Aims of the Payment Accounts Act
The Payment Accounts Act of 11 April 2016 serves to transpose the European Payment Accounts Directive (2014/92/EU). Its central provisions relate to basic accounts, which are intended to give all consumers the opportunity to take part in economic life. In the past, it was very difficult or even impossible for those without a bank account to make electronic payments. This problem affected socially disadvantaged people in particular. People in this situation now have a right to open a basic account at any bank that offers consumer accounts. Basic accounts also benefit those who are owed money by individuals who previously had no account – after all, the lack of a bank account gives rise to costs on both sides.
A basic account
is a bank account with basic functions. It generally does not feature an overdraft facility. It includes all basic payment services, such as cash deposits, cash withdrawals, credit transfers, direct debit and card payments (please refer to sections 30 and 38 of the Payment Accounts Act for details).
In addition to rules on basic accounts, the Payment Accounts Act also includes provisions aimed at making bank account fees more transparent and increasing competition among banks. In particular, the law makes it easier for customers to switch banks, establishes clear rules for certified comparison websites, and sets out information obligations for banks towards consumers.
Banks now have the obligation to support customers who wish to change banks by transferring standing orders and other services to the customer’s new bank upon request. If a bank fails to meet this obligation, the receiving bank and the transferring bank share joint and several liability for any damages sustained by the customer.
Operators of comparison websites for bank accounts can apply for a certificate from a conformity assessment body. This certificate confirms that the comparison website is in line with statutory requirements under the Payment Accounts Act. For users of certified websites, this has significantly improved the transparency of information about the fees charged for services associated with bank accounts. They can rely on the fact that certified comparisons are based on statutory criteria and cover a substantial part of the German market.
Moreover, credit institutions are obliged to provide consumers with general information about fees charged (fee information) and to keep them informed of fees incurred under existing contracts (fee overview). These obligations apply to all payment accounts, but are especially relevant for the most common account services (known as significant payment account services). They will enter into force on 31 October 2018. The new information requirements are intended to make it easier for consumers to obtain information about fees charged for different accounts, thus enhancing mobility and customers’ willingness to change banks.
In Germany, all consumers who are legally resident in the European Union now have the right to a basic account. Under the Payment Accounts Act, all credit institutions that offer consumer accounts must include a basic account as one of their products (obligation to furnish services). A bank account is a fundamental necessity, without which people are unable to make payments and are thus excluded from social and economic life. In Germany, life is very difficult without a bank account. You need an account to receive a salary and financial benefits from the state, and to enter into rental, electricity, water and telephone contracts. You cannot find accommodation or a job if you don’t have a bank account.
A bank account also plays an important role in using digital services. Internet transactions are almost always completed via bank transfer, direct debit or credit card. So the basic account is also an important milestone in ensuring that the digital transformation is socially inclusive.
Moreover, the basic account is also of benefit to government authorities that pay out social benefits: It is much easier and more efficient to be able to transfer social benefits to the recipient’s account automatically than to pay them out in cash at certain locations.
According to a 2013 estimate by the European Commission, there were nearly a million people in Germany who did not have their own bank account. The German Red Cross estimated that this primarily affected homeless people and persons without a residence permit who had been granted a suspension of deportation. Improving the social inclusion of this group of people was one of the reasons why European legislators decided to introduce the basic account. A recent evaluation by the Federal Financial Supervisory Authority found that more than 540,500 people in Germany have opened a basic account since 2016. There is no recent data on the number of people still living in Germany without an account, but it is fair to assume that this number has declined.
A recent survey conducted by the Federal Financial Supervisory Authority concluded that the 1,300 credit institutions that offer basic accounts in Germany generally meet their obligations and reach decisions about basic account applications, or about opening basic accounts, within ten days. If a bank unlawfully declines to open a basic account, the Federal Financial Supervisory Authority’s administrative procedure offers consumers a straightforward and quick way of initiating a review – and a reversal – of the decision. Provided that there are no grounds for the rejection, the Federal Financial Supervisory Authority can issue an administrative act forcing the bank to open an account. Banks are allowed to reject applications only under strictly defined conditions, for example if the applicant already has a basic account in Germany and has access to the relevant services, or if he or she has committed certain types of criminal acts or violated other legal prohibitions.
Banks are allowed to charge reasonable fees for basic accounts. Customers are obliged to pay the contractually agreed fees to the credit institution that maintains their basic account. When assessing the reasonableness of fees, particular consideration is given to usual market fees and user behaviour..
The Payment Accounts Act also includes provisions designed to help customers switch banks. Banks now have to facilitate the move by transferring standing orders and other services to the customer’s new bank upon request. If a bank fails to meet this obligation, the receiving bank and the transferring bank share joint and several liability for any damages sustained by the customer.
Before this provision was introduced, it was often expensive and difficult to switch banks. As a result, customers often remained with their bank even if they were unhappy with the service or had moved far away from their old branch. Now, banks have an obligation to transfer all standing orders and all information they have about direct debit mandates to the customer’s new bank within five working days upon the customer’s request. Within five days of receiving the information, the new bank has an obligation to set up the requested standing orders, complete transfers, and give the new account details to payers who credit the account and to creditors who debit the account on the basis of a standing order. Consumers in Germany have made use of this option 705,000 times since 2016. This large number can be viewed as evidence of increased competition among credit institutions.
Under the EU’s Payment Accounts Directive, all member states must ensure by 31 October 2018 that consumers have access, free of charge, to at least one website that allows them to compare the fees charged for bank accounts. Comparison websites improve the transparency of information about fees for services associated with bank accounts and offer customers a simple and objective way to assess their relative merits. In the past, it was not always clear what criteria were applied by the operators of commercial comparison websites. Users were generally unaware of how many, or which, bank accounts were included in the comparison. Moreover, it was not always clear whether the rankings were in any way influenced by commercial interests.
Germany has implemented the EU rules in the form of the Payment Accounts Act, which aims to improve the quality of the online comparison landscape. Under the Payment Accounts Act, operators of websites that compare bank accounts can apply for a certificate confirming that their website meets the relevant statutory requirements.
Certified websites are given a logo. Consumers can trust online bank account comparison sites bearing this logo.
An ordinance on comparison websites was issued in July 2018. It sets out the specific requirements that the Payment Accounts Act places on website operators and their products, on providers of account services, on the accreditation agency (Deutsche Akkreditierungsstelle GmbH, or DAkkS), and on conformity assessment bodies. Comparisons must be based on clear and objective criteria. Because the Payment Accounts Act represents a market-based solution to implementing the Payment Accounts Directive, certified website operators can continue to charge commission upon conclusion of a contract. However, they must disclose to the accreditation agency (a) their contracts with providers of account services and (b) the algorithms they use for their comparisons. They must also ensure that any remuneration between them and payment service providers or third parties does not influence the comparisons.
The ordinance also specifies the requirements that conformity assessment bodies must meet when accrediting comparison websites. The certification procedure is conducted by accredited conformity assessment bodies that meet the requirements of DAkkS, the accreditation agency.