EU bank law would ban direct debit fees from 2012
LONDON: Bank charges on direct debit transactions would be banned from 2012 under a draft European law that targets France, Italy and Spain as part of efforts to cut the cost of paying bills for consumers and businesses.
EU Internal Market Commissioner Michel Barnier unveiled a draft law on Thursday to set deadlines for migrating 27 national payments systems to a single euro payments area (SEPA).
Fixing a date ratchets up pressure on banks to update their systems and speed up the move to SEPA that began in 2008.
The regulation is expected to be approved by EU states and the European Parliament into law, though minor changes are possible.
"The proposal adopted today fixes end-dates to make this pan-European system a reality, hopefully as early as 2012," Barnier said.
Under the SEPA system, a consumer or business with one euro-denominated bank account would be able to make credit transfers and direct debits in euros domestically or to any other EU country.
The draft measure proposes banning interchange fees for national and cross-border direct debits after the end of October 2012. Banking systems in Spain, France, Sweden, Belgium, Portugal and Italy oblige a payee, such as a utility company, to pay the bank of the consumer or business a hidden fee for direct debit transactions. "As they are agreed collectively between banks and have an impact on prices, these multilateral interchange fees raise concerns about their effect on competition," the European Commission said in a memo. - PB News