Europe’s banks frequently hide key information from potential account holders and hit them with unexpected fees, the European Union’s executive said on 22 September as it called for more transparency in the consumer banking market.
“Retail bankers are letting consumers down...basic consumer principles are being violated, with problems from complex pricing to hidden charges and information that is unclear and incomplete,” EU Consumer Com­missioner Meglena Kuneva said as she published a commission study of EU-wide banking practices.
Because of that lack of reliable information, only 9 per cent of account holders changed their bank last year, compared with 25 per cent who changed their car insurer, the study said, cited by Deutsche Presse-Agentur (dpa). EU officials say that that is a clear sign that the bloc must work harder to break down national barriers to EU-wide banking. “The Commission is determined to combat these problems. That means imposing transparency with understandable and comparable information and setting the ground rules for the conduct of business,” EU Internal Markets Commissioner Charlie McCreevy said.
The study analyzed the costs of opening a bank account and carrying out basic transactions in 224 banks covering 81 per cent of the retail market across the EU’s 27 member states. These costs vary widely. For example, it costs around €150 ($220) per year to run an account in France, but just €50 in neighboring Belgium, the study said. But consumers are often unaware that they could pay less elsewhere, because two-thirds of the banks studied gave such confusing online information on their fees that not even the EU’s experts could calculate how much basic operations would cost.
A third of the banks only published partial price information, and 10 per cent did not give information at all. EU consumers complain that important contract details are hidden in small print or obscured by technical language, the report said.
The report also highlighted the dangers posed by many banks’ policy of paying their staff bonuses for selling specific products, such as high-interest accounts and mortgages. In one recent survey quoted by Commission staff, 72 per cent of financial advisors said that the scale of the bonus attached to selling a product was more important than the question of whether the client needed it. However, Commission officials said that the Brussels-based body is not expected to propose new laws on bank transparency before it has seen how member states apply recently-approved laws on unfair commercial practices and account switching.