Banks in France are imposing excessive charges on bank overdrafts, according to a leading French consumer group.
In a study undertaken by the comparison website Choisir ma banque.com it was found that 122 of the 124 banks imposed charges on unauthorised overdrafts that were considered by the authors to be in excess of the regulations laid down by the government.
These regulations state that the level of interest on an overdraft should not exceed the general rate of interest in operation in the bank. Specifically, Article L313-3 of the Code de la Consumation states:
'Constitue un prêt usuraire* tout prêt conventionnel consenti à un taux effectif global qui excède, au moment où il est consenti, de plus du tiers, le taux effectif moyen pratiqué au cours du trimestre précédent par les établissements de crédit pour des opérations de même nature comportant des risques analogues, telles que définies par l'autorité administrative après avis du Comité consultatif du secteur financier.'
Most banks in the study imposed a fixed charge where an unauthorised overdraft occurred, ranging from a few euros to €16. Where the customer remained over their agreed overdraft limit these charges continued to be imposed for each new operation that occurred.
Banks argue that these charges are justified because of the extra work that is necessary, but as the study states, most of the charges are automated and involve little or no extra effort by the banks. The charges also frequently impact most on those least able to afford to pay them.
The study found that La Banque Populaire charged between €7.80 and €16; Crédit Agricole between €7 and €10; Caisse d'épargne €8.50 to €10.90; Crédit Mutuel €3.95 to €11.06.
These charges might differ between branches as many banks in France operate on a mutual basis, with charges varying by region.
Some customers may also have a 'package deal' for banking services, under which a separate charging system is in place.
Two on-line banks in the study marked themselves out by not imposing any charges. They were Boursorama Banque and ING Direct.
Indeed, on-line banks generally performed well in these comparisons, but they are not accessible to all, as they impose minimum income and/or capital thresholds.
Given the level of charges with which UK clients are familiar those in France may, by comparison, seem mild.
However, bank charges are a hot political issue in France, and there has been legislation in recent years to control the level of these charges and to ensure greater openness.
Since 2011 all banks are required to supply their clients with an annual statement of charges and, in order to improve comprehension and allow greater comparison of charges to be made by consumers, all banks have had to agree to some common terminology to use for the main operations undertaken.
The government has also set up an watchdog on bank charges, called the Comité consultatif du secteur financier (CCSF).
As a result, this year bank charges generally have fallen by a marginal amount.
In a report published by l'association de consommateurs (CLCV) and the magazine Mieux vivre votre argent, those who used their bank only on an occasional basis for standard operations (described as a petit consommateur) will pay on average €68.79, down 0.46% on 2011.
For the average customer and for major users (consommateur moyen and gros consommateur) their annual banking charges will range from €236.49 to €572,90 a year respectively, a fall of 1.46% and 2.35%.
However, there remain large variations in charges and a lack of consistency in their application, even for the same customer.
The authors also point out that whilst some charges are coming down, others are being increased, so customers need to be vigilant in the use of their bank account and checking their bank statements.
Que Choisir, the main consumer group in France, has argued that there should be an end to fixed charges for unauthorised overdrafts and for all charges currently controlled by legal maximum charging limits to be reduced to more accurately reflect actual costs.
*A 'prêt usuraire' is an abusive rate of interest.