14 December 2022
The European Banking Authority (EBA) published today a thematic review on the transparency and level of fees and charges levied by financial institutions (FIs) on the retail banking products in the EU. Overall, the review finds that fees and charges vary greatly in terms of level and type not only across the European Union (EU) market, but also across FIs within the same jurisdiction. Furthermore, the variety of types for fees and charges cause different levels of detriment to consumers, and, with the exception of payment accounts, fees and charges are difficult to compare between providers.
More specifically, the review finds that national legal frameworks are mostly subject to the general principle of freedom of contract. Despite the improvements in consumer protection brought about by several EU sectoral directives introduced in the past decade to regulate the banking retail products, market practices for fees and charges are causing significant detriment to consumers.
With the exception of payment accounts, the low level of harmonisation and standardization of fees within EU Member States might cause detriment to consumers when comparing effectively costs of products and services offered by financial institutions.
The EBA is mandated under Article 9 of its Founding Regulation to, inter alia, collect, analyse, and report on consumer trends, including the development of costs and charges of retail financial services and products in Member States. To that end, the EBA publishes a biennial Consumer Trends Report (CTR), several recent editions of which have identified the level and transparency of fees and charges as one of the key issues that cause significant detriment to consumers in the EU.
In order to gauge a better understanding of the market practices applied by FIs in respect of fees and charges, the EBA has decided to use for the first time one of the new powers conferred in 2020 under Article 9(1) and carried out a thematic review on the level and transparency of fees and charges levied by financial institutions on the retail banking products under the Authority’s consumer protection’s remit.
The review covered mortgage credit, consumer credit, deposits, payment accounts, payment services and electronic money services and was based on input received from national competent authorities, a sample of EU and national consumer associations and a sample of 140 financial institutions.