04 September 2015

Banks under pressure on account switching

01 December 2006  |  12391 views  |  0 Sepa

Customers will not gain the full benefits of competition in a Single Euro Payments Area (Sepa) unless banks make it easier to switch accounts between institutions, says a group of European regulators which are pushing for a greater say in the preparations for the new payments framework.

According to a Financial Times report, a group of European competition regulators is calling for "account number portability" following the introduction of Sepa in 2008. This would require banks to allow customers to change banks but keep their account number so it is easier to transfer services tied to accounts such as direct debits and card payments.

Italian competition regulator Alberto Heimler, who also heads competition bodies at the European Commission and the Organisation for Economic Co-operation and Development, told the FT that regulators were concerned by how infrequently customers switched accounts.

Heimler claims that costs of switching accounts allow banks to "maintain high rates of customer retention and high market power", adding that customers currently have a higher probability of getting divorce than changing bank accounts.

Although it is not one of the measures to be introduced in the Sepa framework, Heimler says competition regulators from countries including the UK, the Netherlands, Sweden and Ireland wanted to start a debate on account number portability, as well as switching costs, and that a common position could be agreed by the end of Q1 2007.

But he warns that additions to the Sepa framework at a later stage would be expensive and so banks "should be forced to develop now an account code system that would minimise the investment needed at a later stage".

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board, sign up now.

Related blogs

Create a blog about this story (membership required)

Related stories

20 November, 2006
11 October, 2006
09 October, 2006
27 September, 2006
21 September, 2006
15 September, 2006
13 September, 2006
06 June, 2006
03 May, 2006
24 March, 2006
17 February, 2006
15 February, 2006
10 February, 2006
07 October, 2005
08 September, 2005

Related company news


Top topics

Most viewed Most shared
Third of Brits expect day-to-day mobile pa...
8305 views comments | 38 tweets | 15 linkedin
Payments UK sets out vision for 'world cla...
6867 views comments | 17 tweets | 10 linkedin
Swedish mPOS firm iZettle raises EUR60m fo...
6190 views comments | 13 tweets | 8 linkedin
HSBC glitch leaves thousands of customers...
6109 views comments | 13 tweets | 7 linkedin
UK boosts contactless limit to £30
5630 views comments | 31 tweets | 20 linkedin

Featured job

to $120K base, double OTE, benefits
New York City, NY or Boston, MA (USA)

Find your next job