27-nation region or face legislation in this area too.

About 30 million people over 18 years old in the EU do not have a bank account, with 6-7 million turned down because of poor credit history, no proof of income or failing to meet residency requirements, the Commission said in a statement.

The EU executive adopted a recommendation today, a non-binding request for member states to crack down on restrictions used by banks as an excuse to reject account applications.

"This recommendation does not state that payment service providers will have to accept any application from an individual in any case - it focuses on what is strictly necessary to enable consumers to use payment services," the commission said.

"It will assess the situation in one year's time and propose any further measures as necessary, including legislative measures," the commission added.

The Commission said consumers should be able to open a basic bank account at an unspecified reasonable charge irrespective of where they live or their financial circumstances.

It only covers people who are legally resident in the EU and need an account for personal but not business or professional use.

A basic payment account is defined by the Commission as one that allows the customer to deposit and withdraw cash, receive payments such as salaries, issue payment orders, make payments through direct debits and buy goods and services online.

Overdrafts would not be allowed as this would mean credit was being given, which requires credit history checks.

The EU executive had said it would propose a draft law to make it mandatory for banks to offer basic accounts but opted for a non-binding recommendation as it gives member states more flexibility to tackle hurdles to opening an account.

Reuters