Banks and Consumers

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BANKS AND CONSUMERS Examples: − Court rulings prohibit banks from charging customers a fee whenever a direct debit cannot be paid due to a lack of funds in their account. As a result, the work necessary to return such a direct debit and the costs incurred in the process must be borne by all customers, which is annoying for all customers who do not cause such additional costs. − At EU level, a price regulation (Regulation [EC] No. 2560/2001 of the European Parliament and of the Council of 19 December 2001 on cross-border payments in euro) stipulated that from 1 July 2002 the price banks charged customers for cross-border electronic card transactions within the EU had to be the same as that which they charged them for a card payment within their home country. On 1 July 2003, this principle of price equality was extended to cover credit transfers provided they meet certain automated processing criteria. The EU regulation is an example of unprecedented and farreaching interference by legislators in banks’ pricing freedom that cannot be justified for competitive reasons and is inappropriate from a business standpoint. In investment business, customers are also made clearly aware in other ways of the price components they need to take into account. If, for example, a bank advertises a security’s gross performance, the information it provides also contains details of how commissions, charges and other fees, e.g. transaction costs, front loads or custody charges, may affect the performance. Customers can see from the example given which effects they should take into account in their specific case. Similar information is contained in all product information sheets. Details of so-called “kick backs” are also disclosed. These are payments made by a fund provider to a bank which has included the fund in its sales programme. They cover, for example, the cost of information material or of the advisory service provided free of charge to the customer. Where banks receive such kick backs, they inform their customers not only about this practice but also about the amounts involved. Only then can customers assess what benefits a bank may expect from selling a security and whether, once they know these, they still wish to follow the recommendations made by an adviser. Regardless of whether such kick backs are paid at all and, if so, how much they are, customers can always rely on receiving advice tailored to their personal needs. 3.3 Self-regulation as an alternative to statutory provisions Self-regulation is certainly not an instrument that provides an answer to all consumer law questions. Thus, whether or not effective regulation may be achieved just as well by market solutions or self-regulation instead of laws or regulations is something that must be examined on a case-by-case basis. If on this basis self-regulation appears preferable, it may be an effective means of creating legal clarity and certainty. 54
BANKENVERBAND European Code of Conduct for mortgage lenders The discussion at both European and national level has demonstrated during the past few years that self-regulatory measures in individual areas can be an effective and flexible way of protecting consumers: one example of these is the European Code of Conduct for mortgage lenders, adopted in 2002. In it, banks agree, first, to make available comprehensive information on the special features of mortgage lending, and, second, to provide consumers with a standardised overview of the key points of the mortgage loan in which they are interested. This makes it easier to compare different offers. When transposing the EU Consumer Credit Directive into national law, German legislators adopted this overview. as far as possible. So the intention of European lawmakers to regulate migration to SEPA uniformly on a statutory basis is only logical. Swift migration would be helpful, as only a short phase in which the old domestic payment schemes exist alongside the new SEPA ones avoids any unnecessary burdens. If SEPA receives the required push from lawmakers, users will not only benefit from the quick, simple and secure payment schemes, but will also recognise how inexpensive SEPA actually is. The keen competition in the German market has in the past resulted in very low charges for payments compared with other European countries. SEPA will increase rather than reduce this competition, as almost 60 billion payments are made in the eurozone alone every year. Realisation of the Single Euro Payments Area (SEPA) The German banking sector has actively supported integration of the euro payments markets and laid the foundations for turning the political vision of SEPA into reality. Employing considerable resources in the process, the European Payments Council (EPC), in which European banking associations and big banks work together to implement SEPA, has developed uniform EU-wide payment instruments. Businesses and consumers are still using these new instruments far too little, however. The SEPA credit transfer, for example, accounts for less than 1% of the total volume of payments at present. Legislators should therefore support wider use of the SEPA payment instruments “Current Account for Everyone” The fact that self-regulatory measures can be successful over the long term is also demonstrated by the “Current Account for Everyone” (Basic Account) recommendation made in 1995 by the central associations of the German banking industry working together within “Die Deutsche Kreditwirtschaft” (German Banking Industry Committee [GBIC]). At that time, there was a public debate about the plight of people who had got into financial trouble and as a result had difficulty gaining access to banking services. The GBIC recommendation says that, unless there are good reasons not to do so in individual cases, banks should make a current account available to any person on request, allowing them to at least receive credit items, make cash deposits and withdrawals, and transfer funds. Entries 55
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BANKS AND CONSUMERS The comprehensi
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Page 65 and 66: BANKENVERBAND − At European level
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Banks and Consumers

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