Ministry says it has no say over bank charges

The Ministry of Finance on Wednesday responded to the criticism of the last few days about the increase in bank charges and calls for its intervention, making it clear that the ministry did not have a say in how bank charges were determined.

The ministry made it clear that restrictions on the charges applied only to the so-called ‘account with basic features’, a basic account that has no overdraft or credit card facilities. “Any other charges are at the discretion of the banks, and the Minister of Finance does not have the right to intervene in how they are decided,” said a ministry announcement issued on Wednesday.

There had been some confusion regarding the ‘account with basic features,’ after Tuesday’s announcement by the Central Bank suggesting people could open this type of account, which allows a limited number of transactions and offers no credit facilities.

With criticism of the bank charge hikes increasing, the finance ministry decided it had to set the record straight with an announcement, saying it had “issued Decrees, which were implemented on 2/11/2020, on the determination of reasonable fees for accounts with basic features.”

Before the issuance of the decrees, a study was prepared by the Central Bank of Cyprus, on the request of the finance minister, said the ministry, explaining that the study took into account national income levels, the average fees charged by banks in Cyprus for services provided in connection with payment accounts, as well as the practices of other EU member-states.

The decrees stipulate the setting of a maximum fee of €36 per year for a ‘payment account with basic features’ per consumer, without the restriction of transactions for most services (opening, operation and closing of account as well as deposit of funds), as well as a minimum number of transactions, which amounts to one hundred transactions per year, for other payment services (direct debits, credit card payments, etc), and which relate to services within the European Union and for amounts under €5,000 per transaction.

Moreover, the decrees also mandate that no fee shall be charged for the use of an ATM within the European Union, regardless of the bank, as well as that no fee would be imposed for the minimum number of transactions, for which the bank will charge only reasonable fees to all recipients of the minimum guaranteed income.

“The decrees ensure reasonable charges for most banking services provided to consumers,” the ministry said, asking the public to contact their bank to discuss their basic account so that they “can benefit from the provisions of the decrees”.

Meanwhile, the Association for the Protection of Borrowers (Syprodat) welcomed the quick response by Central Bank Governor Constantinos Herodotou, who issued an announcement about the charges on Tuesday.

“We are confident that he will carefully study the issue and make the appropriate suggestions to the Ministry of Finance, so that the customers of the banks are not unfairly burdened, given that the services offered by the banks have not changed,” the association said.

Labour union Deok, meanwhile, said that island’s biggest banks are “greedy”, calling their decision “provocative and unjustified”.

“The Department of Consumer Affairs of Deok strongly condemns these unacceptable practices and calls on the Commission for the Protection of Competition to immediately investigate the possibility of abuse and exploitation of the oligopolistic regime of the banks,” Deok said.

Trade union Sek also issued a statement on Tuesday, saying that the decision to impose new charges is “beyond any reasoning”, and asked for the state to intervene.

“Unfortunately, the issue is not new”, Sek said, adding that “from the summer of 2018, when their intentions became clear, their eyes are on the money that citizens have in their wallets”.

Sek also called on all state institutions to “intervene dynamically to stop banking greed, lacking in humanity and logic.”