ECONOMY

Italy faces hard drive to cut bank fees

MILAN (Reuters) – A government drive to cut Italy’s bank fees may be difficult to implement because the wording of the law is vague and open to interpretation by banks, leading consumer association Altroconsumo said yesterday. As part of its liberalization drive, Italy’s center-left government this month abolished fees levied on customers for closing a current account, a fee that banks in most other European countries do not charge. The law will also oblige banks to tell customers of plans to modify bank account terms 30 days before the changes are enforced. Clients will then have 60 days to decide to leave the bank at no cost if they don’t agree with the changes. But consumer associations say the law, which they see as a first step toward greater competition among banks, does not address costs linked to transferring shares or bonds to a new bank account, a process that can be lengthy and expensive. «The law, as it is formulated, talks about closing fees linked to a current account. For other costs, such as those for the transferring of securities, the problem remains,» said Paolo Martinello, who chairs Altroconsumo. «No one should think that changing banks is going to be cost-free as from tomorrow,» he told Reuters. Italians are high savers and it is not uncommon for retail customers to hold bonds and shares through their bank and keep them in an account linked to the main current account. Data from Altroconsumo show that moving a bond to a new account can cost 50 euros per bond, regardless of the value of the security. On average, a current account owner who wants to move three Italian securities and two foreign ones to a different Italian account pays 140 euros. Costs vary from zero to 400 euros. In a legal opinion on the application of the new law obtained by Reuters, Italian bank association ABI says closure fees should not apply to services linked to a current account, such as transferring securities. A source at the Economic Development Ministry, which has promoted the law, said the government would keep a sharp eye on banks to make sure they do not deviate from the new rules. «The ministry will monitor the application of the law. It will be in touch with both consumers and banks to make sure there are no distortions,» the source said. A report by Altroconsumo shows that 28 percent of consumers choose their bank for its proximity to home or work, and only 8 percent say low costs are the main reason.