Payment Accounts Act
Basic payment accounts, two years on: BaFin survey data gives the facts and figures, while the question of a “reasonable fee” is still under debate. The last part of the Payment Accounts Act enters into force at the end of October.
Note:Tips on basic payment accounts
BaFin has published general information for consumers on basic payment accounts, the legal grounds why applications for such accounts can be refused, and the legal remedies available in such cases on its website.
All consumers in Germany have a right to a basic payment account and to assistance from banks when switching accounts. These principles have been set out for roughly two years in the Payment Accounts Act (Zahlungskontengesetz - ZKG), which transposes the European Payment Accounts Directive into German law.
By giving all consumers the right to a basic payment account – i.e. a payment account with basic features – lawmakers aim to enable them to participate fully in economic and social life. Under the ZKG, all banks offering payment accounts for consumers must also offer basic payment accounts (see info box “Tips on basic payment accounts”).
Banks are complying with their obligations
BaFin’s recent survey as of 30 June 2018 reveals that a good 1,300 credit institutions in Germany offer basic payment accounts. Consumers submitted more than 566,000 applications to open a basic payment account between the date on which the new rules came into force (18 June 2016) and 30 June 2018. Institutions refused just under 15,000 such applications. Approximately 540,500 basic payment accounts were opened. As at 30 June 2018, there were just under 497,000 basic payment accounts in existence (see info box “Basic payment accounts – two years on“).
If a bank refuses to open a basic payment account, the consumer concerned can apply to BaFin for administrative proceedings to be opened (documents only available in German). BaFin will then examine whether the bank was entitled to refuse to open the basic payment account and will order the bank to open it if no legal grounds for the refusal exist.
Roughly 580 consumers submitted such applications to BaFin between the date on which the rules came into force (18 June 2016) and 30 June 2018. BaFin was able to help a good 200 of them effectively and unbureaucratically to obtain a basic payment account. In these cases, the institutions had rejected the consumers’ applications without a recognised reason. In 22 cases, BaFin formally ordered the banks concerned to open a basic payment account; in the other cases the banks had already reacted to the consultation with BaFin and had revised their decision. In addition, BaFin received roughly 320 consumer complaints relating to basic payment accounts (see info box “Basic payment accounts – two years on”).
A look at the number of applications to open a basic payment account, the number of refusals and the comparatively small number of complaints and applications to open administrative proceedings received by BaFin shows that the institutions are generally complying well with their obligations under the ZKG (see the December 2017 edition of the BaFinJournal - only available in German).
Assistance in switching accounts
Payment service providers are obliged to facilitate account switching by customers at the latters’ request by transferring standing orders and other services to another provider in an uncomplicated manner and by sharing information on this between them. Consumers took advantage of these rules 705,000 times between the date on which these rules came into force (19 September 2016) and 30 June 2018. In the same period, consumers submitted a good 120 complaints to BaFin relating to statutory assistance for switching accounts (see info box “Initial figures on account switching assistance”).
At a glance:Initial figures on account switching assistance
- Service used 705,000 times
- 120 complaints submitted to BaFin
The relatively small number of complaints compared to the total number of accounts switched shows that the account switching assistance provided generally works. However, the complaints also show that information sharing between the institutions is not always perfect. BaFin investigates any complaints made and works to ensure that any shortcomings identified are remedied. In one case, it imposed an administrative fine in 2017 as a result of violations committed in this area.
Reasonable fees for basic payment accounts
The objective of providing all consumers with access to payment accounts presupposes that the fees for basic payment accounts are capped at a reasonable level. Fee structures that result in people on low incomes not being able to obtain basic payment accounts do not qualify as “reasonable” within the meaning of the statutory provisions.
The question of what concrete effect the banks’ obligation to agree reasonable fees for basic payment accounts needs to have on fee models and amounts (see the April 2017 edition of the BaFinJournal (only available in German)) has been discussed at length ever since the legislative process for the ZKG and will continue to be highly important in practice going forward.
The fees charged for basic payment accounts vary widely. While some banks offer free or low-cost basic payment accounts, many banks have fee models that affected customers in particular regard as burdensomely high. The lawmakers did not specify any caps on the cost of basic payment accounts. Under the ZKG, two key criteria must be taken into account when assessing reasonableness: standard market fees and user behaviour.
Generally speaking, reviewing reasonableness in individual cases is a civil law issue and hence the preserve of the competent civil courts. The rulings issued to date and the cases currently pending give an initial indication of what the definition to be adopted is (see info box “Civil proceedings on what constitutes a reasonable fee”). Banks that do not take the statutory requirements for determining a reasonable fee sufficiently into account are failing in their duty under the ZKG – not only in the interests of individual customers but generally, too. If BaFin decides that pricing is unreasonable, it can instruct the bank concerned as part of its supervisory activities to adapt its fee model for basic payment accounts to meet the requirements of the ZKG.
Standard market fees
In other words, under the ZKG fee structures must be in line with market conditions, among other things. The decisive factor here are the prices for services comparable to those provided for basic payment accounts, and not just the fees for basic payment accounts themselves. Therefore, when assessing whether fees qualify as standard market fees, the fee models used for general payment accounts must also be taken into account. This requirement is derived from the wording of the ZKG, which refers to “the fee for the […] services covered” and can be seen even more clearly from Article 18(3) of the European Payment Accounts Directive.
Concrete user behaviour
With respect to user behaviour, concrete (i.e. individual) user behaviour also has to be taken into account when structuring fees. Merely referring to the average user behaviour exhibited by a sample customer is not sufficient in this context. Institutions are free either to take user behaviour into account by providing different offerings for different user types, as is commonly the case with the other forms of payment accounts, or to take different sorts of user behaviour into account in their fee model for their basic payment account. For example, charging lower fees for low levels of usage or in return for waiving certain services could be conceivable under this option. This applies in particular to institutions that enable customers for their other payment account offerings to influence the size of the fees paid by selecting an account model that matches their user behaviour, e.g. an online account.
Part 2 of the ZKG will enhance transparency
The last part of the ZKG will come into force on 31 October 2018. This regulates the transparency and comparability of payment account fees. In BaFin’s opinion, the new rules will significantly enhance consumers’ ability to take informed decisions on the basis of a reasonable level of effort.
As from the end of October, payment service providers have to supply consumers with a standardised fee information document that is designed in a way that is clear and easy to read, and that is provided in an easily accessible manner (see the October 2017 edition of the BaFinJournal (only available in German)). The fee information document provides general information on the costs associated with a payment account. It must be made available in good time before the contract is entered into in order to permit consumers to compare costs on the market and to find the provider that offers them the best value. The fee information document shall be made available free of charge, in Textform (written form in accordance with the provisions of section 126b of the German Civil Code (Bürgerliches Gesetzbuch – BGB)) and in an easily accessible manner at any time on the providers’ premises and on their websites.
In addition to the fee information document, the statement of fees provides information on all fees actually incurred by the customer in question while a contract is running. It must be provided to the customer at least annually and at the end of the contract. BaFin has published templates for these documents. These are based on the European presentation format set out in implementing regulations.
They are designed to enable consumers to quickly understand which providers are offering what services at what price. Up to now it has often been difficult and time-consuming for them to compare the actual costs of payment accounts because payment service providers use different product descriptions and fee structures. Additionally, the information is frequently difficult to find.
Part 2 of the ZKG also sets out rules governing certified comparison websites. The European Payment Accounts Directive requires all Member States to ensure by 31 October 2018 that consumers have free access to at least one comparison website for payment accounts. The ZKG specifies that operators of websites comparing payment account offerings shall in future be able to apply for a certificate plus logo confirming that the comparison website complies with the statutory requirements for such websites. To this end, the Federal Ministry of Finance (Bundesfinanzministerium – BMF) passed the Comparison Websites Regulation (Vergleichswebsitesverordnung) in July 2018. This regulation specifies in more detail the ZKG’s requirements in relation to website operators and their products, payment account service providers and the certification by specially designated bodies of the comparison websites.1
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