ZKA: European principles for account switching a viable compromise

01 December 2008 - Leading German banking associations, which together make up the Zentraler Kreditausschuss (ZKA), welcome the agreement on common European principles for account switching reached after intense negotiations between the European Banking Industry Committee (EBIC) and the European Commission and consider it a viable compromise. Nevertheless, the ZKA points out that the banking industry in Germany has already established very high market standards so that little will change for the customers of German banks. Financial institutions in Germany have long offered a comprehensive switching service to consumers holding retail current accounts.

The aim of the European agreement is to facilitate switching bank accounts within a member state. Among other things, the principles provide for banks to supply their customers with clear and complete information about the steps involved in switching accounts, the length of the process and any costs which may be involved. In addition, the banks should help to ensure that customers wishing to move their account are able to do so as simply and smoothly as possible.

Practices which for the most part are already widespread and well established in Germany are recommended for adoption throughout the European internal market. For many years, German banks have offered customers who open an account extensive support in the switching process – by closing the account at their old bank and arranging for the transfer of any credit balance, for instance, or providing checklists and advice. The principles now also envisage at European level that, along the lines of the existing legal position in Germany, banks will not be permitted to charge clients for closing an account.

The ZKA will encourage implementation by banks in Germany on the basis of the common European principles.