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BackThe European Commission is planning a legislative proposal, which should guarantee the right to a Basic account for all EU citizens. According to an information of the European Commission, currently about 30 million people do not have access to a personal account. This has serious consequences for the people affected, who for example face problems in the labour market, because they cannot specify an account into which their wages can be paid. Apart from that, they have to rely on cash payments instead of being able to use modern means of payment. The European Parliament this week has discussed the problems of people without access to bank accounts in a workshop.
The workshop, which was organised by the rapporteur in charge, MEP Jürgen Klute of the German Left, had the objective to provide an overview over the problems caused by being excluded from account services and over possible solutions at European level. At the start of the workshop, a number of experts informed the MEPs of problems of the people concerned caused by the lack of access to a personal account. According to this information, negative effects include among others
•Invoices have to be paid in cash, which means additional costs in form of payment slip charges.
•Modern means of payment cannot or only to a certain degree be used, for example paying at the supermarket checkout with debit card.
•If the people concerned need money at short notice, the lack of an account and an overdraft might result in the fact that people turn to the “grey market”, i.e. money lenders, who demand high interest rates and charges.
•It is more difficult to find a job if one cannot provide an employer with account details.
However, some issues had still to be clarified from a legal point of view, declared Professor Peter Mülbert of Mainz University. One had to make sure that the right to a basic account would not be misused for fraudulent transactions. For example, one had to create a central reporting office for all accounts to ensure that there was only one basic account for each person. This account had to be based on credit; however, a solution had to be found that account holders would not overdraw their basic account by offline payments. And there was the question of what would happen if the card was lost or stolen – who would pay the damage? The issue of the attachment of bank accounts had also to be discussed. Holders of basic accounts had to be left with enough money to cover their living costs.
The second part of the event was concerned with demands on the basic account:
•It had to be a simple and standardised product
•Withdrawals and bank transfers had to be possible; the same would apply to setting up direct debits and standing orders
•A small overdraft should be granted
•The price/ performance ratio had to be fair
•Important products, such as old age provision should be accessible
•All banks should be obliged to offer basic accounts
Manfred Westphal of the Federation of German Consumer Organisations, Berlin said that in Germany alone there would be between three to five hundred thousand people without access to a bank account. Olivier Jérusalmy of the European Financial Inclusion Network pointed out that a self-imposed commitment by the banks to grant a basic account would not be adequate. However, some countries, such as Belgium, France, Sweden, Denmark and Finland would already regard the right to an account as obligatory. 14 Member States would not have a respective framework.
The Commission informed that from its point of view, every person should have the right to an account; however this was not the case for 7 % of the adult population. The proposal should provide a framework; the formulation itself, however, should be with the Member States. However, granting an overdraft would be a red line for the Commission, which it was not prepared to cross. One had to take a closer look at the technical details of a basic account. The European Commission plans to publish a legislative proposal on this subject by the end of May/beginning of June.
•Invoices have to be paid in cash, which means additional costs in form of payment slip charges.
•Modern means of payment cannot or only to a certain degree be used, for example paying at the supermarket checkout with debit card.
•If the people concerned need money at short notice, the lack of an account and an overdraft might result in the fact that people turn to the “grey market”, i.e. money lenders, who demand high interest rates and charges.
•It is more difficult to find a job if one cannot provide an employer with account details.
However, some issues had still to be clarified from a legal point of view, declared Professor Peter Mülbert of Mainz University. One had to make sure that the right to a basic account would not be misused for fraudulent transactions. For example, one had to create a central reporting office for all accounts to ensure that there was only one basic account for each person. This account had to be based on credit; however, a solution had to be found that account holders would not overdraw their basic account by offline payments. And there was the question of what would happen if the card was lost or stolen – who would pay the damage? The issue of the attachment of bank accounts had also to be discussed. Holders of basic accounts had to be left with enough money to cover their living costs.
The second part of the event was concerned with demands on the basic account:
•It had to be a simple and standardised product
•Withdrawals and bank transfers had to be possible; the same would apply to setting up direct debits and standing orders
•A small overdraft should be granted
•The price/ performance ratio had to be fair
•Important products, such as old age provision should be accessible
•All banks should be obliged to offer basic accounts
Manfred Westphal of the Federation of German Consumer Organisations, Berlin said that in Germany alone there would be between three to five hundred thousand people without access to a bank account. Olivier Jérusalmy of the European Financial Inclusion Network pointed out that a self-imposed commitment by the banks to grant a basic account would not be adequate. However, some countries, such as Belgium, France, Sweden, Denmark and Finland would already regard the right to an account as obligatory. 14 Member States would not have a respective framework.
The Commission informed that from its point of view, every person should have the right to an account; however this was not the case for 7 % of the adult population. The proposal should provide a framework; the formulation itself, however, should be with the Member States. However, granting an overdraft would be a red line for the Commission, which it was not prepared to cross. One had to take a closer look at the technical details of a basic account. The European Commission plans to publish a legislative proposal on this subject by the end of May/beginning of June.