05 June 2007

Commission consultation on Report on Customer Mobility

The Commission started a consultation on the report of the Expert Group on Customer Mobility in relation to Bank Accounts. The Group identified four main obstacles to switching bank accounts, namely information asymmetry and non-transparency of prices, administrative burden, bundling and tying and closing charges.

The Expert Group was asked to cover three scenarios of customer mobility, i.e. national switching; cross-border switching; and cross-border opening.

The Group members' views diverged on most issues. While consumer experts consider customer mobility in relation to bank accounts as a problem, banking industry experts do not consider that it represents an actual problem. Both groups of experts base their view on a number of available reports, studies and surveys.

This final report of the Group summarises its discussions and presents the recommendations of the experts participating in the Group. Where possible, the report reflects unanimous views and, where necessary, the various positions expressed. The recommendations have been made on the basis that appropriate impact assessments are completed before any implementation of the recommendations can be considered.

The Group made some 37 recommendations to address all the obstacles identified.

Internal Market and Services Commissioner Charlie McCreevy said: 'Customer mobility is a key factor in boosting competition in retail financial services markets. The Commission considers the Group's report as a very important contribution in the preparation of its own policy decisions in the area.'

This report will assist the Commission in shaping its policy decisions in the area of customer mobility in relation to bank accounts. Comments should also address the impact of the Group's recommendations and suggest any other ways to improve customer mobility in relation to bank accounts. The Commission will then evaluate what actions should be taken to improve customer mobility in relation to bank accounts.

Deadline for consultation on the expert group report is 1 September 2007

Points for discussion::
a) Future developments in payments market
Consumer experts consider that there is still a large degree of uncertainty as regards the implementation of the PSD and the launch of SEPA products.
Banking industry experts argue that the PSD will remove some obstacles to customer mobility.

b) Switching versus multi-banking
Some banking industry experts see multi-banking rather than switching as the main form of mobility and an alternative to switching.
According to consumer experts, multi-banking has limited impact on competition and is not a substitute for switching.

c) Consumer behaviour
Banking industry experts consider that there is hardly one switching or multi-banking determinant in Europe and thus it may be difficult to implement a uniform solution. They also point out that a number of sources indicate that consumer demand in some Member States' banking market is very much domestically oriented.
According to consumer experts, consumer satisfaction has to be considered with caution as it depends on the level of their expectations. They also argue that limited consumer demand for cross-border services is, at least partly, due to a lack of crossborder competition between banks but also due to obstacles to switching, including lack of transparency and comparability of offers, compounded with a lack of consumers' confidence in foreign providers.

d) Bank strategies
The Group's banking industry experts consider it important to analyse bank expansion strategies since some scenarios of customer mobility may be more relevant than others, depending on the banks' expansion strategies and market orientations.
According to consumer experts, bank strategies as such are not relevant to alleviating demand side obstacles to customer mobility, such as the lack of transparent and comparable information or closing fees.

Press release
Report

© Graham Bishop