10 Financial services: bank accounts
| (34942)
9788/13
+ ADDs 1-2
COM(13) 266
| Draft Directive on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features
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| Legal base | Article 114 TFEU; co-decision; QMV
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| Department | HM Treasury
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| Basis of consideration | Minister's letter of 14 February 2014
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| Previous Committee Reports | HC 83-v (2013-14), chapter 9 (12 June 2013) and HC 83-xii (2013-14), chapter 8 (17 July 2013)
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| Discussion in Council | Not known
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| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared; further information requested
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Background
10.1 In May 2013 the Commission presented, in the
context of the Single Market Act (not, despite its title, legislation,
but a policy manifesto), this draft Directive with provisions
to improve:
· comparability of fees on bank accounts;
· the ease with which consumers switch accounts;
and
· access to basic bank accounts.
10.2 The aim was to improve consumers' experience
of bank accounts in the EU and enhance the integration of the
EU bank account market.
10.3 The draft Directive had three key elements.
First, it would provide that:
· Member States should provide a list of
the most common bank account services subject to a fee at national
level;
· the European Banking Authority would have
a role in helping to develop guidelines to assist in this process;
· the Commission would then be able to set
out a list of EU standard terminology (and definitions) common
to the majority of Member States — this information would
be given to consumers prior to taking out a bank account;
· Member States should establish a voluntary
accreditation scheme for websites comparing fees charged by providers,
in order to simplify the comparison of services and fees offered
by banks;
· account providers would issue the customer
with a statement of all fees incurred on their payment account,
on at least an annual basis; and
· account providers would have to inform
consumers if they were buying a "packaged account" and
if it was possible to buy the account separately to the additional
product or service — if so, providers would then be required
to disclose what the costs and fees for each would be.
10.4 Secondly, the proposed Directive included provisions
to improve payment account switching across the EU:
· setting out minimum standards aimed to
facilitate payment account switching within Member States and
across the EU; and
· providing that customers would not incur
a financial loss due to mistakes made during the switching process.
10.5 Thirdly, the draft Directive:
· would introduce a right of access to a
basic account for all EU consumers, regardless of their place
of residence;
· specifies the characteristics of a basic
account, such as the freedom for money to be added to the account
and for direct debits; and
· would require Member States to raise public
awareness of basic accounts.
10.6 We considered this proposal twice last year
and heard of a number of Government concerns, including one of
subsidiarity. The latter point was dealt with in our last Report
on the proposal, when we also looked forward to being updated
on developments in the negotiations. Meanwhile the document remained
under scrutiny.[61]
The Minister's letter
10.7 The Economic Secretary to the Treasury (Sajid
Javid) tell us that:
· there is significant pressure from the
European Parliament to conclude negotiation of this proposal ahead
of the elections in the spring;
· the European Parliament voted on the proposal
at the beginning of December 2013, which put additional pressure
on the Lithuanian Presidency to also have a general approach agreed
before the end of the year; and
· Council negotiations therefore picked
up pace and were pushed to agreement on general approach just
before Christmas 2013.
10.8 Commenting that the Government wanted to seek
to ensure the proposed Directive avoids putting unnecessary burdens
on industry and achieves the right outcome for UK consumers, the
Minister reminds us that its priorities were to:
· clarify and amend the definition of a
payment account to include current accounts only — the Commission
text could cover an unknown range of different products, such
as credit cards, saving accounts and e-money;
· restrict proposals to domestic switching
— cross border switching would impose significant burdens
on industry because of the technical and practical concerns involved
and there is no substantial evidence of consumer demand;
· ensure existing Member State arrangements
are recognised in the Directive for switching — the UK's
Current Account Switching Service already goes further than the
Commission's proposal by introducing a fully automated process
for the consumer and the Government wants to ensure that Member
States which have already taken action face no additional unnecessary
burdens;
· ensure existing Member State arrangements
are recognised in the Directive for basic bank accounts —
the major UK banks already voluntarily offer basic bank accounts
and the Government wants to ensure that Member States which have
already taken action face no additional unnecessary burdens;
· ensure that basic bank provisions allow
anti-fraud and anti-money laundering requirements to be met —
mandating basic bank accounts with an EU right to access could
place a significant additional burden on UK industry; and
· block the inclusion of comparison websites
in the Directive — the proposal represents a significant
intervention in a market that is currently unregulated and it
is noteworthy that websites were not included in the Single Market
Act II.
10.9 Expanding on the rapid progress to a Council
general approach, the Minister says that:
· the Lithuanian Presidency forced the matter
to a general approach decision at a COREPER meeting on 20 December
2013, by which time the Government had achieved five out of its
six priorities;
· on the sixth priority, relating to comparison
websites, the Government ensured that the general approach would
have a limited impact;
· the Government also made a written statement
at COREPER, which set out its continued and significant concerns
about the inclusion of comparison websites and the need to ensure
that the Directive recognises existing agreements in Member States
for both basic bank accounts and current account switching;
· given the proposal remains under scrutiny,
the Government abstained from voting at COREPER;
· the Presidency concluded, however, that
a general approach was agreed and proceeded to trilogue discussions;
and
· these discussions, for final agreement
on the proposed Directive, have started and the Government expects
them to accelerate rapidly over the coming weeks.
10.10 The Minister concludes by asking whether, given
there is likely to be pressure for an agreement in the coming
months, we are content to grant scrutiny clearance.
Conclusion
10.11 We note the Minister's report of Government
satisfaction on five of its negotiating priorities and its apparent
partial amelioration of the sixth problem. However, we are not
clear from the Minister's account whether, if the proposal were
not still under scrutiny, the Government would have been satisfied
enough with the Presidency text to support the Council's general
approach. Nor is it clear to us how secure the Government expects
the improvements it has gained in Council negotiations to be during
the trilogues.
10.12 So, rather than clearing the proposal from
scrutiny now, we will await a further report from the Minister
on how the trilogues are developing before considering the matter
again. Meanwhile the document remains under scrutiny.
61 See headnote. Back
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