Banks could be fined up to €500,000 for unfair price hikes

BANKS WHO do not act in ‘good faith’ toward their customers before cranking up charges will be liable to fines of up to €500,000 under a new law prepared jointly by the House Legal Affairs and Commerce committees.

The bill aims to harmonise local legislation with an EU Directive that makes it obligatory for banks to consult customers before imposing any changes in their fees.

It introduces the notion of ‘good faith’ and aims to protect consumers from unnecessary increases or changes in their loan charges.

Recently thousands of bank customers have received letters informing them that bank fees would be increased in the coming weeks.

MPs are hoping to have the law in force before the fees go up; the bill is expected to be put to the vote at the plenum in two weeks’ time, said Ionas Nicolaou, chairman of the House Legal Affairs Committee.

The new law empowers the Commerce Ministry’s Consumer Protection Service to scrutinise hikes in bank fees and, in the event of a violation, the service may slap fines of up to €500,000.

If a bank still fails to comply, it will run the risk of paying a penalty of €1,700 for each day of non-compliance, Nicolaou said.

In addition, the Consumer Protection Service will be able to investigate planned future charges and thus act pre-emptively before they are imposed on customers.

The law will have a ‘name and shame’ aspect to it, as the findings of investigations will be made public.

Nicolaou said he was confident the new law would ‘unshackle’ the service, enabling it finally to protect consumers from unwarranted increases in bank charges.

He also called on the head of the service to begin exercising his new powers as soon as possible by looking into the imminent bank fee hikes.

Meanwhile deputies have asked the Banks Association to inform its members of the planned change in the law.

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