A GUIDING thread to help bank clients walk through the maze of bank fees: this is how the state portrays its latest proposed law directed at the banking sector. But banks say that instead of casting more light on their fees the state is about to intervene in the free market and is preparing the ground for price regulation.
If the draft legislation on consumer loans that the cabinet approved in mid January is passed by parliament, each bank operating in Slovakia will have to offer a so-called “basic banking product”, defined as a package of services which must be identical across all banks.
The Finance Ministry says that the basic banking product should help clients get a better sense of orientation in the market, along with smoother access to the basic services associated with their regular bank account. Finance Minister Ján Počiatek said that the product would target the normal client and that banks, in their fight for such clients, will have to offer competitive prices.
“Installing such a product is a rough intervention into the rules of the free market with a possible impact not only on banks but also on clients,” Ladislav Unčovský, executive director of the Slovak Banking Association (SBA) told The Slovak Spectator. “We assume that the real intention of the law is future price regulation, which in a competitive environment does not have any justification and would contradict the principles of the market economy.”
The basic package should include: the opening, operation, and cancellation of a current account denominated in euros; payment transactions such as deposits, withdrawals and transfers; and the issuance of an international debit card, Finance Ministry spokesman Miroslav Šmál told the SITA newswire.
According to Šmál, banks will not be allowed to limit the number of card payments and electronic banking transactions, while the package would include at least 36 transactions annually within the European Economic Area.
However, the SBA said that services cannot be made clearer, nor can packages offered by banks be compared, until the rules are made to apply to all banks providing services to citizens.
“The proposal says that if a bank does not provide one of the services linked to the basic product, it does not have to provide the package,” Unčovský told The Slovak Spectator.
He added that a 2009 report by the European Commission which placed Slovakia among the countries with the most transparent and simplest fees for banking services in the EU is another argument against the draft amendments covering service packages.
The association also complains that the rules governing the legislative process have been violated since additions to the draft did not undergo expert discussion during inter-departmental review and are not factually connected to the bill submitted to parliament, according to Unčovský.
“On the part of the government there has also been a violation of obligations flowing from the memorandum on cooperation to address the impacts of the crisis [a compact between the government and private businesses signed earlier in the economic crisis], based on which the government should secure a suitable legislative environment, and elaborate feasibility studies prior to every legislative process,” Unčovský told The Slovak Spectator.
If parliament passes the amendment to the law without changes and without an expert dialogue Unčovský said the banks would turn to the Constitutional Court and European bodies, adding that the SBA is ready to discuss the contents of the package with the Finance Ministry.
But Finance Ministry State Secretary Peter Kažimír said, as quoted by the Sme daily, that bank bosses had known about the government’s intention to install such a product since last autumn. He described the banks’ reactions as “hysterical”, comparing their response to “a tongue bitten by a snake”, which he said only proved to the ministry that it had hit the nail on the head.
The SBA says that to its knowledge the basic service package, as defined in the draft amendment, is not applied anywhere in the world. The Finance Ministry has referred to the introduction of what it says is a similar package in Belgium, but the SBA says that the comparison is false.
“The Belgian package is different not only in terms of its parameters but also in terms of the volume and the content of the services included, which are intended for low-income groups of clients who do not have a bank account; it also sets the minimum price for services in the package,” said Unčovský.
However, apart from the basic service package Slovakia’s draft bill heralds other changes. Once the law becomes valid, each provider of consumer loans, including non-banking entities, will have to register with the National Bank of Slovakia before doing business, SITA wrote.
The bill will also oblige loan providers to attach more detailed and transparent information about each loan in such a way that clients can make well-informed decisions.
25. Jan 2010 at 0:00 | Beata Balogová