The review of the Payment Accounts Directive (PAD) 2014/92/EU is considered necessary by the European Commission to address limitations in its implementation, improve financial inclusion, and adapt to evolving digital and security needs within the EU financial market.
While the 2023 evaluation found the PAD largely achieved its goals of transparency and increased access to basic accounts, a revision is aimed at closing remaining gaps.
Based on European Union regulations, particularly the Payment Accounts Directive (PAD), consumers legally resident in the EU have a right to a basic payment account, which acts as a default option for financial inclusion when a standard account is not accessible.
The main reasons for revising the PAD include:
- Strengthening financial inclusion: Many vulnerable consumers still struggle to access basic payment accounts due to high fees, lack of awareness, or excessive "de-risking" by banks, where financial institutions refuse accounts on AML (Anti-Money Laundering) grounds, even when not required.
- Addressing inconsistent implementation: The initial transposition of the directive into national laws resulted in a fragmented regulatory framework across member states, requiring further harmonization to ensure a level playing field.
- Improving account switching: While the PAD made domestic switching easier, the number of switches remains low in many member states due to consumer reluctance or difficulties, necessitating measures to further facilitate switching and increase competition.
- Enhancing digitalization and security: The rise of digital banking and new payment technologies requires updating rules to protect consumers from fraud and ensure access to cash, particularly in the face of digital exclusion.
- Addressing cross-border limitations: The current PAD has not fully enabled easy cross-border opening of payment accounts, which is a key goal for creating a more integrated EU financial market.
To enhance access to basic payment accounts, particularly for vulnerable consumers, several concrete proposals should be taken in consideration in reviewing the Payment Accounts Directive (PAD 2014/92/EU), such as:
- A standardized "Reasonable fee" definition: Move beyond the vague "reasonable fee" requirement by establishing a low, harmonized cap for fees across the EU to ensure affordability.
- Require financial institutions to offer a basic payment account as the default option when a customer is ineligible for a standard account, rather than rejecting their application outright.
-Amend the Directive to allow greater flexibility for consumers who cannot provide standard documentation (e.g., proof of address).
- Combine this flexibility with enhanced, but proportionate, monitoring of these accounts for suspicious activities to comply with Anti-Money Laundering (AML) requirements.
The PAD Review should be made also taking in consideration the current trends:
Strengthen awareness and information by:
- measuring knowledge, by determining if vulnerable consumers are sufficiently aware of their right to a basic account. A key area of review is the effectiveness of campaigns by national authorities.
- reviewing transparency tools, by examining the mandatory websites that compare fees to ensure they are accessible and user-friendly for all, including those with limited digital literacy.
Address technological and social changes:
- impact of digitalisation: review how the move toward digital-only banking affects consumers without smartphones or internet access, ensuring they have alternative ways to access basic services.
- cost-of-living crisis: analyse if the current definition of "reasonable fees" in the PAD is still appropriate given high inflation, which has increased the number of people at risk of financial exclusion.
Enhancing digital and physical access:
- Mandate that Strong Customer Authentication (SCA) methods are accessible to all, including disabled or elderly consumers, by offering alternatives to smartphone-dependent apps.
- Cash access protection: Ensure that basic accounts include reasonable access to cash withdrawal services at ATMs or over the counter, supporting consumers who are cash-dependent.
