Plans unveiled to harmonise process for switching bank accounts across EU

The Presidency has outlined planned changes to the draft Payment Accounts Directive (71-page / 437KB PDF) which it has asked EU Ministers to support which would see a harmonised process for account switching set as a requirement under the new law when it comes into force.

"The process for switching bank accounts should be harmonised across the EU," the Presidency proposed. "At present, existing measures at national level are extremely diversified and do not guarantee an adequate level of protection of consumers in all Member States. The provision of legislative measures establishing the main principles to be followed by credit institutions when providing such service in every state of the Union would improve the functioning of the internal market for both consumers and credit institutions."

"On the one hand, it will guarantee a level-playing field for consumers who may be interested in opening a payment account in a different Member State, as it will ensure that an equivalent level of protection is offered. On the other hand, it will reduce the differences between the regulatory measures in place at national level and will therefore reduce the administrative burden for credit institutions which intend to offer their services cross-border. As a consequence, the measures on switching will facilitate the provision of services related to payment accounts within the internal market," it added.

Under the plans, banks and other 'credit institutions' would have to facilitate account switching for consumers based in both the country they are based and other EU countries.

The British Bankers' Association (BBA) told Out-Law.com that it has challenged the cross-border nature of the proposals. It said that there is no evidence of there being a demand for such a service to be facilitated and said it would be "resource-intensive" for banks to accommodate. There are practical implications such as language differences and differences in currency that would have to be accounted for if account switching services had to be operated on a cross-border basis, a BBA spokesperson said.

The BBA said there should be a thorough impact assessment undertaken by the European Commission before the plans are taken forward.

In September, 33 banks and building societies in the UK signed up to a new current account switching (CAS) service that allows customers to change between providers more easily. Many banks have been promoting incentives to customers to open new current accounts with them through the switching regime, including through the use of keyword advertising online.

The BBA told Out-Law.com that the plans to harmonise account switching across the EU would not require changes to be made to the CAS service. The CAS service delivers "above and beyond" what would be required under the new Directive and the fact it is a Directive means EU member states such as the UK would have enough freedom to implement the new rules in a way that would not require changes to be made to the CAS service, the spokesperson added.

A spokesperson for the UK Payments Council added: "The Payments Council is supportive of measures to improve customers’ ability to move between current account providers; this is why, together with the UK banking industry, we have implemented a brand new Current Account Switch Service, which is world-leading and better than any other service within the EU."

"Regardless of whatever the EU agrees, our service delivers more to UK consumers, charities and small businesses than what they are proposing as a minimum standard. Now that UK consumers, small businesses and charities are able to benefit from such an excellent service, we are working to ensure that we can continue to offer the Current Account Switch Service as currently offered, regardless of the final text that is agreed in the EU," they said.