20.01.2010.
New Principles on Account Switching will Facilitate the Process of Changing Banks
January this year Nordea implemented the Common Principles on the Natural Persons’ Current Account Switching approved by the European Commission. These principles are already in force in the majority of European countries and determine that in case the customer desires to change the bank, by opening an account in some other bank, the banks shall mutually cooperate to settle all issues in order to enable the switch of all operations of the persons’ current account from one bank to another.
The new account switching principles mean that in case a customer has expressed the willingness to change banks, the bank has to ensure easy transfer of the account and any operations concerned, e.g. direct debits and standing orders etc. from the „former bank” to the „new bank”. In such a case, the former and the new bank will corporate to enable smooth, timely and cost-effective switching.
Deputy Head of Retail Antra Bergmane told: „We are of the opinion that the common principles on current account switching will definitely facilitate healthier competition among banks. The customers will be able to switch among banks more easily, if dissatisfied with prices, service quality or customer service. Moreover, the customer will no longer need to spend time on settling formalities because the banks will arrange these issues among themselves. The customers will definitely benefit from the new regulations.”
These principles have already rooted and are successfully applied in many EU countries in the form of self-regulatory arrangements. This self-regulatory incentive was implemented by banks to promote competition and thereby make the banking industry more attractive what, on its turn, would materially increase customers satisfaction with banking operations in general. However, the initiative of the European Commission was to make these principles binding to all banks operating in the European Union.
According to the position of the European Commission, all member states were to implement the common principles on natural persons’ current account switching till 1 November 2009 and the principles are already operating in several EU countries. The tasks of elaboration, likewise coordination of implementation of these principles in Europe was entrusted to the European Banking Industry Committee (EBIC), whereas at national level – to the national banking associations; in Latvia implementation of the principles is coordinated by the Association of Latvian Commercial Banks.
To enable successful application of these principles, they have to be implemented by a possibly larger number of banks. Banks in Latvia were to implement these principles till 30 December 2009. Nordea offers this service to its customers from January this year. Currently the services concern only natural persons and account switching is possible only among banks incorporated in Latvia or affiliates of foreign banks in Latvia that have acceded to the common principles.