Call to consumers to ask banks to convert their bank accounts into a payment account with basic features, so that they can take advantage of the cap on charges limited to €36 per year, the Finance Minister and the Governor of the Central Bank, adding that under the law there is no room for intervention in other types of accounts.
The call by Constantine Petridis and Constantine Herodotus came after a rain of criticism from members of the Parliamentary Committee on Commerce, which discussed the issue of increased bank charges. The debate will continue next Tuesday.
Committee chairman Kyriakos Hatzigiannis called on banks to freeze the increases "until a civilised dialogue is exhausted", adding that "they cannot continue this cannibalism with no elements of respect".
He noted that the focus of the debate on the basic payments account is distracting from the fees imposed on other household and business accounts. "This is not an approach, this is a misdirection," he added."
In his remarks, the Minister of Finance said that the decree issued in November 2020 set a cap on bank fees of €36 per year on the Basic Characteristics Payment Account (KPI) per consumer.
He explained that under the decree there is no limitation of transactions for most of the services, such as opening, operating and closing an account and depositing funds, as well as a minimum number of transactions, amounting to 100 per year, for other payment services (direct debits, credit card payments, etc.).etc.) for services within the European Union and for amounts per transaction below €5,000, and zero charges for withdrawals from ATMs within the European Union, regardless of the bank.
"I urge all consumers, if they have not already done so, to contact their banking institutions in order to establish a basic account and they can have basic accounts with more than one bank. From then on, together with the CBC, we will ensure that this legislation is implemented," Petrides added, calling on banks to explain to people the issue of charges "because it creates an atmosphere of confusion, which is not in anyone's interest."
And the CBC Governor called on consumers to convert their accounts to LBBX so that they can take advantage of the €36 per year cap.
"Our fellow citizens should go to the banks and ask either to have this account opened or to have their current account converted to a basic payment account. If they do this and they can carry out all kinds of transactions they already do with a maximum total charge of €36 per year or €3 per month," he said, adding that this applies from 2020 and we just need all of us or those consumers who wish to do so to make sure they apply to the banks to open this account.
Speaking before the committee, Mr. Herodotus said that based on the legislation (the Comparability of Fees, Change of Payment Account and Access to Payment Accounts Act 2017), there is no obligation for banks to inform the CBC of the charges and there was no breach by the banks.
Responding to criticisms that the investigation conducted by the CBC on the matter was kept confidential, Herodotou said the European Banking Authority (EBA), which is conducting a pan-European investigation, also keeps the data confidential.
He noted that no other eurozone country interferes with banks' charges beyond the basic account on the basis of the European Payments Accounts Directive (PAD) and added that the study conducted by the CBC in 2019 focused on the PAD.
He said the CBC's study of charges in other countries showed charges ranging between €1.45 and €6.67 per month, with the cap in Cyprus set at €3 per month or €36 per year on the LPS. He said that in addition to the countries examined by the EBA, the CBC looked at data from Austria, Estonia, France, Lithuania, Lithuania, Slovakia and Slovenia.
He explained that the setting of the cap in Cyprus was done after looking at Cyprus' GDP per capita and selecting the median amount.
He noted that the LBS is for consumers and not businesses, saying that the law would need to be amended to cover legal entities.
Herodotou said that there have been a total of 414,431 applications for 420 basic accounts.345 customers (some have joint accounts), with only three applications rejected.
He also said that an audit is being carried out and covers the day the decree was issued, adding that previously one bank, which he did not name, exceeded the €36 charge, reaching €46 per year.
He noted that the two major banks had caps of €18 and €20 per year which were below the €36 cap.
Meanwhile, representatives of the two main banks (Bank of Cyprus and Hellenic) said they were unavailable to answer whether the charges could be frozen, saying such decisions were taken at board level.
In addition, Hellenic Bank's communications and public relations director, George Slavos, said the bank had sent two million letters since last November informing of the new charges that came into effect yesterday, stressing that the fees for LGBX have not changed, i.e. at €1.50 per month.
The main difference, he explained, related to the savings account maintenance fee of €5 a year, which becomes €20 a year after packaging various services that previously totalled around €17.
He noted, however, that maintaining an account comes at a cost due to supervisory requirements such as KYC (know your client) procedures and updating them.
"There are hundreds of thousands of accounts with balances below €200 or €300. These accounts may be unnecessary but there is a cost of maintaining them," he added.
He also said that customers can request online that their account be changed to a basic payment account, which he said is done at the click of a button.
AKEL MP Kostas Kostas spoke of "promiscuity, discouragement and arbitrariness" on the part of banks. He recalled the closure of shops in the countryside and the queues that form outside shops in cities as a result of the downsizing of the branch network, as well as the weapons available to banks to force people out of their homes. "It is not possible to remove people," he said.
In statements after the session, DIKO Parliamentary Representative Panicos Leonidou criticized the banks for exploiting "the dominant position they hold in the country's economy and ignoring all the institutions of the state, including the parliament, ignoring with their increases the socio-economic conditions prevailing in the midst of an economic crisis and pandemic."
ELAM MP Sotiris Ioannou said that the increase in charges at a time of hard times is unacceptable. "Today, depositors are facing the immoral and inhuman face of the banking system," he said."
On behalf of the EPP, Elias Mirianthous said for his part, he said banks that have been supported through the deposit haircut should be careful about how they impose charges. He also said that due to the charges several of our fellow citizens have been directed to major banks in the occupied territories where they open their accounts there.
Michael Yakoumis[/B], a member of the PPP - Democratic Forces Cooperation, described the increased bank charges as a "provocation and unacceptable action" and added that "if the banks have not understood it, until today the House of Representatives and the citizens put their backs to keep the banking system alive in order to keep the economy and the whole chain working".
On behalf of the Movement of Ecologists - Citizens' Co-operation, Stavros Papadouris said that apart from the basic payments account where there is a cap of €36 per year, banks "arbitrarily proceed, in some cases, to double or even triple their charges, with the result that once again the consumer pays."
Source: CNA
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