EU report slams banks over opaque fees, bad advice
By Marcin Grajewski
BRUSSELS, Sept 22 (Reuters) – Many banks in the European Union confuse customers with opaque fees, unsuitable advice and difficult procedures, the EU’s executive arm said on Tuesday.
Presenting a report on retail banking in the 27-nation bloc, the European Commission said unless the banks changed their behaviour it would take up the issue with national governments to enforce EU rules on fair commercial practices.
“Retail bankers are letting consumers down. There is widespread evidence that basic consumer principles are being violated,” Consumer Protection Commissioner Meglena Kuneva said in a statement.
The report, which analysed 224 financial institutions covering some 80 percent of the market, showed many banks appeared to try to hide charges with complex fee structures that a lot of customers said they found difficult to understand.
Information was often given in legal and financial jargon, important details were hidden in small print and formats were too long without focusing on key features of the product.
For 66 percent of the banks surveyed, fees, as presented on the Internet or on paper, were so unclear that experts needed to contact the institutions for additional information.
Bankers selling financial products often provided bad information to customers.
“Bank salespeople often receive bonuses as incentives to sell certain products. So they are trying to convince people to buy those products, even if they are unsuitable for them,” said one official involved in preparing the report.
The report cited German data that said up to 80 percent of all long-term investment products were prematurely terminated because of inadequate advice.
The report was especially critical about banks in Austria, France, Italy and Spain, while those in Belgium, Denmark, the Netherlands and Portugal scored the best.
It showed wide differences in the cost of having a current account, ranging from 27 euros ($40) annually for average use in Bulgaria to 253 euros in Italy. In France, the figure is 154 euros, and across the border in Belgium, 58 euros.
The Commission hopes the situation will start improving in November, when a voluntary code of good practice takes effect.
Kuneva said the European Union’s executive body would also monitor, in light of the report, whether countries adhered to EU legislation on unfair commercial practices.
National authorities may be hauled to an EU court if they fail to remedy the situation.