New research from the European Consumer Association (BEUC) shows that IBAN discrimination is a continuing concern. Tackle this persistent issue that is still hurting consumers all over Europe. Further in the ECA’s report, they note that the cases reported in 2023 so far all originate from Germany, Spain, France and Italy. The situation has prompted Wise, a financial technology company, to lead the ‘Accept my IBAN’ initiative, which serves as an intermediary between consumers and reporting authorities.
The European Consumers Association, based in Luxembourg, pointed to the scourge of IBAN discrimination. They highlighted that regulatory loopholes are delaying the European Commission’s attempts to address this issue. Worsening issues of enforcement are differences in penalties between member states. Minimum fines for instances of IBAN discrimination start at €250. At the same time, these fines can increase to up to €10,000 for the most serious offences. In extreme companies cases, the maximum possible fine is €10 million. They can impose fines of up to 10% of the firm’s global annual revenue.
“IBAN discrimination can be very annoying for consumers as it might force you to open multiple bank accounts when you live in different EU member states or prevents you from using newer banking services offered by Fintechs,” said Anna Martin, Head of Financial Services at the European consumer organization BEUC. Her remarks highlight some of the issues frustrating consumers have with navigating intervening obstacles to accessing their accounts from out-of-state.
The EFA further raised concerns about enforcement measures. “Enforcement gaps continue to exist today, and the European Fintech Association believes that stronger and more uniform penalties across member states, along with proactive monitoring and enforcement by regulators, are essential to ensure compliance with the SEPA regulation,” stated a representative from the EFA. This demand for uniformity highlights the importance of a unified effort to address IBAN discrimination throughout the EU.
Beyond these regulatory hurdles, the ECA pointed out that proposed solutions—such as the use of virtual IBANs—might only serve to muddy the waters. Martin pointed out, “Virtual IBANs cannot be the solution to IBAN discrimination as it makes fraud prevention and resolution more difficult and creates confusion for consumers about their legal protections, such as refund rights in case of fraud or the protection of their deposit in case of bankruptcy.”
The ‘Accept my IBAN’ initiative is an important step in addressing these challenges. For one, it creates a direct line of communication between the people impacted and the government agencies responsible. Stakeholders insist that without meaningful regulatory reform, IBAN discrimination will continue to be a problem.
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