90/109/EEC: Commission Recommendation of 14 February 1990 on the transparency of banking conditions relating to cross-border financial transactions
Date: 1990-02-14
Institutions: European Commission
Subjects: administrative transparency, financial institution, financial transaction, management accounting













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31990H0109

90/109/EEC: Commission Recommendation of 14 February 1990 on the transparency of banking conditions relating to cross-border financial transactions  


Official Journal L 067 , 15/03/1990 P. 0039 - 0043 





*****COMMISSION  RECOMMENDATION  of 14 February 1990  on the transparency of banking conditions relating to cross-border financial transactions  (90/109/EEC)  THE COMMISSION OF THE EUROPEAN COMMUNITIES,  Having regard to the Treaty establishing the European Economic Community, and in particular Article 155 thereof,  Whereas the removal of economic barriers within the Community and the progress achieved in the field of monetary and banking cooperation fostered by the directives adopted under the Single European Act should logically lead to an increase in purchases of goods and services in other Member States and to greater mobility for individuals, particularly workers, tourists and pensioners;  Whereas this free movement of individuals and products will increase the number of cross-border financial transactions and the number of operators carrying out such transactions;  Whereas the way in which international transfer systems operate is much more complex than the system of national transfers because one or more intermediary institutions are involved, because different clearing arrangements apply in countries not having the same currency and because an exchange transaction takes place;  Whereas, in view of this complexity, better-qualified staff and a wider range of checks are needed than in the case of national transfers; whereas this adds significantly to the cost of, and time needed for, cross-border financial transactions; whereas those undertaking such transactions should, therefore, be clearly informed in advance of the cost and time needed;  Whereas rules of conduct based on common principles of transparency and concerning the information to be supplied and the details to be indicated on the statement relating to the transfer of funds would be such as to encourage institutions undertaking cross-border financial transactions to estimate their costs more accurately and to rationalize as far as possible their methods of transfer;  Whereas, however, since customer information is linked, as regards the choice of means, to the commercial policy of banking institutions, it should not be subject to uniform and binding rules;  Whereas the introduction of reference periods is essential in order to make an assessment of the prices charged for cross-border transactions and to preserve the confidence of those effecting or receiving transfers;  Whereas certain national departments should specialize in dealing with complaints in connection with cross-border financial transactions which require special attention because institutions in more than one Member State are involved;  Whereas, although several Member States have binding legislation on the transparency of banking conditions, it does not appear expedient to ask those Member States to amend their legislation by inserting rules relating solely to cross-border transactions; whereas the same applies a fortiori to the Member States where legislation on transparency covers the entire services sector and not simply banking transactions;  Whereas there are also a number of Member States which wish to retain proven cooperation procedures in order to improve relations between financial institutions and users; Whereas a recommendation enabling the competent authorities to secure on a voluntary basis the cooperation of the institutions concerned is an appropriate instrument for bringing about a change of behaviour and devising new structures apt to reduce the cost of cross-border transfers under conditions of free competition,  HEREBY RECOMMENDS:  (i) that Member States ensure that institutions which undertake cross-border financial transactions within the meaning of this recommendation apply the principles set out in the Annex;  (ii) that Member States notify the Commission not later than 30 September 1990 of the names and addresses of the bodies referred to in paragraph 2 of the Sixth Principle set out in the Annex.  Done at Brussels, 14 February 1990.  For the Commission  Leon BRITTAN  Vice-President  ANNEX  PRINCIPLES GOVERNING THE TRANSPARENCY OF BANKING CONDITIONS RELATING TO CROSS-BORDER FINANCIAL TRANSACTIONS  GENERAL  The aim of the principles set out in this recommendation is to make more transparent the information supplied, and the invoicing rules to be observed by the institutions concerned in connection with cross-border financial transactions as defined below.  The principles apply to all categories of customer of the institutions concerned, without prejudice to the possibility of allowing certain customers to benefit from more favourable banking conditions by virtue, for example, of the size of the transaction or transactions involved.  'Institutions concerned', hereafter referred to as 'institutions', means all legal persons, and in particular credit institutions and postal services, providing facilities for effecting or facilitating cross-border transfers. For the purposes of this recommendation, branches of institutions are deemed to be 'institutions'.  'Cross-border financial transactions' means transfers as defined below where the institutions of the transferor and the transferee are situated in two different Member States.  'Transfer' means the complete movement of funds denominated in ecus or in a currency that is legal tender in a Member State from a transferor to a transferee, regardless of whether the latter holds an account with an institution situated in another Member State.  'Transfer order' means the written, oral or electronic instruction given to an institution to credit to an account or to keep available for a given person a sum of money or to arrange for that instruction to be executed by another institution.  'Transferor' means the person who issues the first transfer order.  'Transferee' means the final recipient who is to receive the funds in a Member State other than that in which the first transfer order was issued either by way of an operation crediting his account or by way of a notification enabling him to obtain payment of the funds.  FIRST PRINCIPLE  Each institution should bring to the attention of its customers easily understandable and readily available information concerniang cross-border financial transactions  This principle could be applied in one of the following ways:  - a notice or some other permanent form of information drawing attention to the cost of, and time needed for, all cross-border financial transactions and encouraging customers to seek further information,  - standardized information (in the form of a notice, booklet, brochure or some other appropriate means of providing information) specifying the amount or, where appropriate, percentage of commission fees and charges applied by the institution in respect of each transaction that may be invoiced either to the transferor or the transferee when a cross-border financial transaction is undertaken, as well as, if necessary, the provisions relating to the value dates,  - information of a more specific nature (in the form of a booklet, brochure or some other appropriate means of providing information) should also be given to the transferor, if he so requests, regarding the procedures applied by the institution in executing his orders, together with an estimate from intermediary banks of expected charges and time needed, having due regard to those various procedures.  SECOND PRINCIPLE  In the statement relating to a cross-border financial transaction, the institution should inform its customer in detail of the commission fees and charges it is invoicing and of the exchange rate it has applied  This principle could be applied in the following way:  The institution concerned could clearly specify in a statement or some other document sent or handed to its customer, regardless of whether he is the transferor or the transferee:  - the exchange rate applied in converting the amount of foreign currency,  - the amount of the commission fee or fees applied or invoiced by the institution,  - the list and amount of any taxes payable,  - the nature and amount of the charges payable by the customer,  - the nature and amount of any additional invoice. THIRD PRINCIPLE  1. Without prejudice to the possibility for the transferor to choose other ways of apportioning commission fees and charges, the transferor's institution should inform its customer when the latter gives his order:  - that the commission fees and charges it imposes for transmitting the order may either remain payable by the transferor or be invoiced to the transferee,  - that any commission fees and charges invoiced by the transferee's institution to its customer when it places the funds at his disposal may either remain payable by the latter or be invoiced to the transferor.  2. Where the transferor has specifically instructed his institution to ensure that the transferee is credited with the exact amount shown on the transfer order, it is recommended that the institution apply a method of transfer which will make it possible to achieve this result and that, before undertaking the transfer operation, it inform the transferor of the additional amount which will be invoiced to him. However, this amount will represent only a non-binding estimate for the institution except where it applies a flat-rate calculation.  This principle could be applied by making available to the transferor who wanted the transferee to be credited with an exact amount prior information based on a flat-rate calculation or an estimate that could take account of the average of the commission fees and charges applied by institutions in the country of the transferee where information permitting a more accurate calculation was not available. If the amount estimated were smaller than the amount of commission fees and charges actually payable, the difference could be invoiced only to be transferor.  FOURTH PRINCIPLE  1. In the absence of instructions to be contrary and except in cases of force majeure, each intermediary institution should deal with a transfer order within two working days of receipt of the funds specified in the order or should give notification of its refusal to execute the order or of any foreseeable delay to the institution issuing the order and, where different, to the transferor's institution.  2. The transferor should be able to obtain a refund of part of the costs of the transfer in the event of any delay in executing his order.  This principle could be applied in the following way:  On expiry of a period of two working days, the transferor's institution should pay the amount of the transfer order to the transferee's institution or to any intermediary institution unless the transferee's institution (or this intermediary institution) gives notification within two working days of receipt of the transfer order of its refusal to execute the order received.  Where it is not the transferee's institution and where it has not given notification of its refusal to execute an order, the recipient institution should, within that same period of two working days from receipt of the funds specified in the transfer order, issue to the transferee's institution or to another intermediary institution a new transfer order containing the instructions necessary for the transfer to proceed in the appropriate fashion.  FIFTH PRINCIPLE  1. The transferee's institution should fulfil its obligations arising from a transfer order not later than the working day following receipt of the funds specified in the order unless the said order stipulates a later date of execution.  2. If the transferee's institution is unable to execute the order within the time indicated in paragraph 1, it should, as soon as possible, inform the institution issuing the order and, where different, the transferor's institution of the reasons for its failure to execute the order or for the delay in execution.  SIXTH PRINCIPLE  1. Any institution participating in a cross-border financial transaction should be capable of dealing rapidly with complaints lodged by the transferor or the transferee in connection with the execution of the transaction or with the statement relating to it.  2. If no action is taken on a complaint or no answer received within three months, the complainants may refer the matter to one of the Member States' bodies competent to deal with complaints from users. The list and addresses of such national bodies should be available on request from any institution undertaking cross-border financial transactions. One way of applying this principle would be to entrust the task of dealing with complaints to bodies independent of the parties concerned and forming part of:  - the public sector (ministerial department),  - the central bank,  - a specialist body such as the ombudsman's office,  - a contact committee comprising bank representatives and users.