EU gives banks deadline for account switch plans

By Huw Jones
BRUSSELS, July 15 (Reuters) – Banks in the European Union have only a few months to come up with "credible" plans to allow consumers to switch accounts in their home country quickly and for free, otherwise lenders will face regulation, the bloc's top financial regulator said on Tuesday.
European Union Internal Market Commissioner Charlie McCreevy said banking associations were having "considerable difficulty" in meeting his request to come forward with a voluntary industry code of conduct on switching accounts.
"If I am not satisfied with what they are going to do, then I will have to go down the legislative route," McCreevy told reporters.
Banks in some countries were already operating the kind of system he wanted to see in place, he said.
"I implore the banking industry to agree a worthwhile code of conduct… I don't think it's rocket science. We have to make a decision later this year," McCreevy said.
EU officials have already drafted a regulation on account switching that could be proposed rapidly.
A copy obtained by Reuters last month showed it would allow customers to switch to another bank in the same member state for free and with minimum fuss. A voluntary code drafted by banks forsees a longer time for switching, the option of a fee and more paperwork for the customer.
The EU's 27 states and the European Parliament would have the final say on any regulation.
The accounts shake-up is part of a wider reform of the EU's single market and is seen as another example of Brussels' drive to make institutions and businesses more consumer-friendly.
INVESTOR CHOICE
McCreevy said he will also propose changes by the year end to EU rules overseeing how 10 trillion euros ($15,950 billion) of retail financial products are sold to the bloc's 490 million citizens.
He spelt out key principles the changes will be based on so that investors to have a wider and more competitive choice:
— they should have clear, accurate information for investors, outlining charges, risks and rewards;
— too much information can be unhelpful and there must be no overly technical, lengthy disclosures;
— the investor must have confidence that the distributor of the product is offering relevant products with advice driven by the needs of the investor;
— if must be clear if the selling process is driven by commission;
— there must be no misleading picture of risks and rewards and no ambiguity about which entity is answerable to the market supervisor;
"It's already clear the status quo can be improved upon. We have to raise the bar in terms of product disclosure requirements," McCreevy said.