The European Union Commission is trying with all its might to force banks to lower their charges. Competition Commissioner Mario Monti and Consumer Protection Commissioner David Byrne have been looking at the banks' policy on service charges from two sides and are able to show initial successes.
The credit institutions have gone on the defensive in the oft-criticized high fees for currency exchange transactions within the euro zone and to the high charges for transfers abroad. The European banks are slowly but surely eating humble pie in front of Commissioner Monti, especially on the issue of exchange fees. Since the commission instituted proceedings last year against about 150 banks in seven EU states, one bank after the other has been making concessions.
Two banks have announced that they will change their policy on charges in such a way that the commission will drop the proceedings against them. Another bank that will forego exchange fees in autumn this year is Germany's WestLB, which is at loggerheads with the commission on several points.
Commissioner Monti's competition watchdogs are observing with silent satisfaction how the banks are backing down bit by bit from charging fees for exchanging euro-zone currencies. The frequency of back-pedalling in recent weeks seems to confirm the commission's suspicions of fixed price arrangements.
But, the charges for exchanging currency in the euro zone are not the only issue for which the commission is chiding the banks. The fees for transferring money abroad are a constant bone of contention in Brussels. Although the European banks announced recently that transfers between EU states would become cheaper for private clients in future, the commission does not quite trust the announced agreement on interbank charges.
If necessary, the commission wants to force the banks to lower charges for transfers abroad by introducing its own regulations.
Consumer Protection Comissioner David Byrne recently urged that there has to be harmonized banking charges in the EU at latest when euro cash comes into circulation at the beginning of 2002. Therefore, he is expecting a proposal by this autumn.
Both the commission and the European Parliament had complained on several occasions that the charges for transfers abroad are excessive. Spot-checks in 1999 showed that on average more than 15 euro (US$12.9) was being charged to transfer 100 euro (US$85.90). Some banks even took more than 30 euro (US$25). A survey by the European Central Bank showed that foreign transfers were up to 100 times as expensive as domestic ones.
The commission no longer intends to accept this kind of rip-off. Byrne is demanding that if money is being sent abroad, then the fees must be adjusted to the clearly lower local charges.
At present, the fee for domestic transfers is just above one euro. The major European banking associations are now striving for a maximum rate of about three euro. A corresponding offer is now supposed to be presented to the EU Commission.
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