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The regulation of overdraft credit – Two different solutions: France versus Germany

While the French have decided to regulate the cost of overdraft credit, it looks as though the German coalition will not be imposing a ceiling on overdraft facilities as anticipated.

While the SPD partner is still hoping to change this in its negotiations, the draft coalition contract does not foresee a cap to limit the at times very high prices for exceeded overdrafts in Germany (preferring to use warnings and compulsory provider information provisions of alternative options) (see German news on iff). This is in in contrast to France where details have just been made official as to the introduction of a double cap on fees in situations of difficulties (i.e. bank account irregularities and exceeding of ones authorised overdraft limit: called instances of “commissions d'intervention”). This regulation was part of the law on separation of banking activities from July 26, 2013).
There are two caps, one applicable to all individual clients (non-professional), and a special cap for people in financial fragility. The ceiling amounts have now been set by decree (published in the Official Journal of 19 October 2013): Ceilings are 8 euros per transaction and 80 euros per month (for all) and 4 euros per transaction and 20 euros per month for the most vulnerable customers  This double cap will apply from 1 January 2014. People in financial fragility are those who benefit from the legal procedure of a right to a bank account and those that subscribe  to the restricted offer of alternative check payments (la procédure du
droit au compte et celles qui souscrivent l’offre spécifique de la gamme des paiements alternatifs aux chèques (GPA).

As a reminder the regulation is the result of research that showed the following practices and charging of fees for breaches (called intervention commissions): The average cost of these fees was 8.23 euros until today (with varying caps depending on the bank from either daily, monthly or both: The monthly limit was 163.34 euros on average (with differences ranging from € 78 to € 458.70) and the maximum daily limit averaged at 23.27 euros (ranging between € 7.50 and € 55.80) in December 2012 (source: Monitoring of bank charges - Annual Report 2013)

More details available in French under the consumer financial advice and education website:

ID: 48410
Publication date: 26/11/13

Link to La Foinace pour tous website (in French)

Created: 26/11/13. Last changed: 26/11/13.
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