MPs to draft law to restrict bank charges

MPs have taken the initiative and will be drafting legislation governing bank fees charged to account holders after the government said there was not much it could do about it.

Back in December it emerged that Cypriot commercial banks would impose new charges on customers, sparking reaction from consumer rights activists, trade unions and some political parties.

In the case of the Bank of Cyprus, the charge for a current account would go up from €3 every three months in January of 2020, to €6 every three months in the first few months of 2021; while starting in February of 2022, this would rise to €12 every three months.

For Hellenic Bank account holders, the cost for a current account two years ago was set at €2 per month, while the new cost would be €2.90 per month. For savings accounts, Hellenic Bank would up the annual cost from €5 per year to €5 for every three months, an annual increase of €15.

The Bank of Cyprus would also be charging €20 per year for savings accounts, with no charge having been previously imposed on such accounts.

Despite complaints, the finance ministry had at the time made it clear that it could not interfere with bank charges except where it concerned a ‘payment account with basic features’ – an account that has no overdraft or credit card facilities. Any other charges are at the discretion of the banks, the ministry stated.

On Tuesday chair of the House commerce committee Kyriacos Hadjiyianni (Disy) said that the parties have agreed to file a joint legislative proposal regulating the matter.

Akel’s Costas Costa said the legislative proposal will broaden the bank customers eligible to hold a ‘payment account with basic features’.

This type of account is normally used to carry out everyday transactions that do not fall under commercial activities: cash deposits, payroll transfer, cash withdrawals, payment of standing orders.

To date, only private individuals (not corporations) are eligible to open such an account. MPs now want very small businesses as well to be able to hold these accounts.

“With our proposal, essentially we are trying to do what the government ought to have done – to expand the safety net for citizens,” said Costa.

He also censured Bank of Cyprus and Hellenic for having disregarded repeated appeals from parliamentarians to put the planned fee hikes on ice.

The committee plans to discuss the issue of unfair terms of contract separately.