Brussels, 23/09/2009 (Agence Europe) - According to a European Commission report on retail financial services published n Tuesday 22 September, there are widespread problems with the way banks inform and advise their customers. The report describes the price structures of current accounts as “very opaque making it almost impossible for consumers to know how much they are paying and to compare different offers”. For 66% of banks surveyed, bank fees were so unclear that experts compiling the report needed additional explanatory contacts with the bank to find the real costs of an account. Austria, France, Italy and Spain score poorly on transparency and are among the most expensive countries for banking accounts. The EU market is fragmented depriving consumers of the advantage of an EU internal market. Only 9% of EU consumers switched current accounts for the two years 2007-2008. The report is based on an independent bank fees study analysing the prices of accounts for 224 banks covering on average 81% of the EU market. A summary of the main points of the study:
Fee structures of current accounts are often opaque. Almost a third of consumers surveyed are not able to compare current account offers.
Online price information is incomplete. In two out of three cases (66%), experts compiling the bank fees report needed additional contacts with the bank to clarify the pricing information on fees. Even then, banks in many situations only offered oral information on their tariffs, but refused to send tariff lists. Around 10% of the banks had little or no price information available on their websites and 33% had incomplete price information in their tariffs.
In some EU countries, consumers pay considerably more for current accounts than in others. The prices of accounts with “average” usage range from as high as €253 in Italy to as low as €27 in Bulgaria. For “intensive” users, the difference is even clearer: from a maximum of €831 in Italy to a minimum of €28 in Bulgaria. Austria, France Italy and Spain score poorly on transparency and are among the most expensive countries for banking services. Bulgaria, the Netherlands, Belgium and Portugal secure low rankings, in terms of current account prices.
Consumers in countries with opaque price structures are likely to pay more for bank accounts; “incomprehensible” and “insufficient” information are major obstacles to cross border shopping in financial services. 79% of EU citizens want clear and comparable standardised information as, for instance, provided for in the new Consumer Credit Directive. There is growing evidence that consumers often do not obtain suitable advice on financial services. For example, German data show that consumers terminate 50-80% of all long-term investments prematurely because of inadequate advice, leading to estimated losses of €20-30 billion a year.
In a press release, the Commission says the evidence will feed into the ongoing work in retail financial services that it announced in the Communication “Driving European Recovery” March 2009. The EU's Unfair Commercial Practices Directive already prohibits practices which mislead consumers and distort choice, for instance, omitting information linked to bank accounts or giving information so unintelligible that the average consumer cannot work out the price. Member states have an obligation to enforce these laws in financial services. Industry (voluntary) common principles to facilitate bank account switching will apply from 1 November 2009. The Commission will monitor implementation closely.
The full report can be found at: http: //ec/europa.eu/consumers/rights/fin_serv_en.htm (O.J./transl.rt)