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Universal bank account

Klaus Ulrich / groJanuary 15, 2016

In Germany, you need a bank account to pay rent and other bills, or get your paycheck. Yet homeless people and asylum seekers are not welcome at banks. New legislation is intended to change all that.

Symbolbild Finanzen - Geld anlegen
Image: picture alliance/dpa Themendienst/Wuestenhagen

In future, banks will no longer be able to reject someone who wants to open a basic bank account. When the government passes its new law, all German banks will be obliged to accept the homeless and asylum seekers as customers.

Under new the payment account law, which also incorporates an EU directive, a so-called basic payment account for all will be launched in Germany. Anyone who legally resides in the European Union may open a simple bank account showing their balance at the bank of their choice. Consumers must be able to use all basic payment services through the basic payment account.

A million people affected

According to Germany's Ministry of Finance, more than a million people would benefit from the basic account. Consumer protection groups estimate a significantly higher number and assume that up to three million people do not have access to a basic bank account.

Symbolbild Bankkonto in Deutschland
Checking accounts are vital to everyday life in GermanyImage: picture-alliance/dpa/A. Warnecke

In Germany, there has only been a voluntary obligation for banks to set up accounts for everyone. The government was, however, not satisfied with the implementation. Until now, the homeless and asylum seekers have only been accepted by some savings banks and credit unions.

Bank fees disputed

According to the government's plans, banks will be required to publish account fees in the future so that consumers can easily compare different deals without specialized knowledge. Also, comparison websites – officially certified by the government – will be developed. Furthermore, consumers will easily be able to change their accounts.

According to the bill, bearers of the basic bank account will receive a bank card and will be able withdraw money and transfer funds. But they cannot overdraw the account.

Some politicians criticize the fact that a fee exemption, or at least a cap on fees, is not envisaged in the draft law. A basic payment account should be free of charge – there are demands to reach a consensus on this point before the law is adopted. The law is slated to take effect in June, 2016.

Bank criticism

The draft law, however, has met with little enthusiasm among some banks. They point out international regulations for the prevention of money laundering, which require a clear identification of bank customers.

At the same time, legislators have provided for some exceptions to protect financial institutions, stated the German Finance Ministry.

Consequently, a bank may refuse to open an account if the applicant already has an account elsewhere in Germany, or has committed an offense against this particular bank, like financial fraud. Another reason for rejection would be having significantly overdrawn a previous account.