COMMISSION RECOMMENDATION of 23 April 1998 concerning banking charges for conversion to the euro (98/286/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular Article 155 thereof,

1. Whereas the euro will become the currency of the participating Member States as from 1 January 1999; whereas the euro will be substituted for the national currencies of the participating Member States at the conversion rates; whereas during a transitional period the euro will exist in different denominations; whereas the national currency units will be sub-units of the euro according to the conversion rates; whereas according to Article 4(3) of Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions relating to the introduction of the euro (1), the conversion rates are to be used for conversions either way between the euro unit and the national currency units; whereas the draft Council Regulation on the introduction of the euro (2) imposes certain obligations to convert;

2. Whereas the Commission considers that banks are not legally entitled to charge:

- for the conversion of incoming payments denominated in the euro unit or in the national currency unit during the transitional period,

- for the conversion of accounts from the national currency unit to the euro unit at the end of the transitional period,

- a different fee for services denominated in the euro unit from that charged for otherwise identical services denominated in the national currency unit;

3. Whereas the Commission considers that, in order to facilitate the smooth introduction of the euro, banks should go beyond the minimum required by law by providing without charge the conversion of accounts from the national currency unit to the euro and during the transitional period, by providing without charge the conversion of outgoing payments from the national currency unit to the euro unit and vice versa during the transitional period, and by providing for the exchange without charge to their customers of 'household amounts` of the national banknotes and coin for euro banknotes and coin during the final period;

4. Whereas for reasons of clarity and completeness the legal requirements as interpreted by the Commission as well as the recommendations of the Commission should be presented together; whereas the term 'standard of good practice` is used to signify both the legally required and the recommended practice;

5. Whereas the standard of good practice should not include conversion without charge of accounts from the euro denomination into the national denomination, as this is not necessary for the introduction of the euro, nor should it include the exchange of euro-area national banknotes for other euro-area national banknotes without charge, as the need for such exchange is not affected by the introduction of the euro; whereas the standard of good practice should cover the transparency of any charges for such conversions;

6. Whereas the standard of good practice should not include the exchange of national banknotes and coin other than in household amounts; whereas banks and retailers should negotiate any charges for the withdrawal from retailers of national banknotes and coin and for the delivery to retailers of euro banknotes and coin, taking into account arrangements made by the competent authorities at national level;

7. Whereas for all conversions between any national currency unit and the euro unit and vice versa, and for all exchanges of banknotes and coin of participating Member States, banks should show clearly the application of the conversion rates in accordance with the provisions of Regulation (EC) No 1103/97; whereas the use of the conversion rate and any charges should be transparent; whereas the standard of good practice in so far as it concerns transparency of charges should be implemented by banks in advance of 1 January 1999, wherever possible, in order to reduce the risk that consumers may wrongly attribute already existing charges to the introduction of the euro;

8. Whereas banks which implement the standard of good practice should publicise this, to demonstrate that they comply with the standard, and all banks should in any event inform their customers in advance of 1 January 1999 whether they apply the standard of good practice and, if not, for which conversions they intend to charge;

9. Whereas the Commission intends to monitor the application of the standard of good practice; whereas such monitoring activity is addressed in Recommendation 98/288/EC on dialogue, monitoring and information to facilitate the transition to the euro (3); whereas the dialogue provided for in that Recommendation may include discussions on the implementation and monitoring of the standard of good practice; whereas the dialogue could also address aspects of charging for conversion which could extend beyond the scope of the standard of good practice as laid down by this Recommendation;

10. Whereas consumers without a bank account may need special consideration in relation to the exchange of banknotes and coin denominated in the national currency for banknotes and coin denominated in euro, during the final period to be determined by local conditions within each Member State;

11. Whereas the issue of charging for conversion to the euro has been discussed at the Round Table in May 1997; whereas an expert group has been established to examine the issue, involving all sectors concerned, and its report has been published (4); whereas the conclusions of the experts' report have been accepted by the Commission in its Communication 'Update on practical aspects of the introduction of the euro` adopted on 11 February 1998 (5) and discussed at the Round Table in February 1998,

HEREBY RECOMMENDS:

Article 1

Definitions

For the purpose of this Recommendation, the following definitions apply:

(a) 'Banks` are credit institutions as defined in Council Directive 77/780/EEC (6), and any other financial institutions as defined in Article 4(1) of Council Regulation (EC) No 3604/93 (7), whose business is to carry out activities related to the conversion of payments and accounts and the exchange of notes and coin, and bureaux de change and post offices;

(b) 'national currency unit` is the unit of the currency of a participating Member State, as that unit is defined on the day before the start of the third stage of economic and monetary union; 'the national currency unit` in this Recommendation refers to the national currency unit of the Member State where the bank making the conversion is located;

(c) 'participating Member States` are those Member States which adopt the single currency in accordance with the Treaty;

(d) 'conversion` is the change of denomination of a monetary amount from the national currency unit to the euro unit and vice versa at the conversion rate, in accordance with the provisions of Regulation (EC) No 1103/97;

(e) 'euro unit` is the currency unit of the euro as referred to in the second sentence of Article 2 of the draft Council Regulation on the introduction of the euro;

(f) 'transitional period` is the period beginning on 1 January 1999 and ending on 31 December 2001;

(g) 'final period` is the period beginning on 1 January 2002 and ending on 30 June 2002 at the latest, which period may vary in length according to participating Member State, under the terms of the draft Council Regulation on the introduction of the euro;

(h) 'conversion rate` is the irrevocably fixed rate adopted for the currency of each participating Member State by the Council according to the first sentence of Article 109l(4) of the Treaty;

(i) 'incoming payments` are payments received for crediting to accounts of beneficiaries;

(j) 'outgoing payments` are payments made by debiting accounts of originators;

(k) 'accounts` are all types of accounts with banks (as defined in (a)) and include deposit accounts, current accounts, mortgage accounts and securities accounts.

Article 2

Standard of good practice

Banks should implement, in accordance with Article 4, a standard of good practice on conversion without charge, which should include:

(a) Practice that the Commission considers to be legally required:

(i) the conversion without charge of incoming payments from the national currency unit to the euro unit and vice versa during the transitional period;

(ii) the conversion without charge of accounts from the national currency unit to the euro unit at the end of the transitional period;

(iii) the charging for services denominated in the euro unit at fees no different from those for identical services denominated in the national currency unit.

(b) Other recommended practice:

(i) the conversion without charge of outgoing payments from the national currency unit to the euro unit and vice versa during the transitional period;

(ii) the conversion without charge of accounts from the national currency unit to the euro unit during the transitional period;

(iii) the exchange without charge to their customers (namely the account holders) of 'household amounts` of the national banknotes and coin for euro banknotes and coin during the final period. Banks should quantify 'household amounts` by volume and frequency in a transparent manner.

Article 3

Transparency

1. For all conversions between any national currency unit and the euro unit and vice versa, and for all exchanges of banknotes and coin of participating Member States, banks should show clearly the application of the conversion rates in accordance with the provisions of Regulation (EC) No 1103/97, and should identify separately from the conversion rate any charges for any kind whatever which have been applied.

2. Where banks charge for conversions and exchanges which are not included in Article 2 or where banks do not implement one or more of the provisions of Article 2(b), they should provide clear and transparent information concerning those conversion charges or exchange charges by providing their customers with:

(a) prior (ex ante) written information on any conversion charges or exchange charges which they propose to apply, and

(b) specific information (ex post) on any conversion charges or exchange charges which have been applied, on bank and cardholder statements and any other means used for communicating with the customer. This information should demonstrate clearly to their customers the application of the conversion rates in accordance with the provisions of Regulation (EC) No 1103/97, with any conversion charges or exchange charges being identified separately from the conversion rate and from any other charges of any kind whatever which are applied.

Article 4

Implementation

1. Banks should implement the standard of good practice by 1 January 1999 at the latest, and earlier in the case of Article 3 if this is technically feasible.

2. Banks should inform their customers as soon as possible before 1 January 1999 about whether and to what extent they will implement the standard of good practice.

3. Implementation of the standard of good practice should be publicised by any method which demonstrates that banks comply with the standard, such as:

(a) professional codes of conduct;

(b) provisions within a national changeover plan;

(c) displaying a 'conversion symbol` which demonstrates that banks comply with the standard of good practice. A scheme to confer the right to display a conversion symbol should be worked out at national level by the parties concerned, if and when it is considered appropriate.

Article 5

Other recommended measures

The competent authorities of the Member States are invited to consider how best to facilitate the exchange, free of charge, of banknotes and coin denominated in the national currency unit in reasonable amounts and at reasonable frequencies, for banknotes and coin denominated in the euro unit during the final period, in the case of consumers having no bank account.

Article 6

Final provision

Member States are invited to support the implementation of this Recommendation.

Article 7

Addressees

This Recommendation is addressed to the Member States and to banks and their associations.

Done at Brussels, 23 April 1998.

For the Commission

Yves-Thibault DE SILGUY

Member of the Commission

(1) OJ L 162, 19. 6. 1997, p. 1.

(2) OJ C 236, 2. 8. 1997, p. 8.

(3) See page 29 of this Official Journal.

(4) Report of the expert group on banking charges for conversion to the euro, Euro Paper No 14.

(5) COM(1998) 61 final.

(6) OJ L 322, 17. 12. 1977, p. 30.

(7) OJ L 332, 31. 12. 1993, p. 4.