WRITTEN QUESTION E-0532/00

by Raffaele Costa (PPE-DE) to the Commission

(28 February 2000)

Subject: Conditions imposed by certain Italian credit institutions on its own current account-holders

What consumer protection rules exist in relation to bank deposits?

Can banks always do as they wish, within the bounds of the laws to prevent usury, or does the European Union consider that they are obliged to comply with specific rules?

Is the Commission aware that, in Italy, certain credit institutions have set borrowing rates of 13 % for their customers while paying only 0,1 % (or even less) on accounts that are in credit?

Answer given by Mr Bolkestein on behalf of the Commission

(12 April 2000)

Under Article 47(2) of the EC Treaty (formerly Article 57(2)), there are various Community directives which coordinate and, where necessary, harmonise the provisions laid down by law, regulation or administrative action in the Member States to facilitate access to credit activities and their exercise within the single market.

In this connection, the European Parliament and the Council adopted, on 30 May 1994, Directive 94/19/EEC(1) on deposit-guarantee schemes, which ensures a harmonized minimum level of deposit protection. From 1 January 2000, the aggregate deposits of each depositor must be covered up to at least EUR 20 000.

Moreover, in its communication Implementing the framework for financial markets: action plan(2), adopted on 26 May 1999, which was sent on the same date to the European Parliament and the Council, and was confirmed by the Cologne European Council, the Commission pointed out that cross-frontier retail financial trading would only flourish if consumers had confidence in the integrity of the service being provided and the selling methods used by suppliers, the credentials of the supplier and the availability and efficacy of redress procedures in the event of a dispute. For this reason, the communication stresses that action at EU level for retail markets and for the protection of consumers remains a high priority. The communication lists a series of areas for action which the Commission has identified to give consumers the tools (information) and guarantees (clearly established rights and effective redress procedures) they need to participate fully and actively in the single financial services market: identifying the consumer protection rules which are not harmonised and which should not be maintained, to reduce obstacles to the cross-border provision of services; promoting the introduction of effective mechanisms to overcome the flaws in the single retail financial services market due to differences in private law; creating the legal conditions necessary for pan-European use of new distribution routes and new distance-selling technologies; encouraging the introduction of safe and cheap methods of payment which will allow individuals to make cross-border payments without having to pay exorbitant fees.

However, the Commission feels that it is neither possible nor appropriate to intervene as regards the interest rates offered by credit institutions. As the Honourable Member is aware, under Article 4 (formerly Article 3a) of the EC Treaty, the Community's economic policy is based on the single market and is conducted in accordance with the principle of an open market economy with free competition. It is respect for this principle which ensures the best allocation of economic resources. Within this context, it is for each credit institution, while observing the rules on competition, to define its own commercial policy according to its perception of market risks. As it pointed out in its reply to Written Question E-2738/99 by Mr Zappala and Mr Tajani(3), the Commission feels that, quite apart from being legally questionable, public intervention designed to impose restrictions on the financial market would be an obstacle to the free movement of financial services. It would prevent consumers from taking full advantage of the benefits of the single market as regards increased choice and competitive conditions and would, therefore, be harmful to both firms and consumers, with a negative impact on development and employment.

Regarding European competition rules, Article 81 (formerly Article 85) of the EC Treaty prohibits any anti-competitive agreements between firms, particularly as regards pricing, and Article 82 (formerly Article 86) prohibits any abuse by one or more undertakings of a dominant position within the common market. These articles only apply, however, to restrictions on competition which significantly affect trade between Member States. If this is not the case, the national competition authorities are responsible for applying national competition law.

The Honourable Member is probably aware that the Bank of Italy, as the Italian competition authority for the banking sector, has recently adopted a decision admonishing Italian banks for anti-competitive agreements, particularly as regards credit and debit interest rates, concluded by a group known as the friends of the bank and imposing fines. Since the Bank of Italy has made investigations which led to this

decision, and it has yet to be established whether the matter has had a significant effect on trade between Member States, the Commission did not consider it appropriate to intervene in the case in question.

(1) OJ L 135, 31.5.1994.

(2) COM(1999) 232 final.

(3) OJ C 280 E, 3.10.2000, p. 120.