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Is this the end of free banking in the UK?

New EU rules aim to make it easier to compare fees

EU proposals threaten future of free banking in UK

EU proposals aimed at making it easier for consumers to compare fees on their bank accounts could lead to British banks charging for services that are currently free, according to some reports.  

The European Commission has announced draft plans to make it easier for customer to compare the fees charged by banks. 

The proposals would mean all current account providers must provide customers with a ‘fee information document’, which would list the most common service provided and the fees charged for them. 

Some analysts have raised concerns that doing this on a Europe-wide basis could lead to UK banks charging for services like cash machine withdrawals in order to avoid being undercut on others. Customers in the UK already pay for access to current accounts through forgone interest and fees for overseas card use, as well as through overdraft fees. 

New banking rules: what else is the European Commission proposing?

In addition to measures to make it easier to compare fees, the European Commission will tackle the issue of making switching bank account easier. 

In order to do so, it plans to ensure that a customer who requests to switch bank account, making sure all direct debits and credit transfers go with it, are able to do so within 15 days. If the customer wants to switch from a bank in one European country to another, the transfer must happen within 30 days. Customers will also be protected from financial loss results from mistakes or delays in updating their payment account details. 

The proposed Directive plans to allow customers in Europe to open a bank account even when they are not a resident of that country. It also wants all consumers to be entitled to a bank account with basic features wherever they live in the EU and whatever their personal financial situation, for example those who are unemployed. 

Which?’s view on the proposals

Making it easier to compare fees 

We broadly welcome measures to increase fee transparency. However, we believe this legislation should not be an excuse for banks to introduce fees for bank accounts, particularly for current account and basic bank account customers. Additionally, we want to see further action taken against complicated and excessive bank charges.

Making it easier to switch bank account 

We welcome the introduction of switching services within EU member states to increase the rate of current account switching. However, we believe that the introduction of bank account portability would make switching even easier for customers.

We would like to see a recommendation of an independent feasibility study into portable account numbers, which looks at the potential costs of such a scheme with the potential benefits to consumers, business and governments. 

Increasing access to basic bank accounts 

We broadly welcome the measures to increase access to basic bank accounts, in particular that member states put in place measures to raise public awareness of the availability of these accounts, and that providers make this information available to consumers.

Finding the right bank account for you

If you’re not happy with your bank account then you might be better off elsewhere. Our guide to finding the right bank account answers the questions below and more:

  • How do you use your bank account? We help you find the best bank account if you’re in credit or the best bank account if you use your overdraft.
  • Do you want to manage your account online or in branch? Find out how to bank online safely.
  • Is customer service important for your bank account? We reveal the best banks for customer satisfaction.

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