Anger over delays in probing bank charges in the euro zone

Date: 30/09/1999

By Renée Cordes

THE European Commission is being accused of dragging its feet in an investigation into complaints that banks are overcharging customers for changing money and transferring cash between banks in the 11-nation euro zone.

Officials are coming under mounting pressure to deliver a verdict on the allegations amid growing anger over the institution's failure to act, even though it has received around 800 complaints from customers since February.

Early this year, former Competition Commissioner Karel van Miert issued warnings to eight banks and dispatched a team to conduct dawn raids on premises in response to allegations that the banks had formed an illicit pact to maintain high charges.

The Commission insists that it is continuing to treat the issue as a priority, but says it is not yet ready to decide whether to launch formal proceedings against any financial institution. "We really have to tread carefully," said one official. "We are not really at that stage yet."

Officials claim it is extremely difficult to find hard evidence that banks are imposing excessive fees on customers, as most do not have formal written policies on charging for transfers.

But the delay was sharply criticised by speakers at a public hearing on the issue organised by the European Parliament's economic and monetary affairs committee last week.

Committee chairwoman Christa Randzio-Plath lambasted the Commission for its lack of progress. The German Social Democrat MEP said she received letters every week from citizens throughout Europe protesting over bank charges, and added: "After almost nine months, the advantages of the euro have not been developed for our citizens."

But representatives from the European Banking Federation, the European Savings Bank Group, ABN-Amro and KBC Bank, who took part in the hearing, told committee members that they had reduced charges substantially.

They also argued that the charges levied by banks for transferring money across borders not only included exchange-rate risks, where applicable, but also handling costs.

Under new EU banking laws which entered into force in all member states except Belgium in August, banks are barred from charging customers twice when they transfer funds from one account into another.

They are also obliged to provide customers with details of all charges and commission fees, unless there is a request for the costs to be picked up by the bank at the receiving end. In addition, the law provides for customers to receive compensation when their funds are not transferred within five days or are lost in transition.

The European Commission is being accused of dragging its feet in an investigation into complaints that banks are overcharging customers for changing money and transferring cash between banks in the 11-nation euro zone.