The European Commission has recently published its draft proposals for further transparency and comparability of financial services, as it aims to simplify the process for the switching of accounts among its EU member states. It also wants to enhance accessibility to basic bank accounts – for the benefit of European citizens. The proposed directive posits that all banking service providers should provide their consumers with information document(s) listing their services and they are being obliged to disclose their costs.
The EU Commission maintained that all the financial documentation may be drafted using standardised terminology and formats in order to facilitate comparison across different jurisdictions. In addition, this EU proposal requires that every European member state should have at least one independent price comparison web site which gathers and disseminates all the relevant information (including fees and charges) which may be incurred by customers.
The Commission advocated that its proposal will facilitate the process for customers who may wish to switch their bank accounts. This directive suggests that the financial service providers themselves will have to deal with all the steps involved in the switch. It stipulates that the payment service providers must complete this procedure within 15 days (30 days if customer change their accounts in different EU countries). Interestingly, this service must be provided free of charge.
The EU Commission came up with “legally binding measures on payment accounts”. Arguably, with such a directive, the Commission will strengthen its single market. At the same time, the European consumer will be presented with competitive offers and lower costs for their banking services. It is anticipated that the EU bloc’s financial services industry will benefit from increased mobility of clients (including cross-border), with reduced barriers to entry.