Opaque banking fees leave EU citizens in the dark

BRUSSELS - If tracking down the bank which charges the lowest account fees has left you frustrated in the past, new evidence suggests you may not be alone.

A report published by the European Commission on Tuesday (22 September) described the price structure for current accounts offered by European banks as: "very opaque making it almost impossible for consumers to know how much they are paying."

So unclear is the information on websites and printed material that the independent experts producing the report for the Commission were forced to contact 66 percent of the banks they surveyed in order to work out the real costs of an account.

The report – which covered 221 banks making up 81 percent of the EU market – also showed that consumers pay considerably more for their current accounts in some member states, with average annual fees in Italy clocking in at €253, compared to a paltry €27 in good-value Bulgaria.

"There is widespread evidence that basic consumer principles are being violated with problems from complex prices to hidden charges," said EU commissioner for consumer affairs, Meglena Kuneva, while presenting the report in Brussels.

"Banks need to put their house in order with a culture change …and member state authorities need to fulfil their obligation to enforce EU consumer laws," she added.

Two pieces of EU legislation are designed to protect citizens in this area. The Payment Services Directive, which must be transposed by member states into national law by 1 November of this year, is expected to provide greater transparency to the market.

The Unfair Commercial Practices Directive - implemented in 2007 - is a comprehensive piece of legislation banning all practices that mislead consumers.

But both rely on the correct enforcement by member state authorities, something the Commission says needs to be stepped up.

A catalogue of difficulties

As well as the difficulties in accessing information on banking fees, the new Commission report says advice given to clients by banking staff is frequently sub-standard, either the result of inadequate training or a simple desire to sell more expensive products.

German data show that consumers terminate 50-80 percent of all long-term investments prematurely because of inadequate advice, resulting in a loss of €20-30 billion a year.

Added to this, the complexities of changing a bank account in Europe mean switching rates remained as low as nine percent in 2007 and 2008, compared to 25 percent for car insurance.

Last December the industry adopted principles to facilitate bank account switching – due to apply from 1 November 2009 - with the Commission saying it will monitor results closely.

The report shows that banking fees are lower in countries where switching bank accounts is less laborious, a direct result of the greater competition.

The European Consumers' Organisation, BEUC, welcomed the report's publication on Tuesday.

"The Commission has presented cold, hard facts that cannot be refuted. But this information will be useless unless it is acted upon and soon", said the groups director-general, Monique Goyens.

The Commission says it intends to discuss the findings with national enforcement authorities such as the Office of Fair Trading in the UK.