Bank Fees – Knowing and Comparing
In order to allow consumers to be able to make quick and informed decisions, payment service providers (such as banks) are required to give consumers the information related to their payment account using the following clear and easy to understand documents:
- Fee Information Document (containing the expected fees to be paid by the consumer in relation to a payment account)
- Statement of Fees (with the actual costs incurred on the payment account);
- Glossary (of at least all significant payment services and the respective definitions).
WHAT IS THE FEE INFORMATION DOCUMENT (FID)?
Before entering into a contract for a bank account, a consumer has the right to be provided with a document called the Fee Information Document (FID). This document aims to give general information on the costs associated with that payment account.
The FID, which is to be provided for each account offered by the bank, should contain the standardised terms in the final Maltese list of the most representative services linked to a bank account (the Final List) as well as the corresponding fees for each service.
WHEN SHOULD I OBTAIN THE FID?
The FID shall be made available on paper or another durable medium and consumers shall receive it in good time before entering into a contract. With this, they can quickly compare offers from different banks and select the option that best suits their needs and the use of the account.
WHAT IS THE STATEMENT OF FEES (SOF)?
After entering into a contract for a bank account, each consumer has the right to be provided, at least annually, with a SOF containing, for the relevant period, an overview of:
- the total amount of each fee charged;
- interest, if any, applied to the bank account;
- information regarding any overdraft interest charged (interest rate and total amount);
- the credit/debit interest rate applied;
- the total amount of interest earned or paid.
WHY IS THE STATEMENT OF FEES USEFUL?
This information provides a general overview of all fees paid during the time period to which the SOF refers (usually one year), helping consumers to understand the expenditures to which the fee relates and to assess the need to either modify their consumption patterns or move to another provider. Fees are considered to be all charges and penalties, if any, payable by the consumer to the bank.
The SOF presents the most representative services in the same order as the fee information in the FID. The communication channel used to provide the SOF is agreed with the consumer. The consumer can request to receive it either on paper or another durable medium.
HOW MUCH DOES IT COST TO OBTAIN A FID or a SOF?
Both are free of charge and, upon request, can be provided in Maltese.
WHAT IS THE DIFFERENCE BETWEEN THE SOF AND THE MONTHLY ACCOUNT STATEMENT?
The SOF is clearly distinguishable from other communications provided to clients, such as the monthly account statement. These two documents vary not only in format but also in the objectives that they satisfy: the SOF aims to help consumers to both understand and compare fees through a common format, whilst the account statement aims to give to the account holder full disclosure of all the movements to and from the account.
TERMS MADE EASY…
The terms used in the FID and the SOF are explained in a Glossary that must be available on the bank`s website and within its premises, in a place accessible to consumers.
The terms set out in the Final List and the associated definitions must also be made available to consumers in the Glossary.
The Glossary is free of charge and, upon request, can be provided in Maltese and on paper.
The Malta Financial Services Authority, MFSA, is continuously working to create awareness and protect consumers in the financial services sector.