Pittella: EU search engine to counter low financial mobility


Addressing low customer mobility from one bank account to another should be the first priority of a European legislative initiative on the retail banking sector, MEP Gianni Pittella told EURACTIV.

Gianni Pittella is the European Parliament’s rapporteur for the own-initiative report on retail banking. He is also the head of the Italian group of the Socialist Party in Parliament.

To read a shortened version of this interview, please click here.

One of the main shortfalls identified by the European Commission inquiry into the banking sector is consumer mobility. How to guarantee consumers accept all the bureaucratic burdens and costs implied by changing bank account?

Consumers today are not in a position to make a free choice, due to bundled products and to the difficulty of finding information on alternative options. We have to intervene on these factors. We foresee the creation of an Internet platform at European level, a kind financial search engine, enabling everybody to see different options. This way an Italian citizen can see the offers of a French bank, compare them and choose the best for his needs.

And what about cutting closure costs? Your report does not ask for abolition but accepts “fully justified charges for closing accounts”? Why?

Closure costs are so far applied only in a few EU countries. In my draft I asked for the elimination of this cost, but the final compromise with the other political groups was milder.

Can multi-accounts be one solution to tackle low consumer mobility?

They can be. We support the idea because it would in fact establish a real pluralism in the offer, in the consumer’s interest. Customers’ loyalty can have positive effects, but it brings competition distortion which eventually increases costs.

Bundled products, such as insurance linked to a bank account, end up in increasing costs and decreasing transparency, but on the other hand make life simpler for customers. Do you think getting rid of them could have a negative impact?

The citizen is free to choose. The important thing is that banks have to make it possible to see and compare different services. Then the customer can choose between a tied package or unbundled services. We have never asked for the elimination of packets.

The idea is therefore to introduce the Ryanair model into the banking sector?

Everybody has to be able to choose to access a single service or a whole packet.

The other big issue is Multilateral Interchange Fees (MIF) applied by payment card issuers. Retailers call them a hidden tax on all consumers, including those not using a credit card. The Commission has a milder approach. What do you suggest?

It is a very open debate. We realise there are different opinions supported by valid technical reasons. That is why we asked the Commission to elaborate guidelines in order to harmonise MIFs.

For retailers asking for guidelines is a mistake. They want a straightforward abolition.

It is an opinion. But on the other hand there is also the opinion of those saying MIFs are useful to consumers. In this situation, with radically different positions, we thought it is right to ask the Commission to further analyse the sector.

One of the components of the MIFs is credit-related risks. Payment card issuers claim the use of MIFs protects them and the system against potential defaults. Would increased use of debit cards instead of credit cards decrease this risk, and therefore reduce MIFs at the same time?

We did not approach this issue in our report.

The Commission made it clear that cash is more expensive and less efficient than electronic payments. Retailers and other actors oppose this idea. And the Parliament?

I think there is no doubt that we have to aim for electronic money and financial instruments that guarantee higher transparency and traceability.

The Payment Services Directive (PSD), currently being implemented by the member states, and the Single Euro Payment Area (SEPA) are supposed to further encourage electronic payments. But on the other hand they could bring to an end to local, fully functioning but smaller payment systems – as it is likely to happen in Belgium with Proton.

It is too early for assessments. We have established rules and preconditions for payment services providers. If we need corrections, we will carry them out. In any case, if we end up with a system with only two actors at European level, this should be changed.

How can financial education be improved?

There are several actors involved, like financial intermediaries and banks and also public authorities. Financial education must become a central subject in the relationship with citizens. We cannot have a European body for this, but we have to encourage all public and private actors.

This also implies a bank account for all.

Everybody has to have a bank account. We cannot accept that people are still keeping money under their beds. A bank account means more rights, more advantages and more transparency.

In your report you underlined the importance of cooperative banks, a position not necessarily shared by the European Commission.

I think we are experiencing a phase of important mergers in the European banking sector, also cross-border ones. We see new giants in the market. This is a process to be encouraged, but we cannot forget the role of cooperative banks in relation to local needs. They provide services that respond to these necessities. The Commission has a different opinion. But the report has recorded wide cross-party support on this subject in the Parliament.

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