The European Union (EU) directive 2014/19/EU confers the right to access a basic payment account in the European Union in the for all legal residents in the EU. The directive aims to improve access to payment accounts, provide uniform processes for account switching and ensure transparency and comparability of payment account fees. Prior to the directive, not all EU residents had easy access to basic payment accounts, thus the directive less burdensome processes for consumers.
The directive defines a basic payment account in the European Union as one which allows:
- Depositing of funds
- Cash withdrawals
- Direct debit and credit transfers
Legal residents are broadly defined as anyone whose expulsion is impossible for legal or factual reasons, thus it extends to more than just those with a residency permit.
Clearer fees
The directive provides tools to make banking fees clearer. The directive requires Member States to have at least one independent website that compares payment account fees charged by different service providers. Members States must list at least ten payment account service providers and their fees. Member States must also ensure that, prior to creating a contract, service providers must give consumers information that is:
- Short, clear and legible
- Written in the official language of the Member State
- Accurate and not misleading
- Expressed in the currency of the account
Member States should also ensure that service providers give consumers a glossary of standardised terms using clear, non-technical or misleading language. At a minimum, service providers must give consumers annual statements of all the fees charged to the account at no cost to the consumer.
Reasonable fees
Transfer and receiver fees must be reasonable and in line with actual costs to the service provider. Reasonability of fees is based on national income levels and average fees charged by credit institutions in the Member State where the payment account is located.
Account switching – basic payment account in the European Union
The directive harmonises the procedure for account switching within the EU. Switching is conducted by the recipient bank who bears the costs of any financial loss in the event of processing errors. The transferring bank has an obligation to cooperate with the account switching process.
The directive ensures that providers offer switching services between payment accounts located within the EU. When a consumer indicates to their service provider their intention to open a payment account in another Member State, the service provide must assist the consumer by:
- Listing all currently active standing orders for credit transfers and debt-driven direct debit free of charge
- Transferring balance remaining on the payment account to the new payment account
- Closing the payment account
This directive assists in working towards a smooth-functioning, modern, socially-inclusive internal market implementing the right to assess a basic payment account in the European Union. For more information about opening a bank account in Spain or account switching please contact our office.
Víctor Sáez
