Banks cautious about public service role

Date: 10/10/1996

By Chris Johnstone

BANKS have given a guarded response to Consumer Affairs Commissioner Emma Bonino's proposal for tough new standards on some key services.

Bonino has floated the idea that some bank services, such as bank payment systems, could be classified as being of 'general interest' and therefore subject to specific public service obligations such as affordability and minimum quality.

The European Banking Federation said the issue was delicate and it was too early to comment on the suggestion, made by the Commissioner at a conference on public services, liberalisation and the consumer in Rome last weekend.

But a federation official pointed out that while minimum service demands for banks existed in some countries such as France, imposing them Europe-wide might create different interpretations and fresh distortions.

Bonino's idea will add to the ferment of debate across Europe about what demands should be made on (and what protection offered to consumers by) public and private companies performing key activities such as providing energy, water or communications services.

The forthright Italian Commissioner said the debate should be broadened to include banks because some of their services had become indispensable.

“You need a bank account, for example, to receive unemployment payments in Belgium,” she said, adding that banks were trying to expand fees for basic services and even, in some cases, charged for closing an account.

Bonino points out that while the single currency promises to make cross-border purchases easier by removing exchange transactions, bank fees for non-cash payment systems such as electronic purses, the traditional credit card and Eurocheques are likely to become more widespread.

But many of these new systems are not compatible. “These types of money are losing their universal character and are becoming paid-for services,” she said.

Dutch banks announced this week that they would start issuing bank smart cards to all their clients this month in a move which is likely to be followed in other European countries. The cards can be used to pay for goods, store loyalty points from airlines or shops, and to draw cash.

BEUC, the umbrella organisation for Europe's national consumer associations, welcomed Bonino's commitment to take action. “Consumers, especially the vulnerable, have considerable problems with access to financial services,” said a spokeswoman.

She warned, however, that a general interest designation might not be the best tool to tackle the problem, saying: “In such a complex sector, we are not quite sure how it would operate.”

The debate about public service is heating up in Europe as many traditional state-owned utilities face up to Commission pressure to open up their markets and national pressure to slim down and become more efficient and accountable.

France and Belgium are pressing for a clause to be put into the revised Maastricht Treaty at the current Intergovernmental Conference which would define public services and offer them more protection.

But Competition Commissioner Karel van Miert warned that such a clause could be used to stall fresh progress towards opening the market in sectors such as telecommunications and energy.