Financial Consumer Protection 'Basic account' guarantees all consumers access to a current account

Today, the new German law on payment accounts (ZGK) comes into force. With this, consumers have the legal right to a current account including minimum functionalities – the so-called 'basic account'. In 1995, the German banking industry (DK) announced a voluntary self-commitment to offer 'accounts for the man in the street'. In practice, however, German banks never complied with this obligation and instead continued to decline consumers based on low economic profitability.

Against this backdrop, the new ZGK entails the following regulations:

  • As of now, consumers, including people without residence, have the legally binding claim to a 'basic account' at any financial institution (i.e. private banks, savings banks and the cooperative banking sector). This 'basic account' should not be more expensive than usual market-based accounts.
  • The minimum functionalities are legally defined and include cash withdrawals and deposits, money transfers such as debit, regular transfers and payment card transactions.
  • Moreover, financial institutions have to offer consumers such account models, which correspond with their individual user behavior. That is, internet-oriented customers ought to be offered an online account, while customers with lower internet literacy cannot be offered mere online accounts.

Klaus Müller, Director of the Federation of German Consumer Organizations (vzbv), noted: "Over decades we fought for all consumers to have access to a 'basic account'. Today was a good day for consumers. The banking industry is now obligated to turn their current and mostly overpriced 'accounts for the man in the street' into 'basic accounts'. This account has to be in line with individual consumer’s user behavior in order to keep down the costs."

Source: Federation of German Consumer Organizations (vzbv)

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