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EU targets banks to help consumers

Brussels - The European Commission will propose new rules to make it easier for consumers to open and switch bank accounts, as well as see what banking fees they are being charged.

The proposal, to be published on Wednesday and which could become law in the European Union in three years, also requires banks to shoulder the administrative burden when clients switch accounts, such as transferring direct debits.

Officials with knowledge of the draft law said it would also oblige banks to spell out their charges in a standardised way, making it easier for customers to compare.

The Commission wants at least one bank in each country to offer a basic account, allowing people currently outside the banking system to deposit cash and pay bills.

The EU executive will also suggest giving citizens the legal entitlement to open an account, acting out of a growing sense of frustration that efforts to cajole banks into better self-regulation is not working.

Studies by Commission officials showed that banks did not offer enough information on switching accounts and that consumers did not know what fees they paid for banking services.

The studies also found that 58 million citizens in Europe had no bank accounts - including half the populations of Bulgaria and Romania.

The Commission hopes introducing a standard guide to fees for people opening an account, as well as an annual summary of charges and establishing a national comparison website will change this.

Under the new rules, consumers wanting to switch banks would only have to inform the new bank, which would then be obliged to tell gas, electricity and other providers of the changes to account payments.

The proposal will go to EU member states for their approval or possible change before the changes can be introduced.
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