Publicity and Privacy in Land Reform in Scotland

This post is co-written by Dr. Jill Robbie (Glasgow University) and Anna Berlee (MEPLI fellow). It is a cross-post from the University of Glasgow School of Law Blog.

The previous post by Dr. Akkermans already mentioned the Land Reform in Scotland as an example of creative private law solutions. Today we would like to delve in a bit more with a specific eye to the reforms proposed in land registration  in Scotland looked at also in a broader light with perspectives from the EU with its recent 4th Money Laundering Directive and individual Member States like Germany with its limited access to land information. 

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Google Spain vs. AEPD: About the ‘right to be forgotten’ and the forgotten right of freedom of expression

On 13 May the CJEU accepted a partial ‘right to be forgotten’ in the Case of Google Spain, Google v. AEPDWhat is remarkable about this ruling, is the extent of privacy protection adopted.

The Facts of the Case

Some 16 years ago Mario Costeja González was going through a rough patch in his life and was unable to pay his social security debts. As a result, his house was sold via public auction. This auction was announced in a newspaper.  At a later date an electronic version of the newspaper was made available online by its publisher. Google indexed the link and if you ‘googled’ the name of Mr. González a link to the newspaper article showed up in the search results. Even well over a decade after the forced auction of the property it still shows up in the search results on his name. Mr. González wanted the links to the newspaper article removed from Google’s search results. Is Google obligated to comply with his request under the Data Protection Directive? That was the question the CJEU had to answer.

Questions to the CJEU (paraphrased)

  1. Google Spain stated that the actual search engine operator is in California, US and therefore falls outside of the scope of the Data Protection Directive. Is that correct?
  2. Is a search engine operator, such as Google, liable under the Data Protection Directive as a ‘controller’ of ‘processing personal data’ ?
  3. If so, can Google be required to remove the links to webpages showing personal data?

The most important questions of all of these, is the latter. Does there exist something as a ‘right to be forgotten’ and more importantly, what is required before someone may make use of this ‘right’?

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Proprietary effect of Dutch non-transferability clauses no longer default

The Supreme Court of the Netherlands has in its recent ruling of 21 March in Coface/Intergamma, shed a new(-ish) light on non-transferability clauses in contracts. It uses the layer of ‘interpretation’ to make a change in the way in which we’ve seen the non-transferability clauses. The practical effects however will be minimal.
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Low-cost notarial internet deeds cause quite a stir amongst Dutch notaries

As of 29 October there might be shopping lists that say: ‘bread, handkerchiefs & a last will and testament’.

HEMA, a popular shop with branches all over the Netherlands, famous own branded products at a relatively low price, and their smoked sausages, has started offering notarial deeds. After answering 11 questions on their website and after filling out a form, a notary of your choosing will contact you and set up an appointment for the singing of the deed(s). HEMA offers thus far only a co-habitation agreement and a last will and testament. The prices for these deeds are 125,- EURO per deed, which is, according to a representative of HEMA, roughly half of what you would pay elsewhere. Currently there are 26 Notaries in the Netherlands involved that notarise these HEMA deeds.

Deeds offered by HEMA
Co-habitation agreement
A co-habitation agreement (samenlevingscontract) is a notarial deed specific for partners that do not necessarily want to marry (at this time) or enter into a registered partnership, yet do want to arrange certain matters between the two of them. Matter such as the division of costs for groceries, clothing, and other living costs and also how to divide the household assets upon a separation. Often, a co-habitation agreement is also entered into because of the fiscal benefits attached to it, or in order to receive a partner pension.

The HEMA deed is however limited to only ‘standard’ situations and couples. Therefore, the following situations fall outside the scope of what may be covered by a HEMA deed:

  • If one of the partners owns a house and the other partner helps in the monthly payments;
  • The arranging of a division of assets after a split;
  • Either partner, or both, has savings or assets which they want to arrange a division for in the event of a separation;
  • The partners either save or invest their pension with their employer, and wish to share this in the event of a separation;
  • Arrangements about partner-alimony in the event of a separation. 

Much like the co-habitation agreement, the will is only suitable for ‘standard’ situations, and not suitable if:

  • One of the partners has a child or children from a previous relationship;
  • One of the partners has a business which requires special arrangements;
  • Either partner lives outside of the Netherlands or has assets like land in another country;
  • One of the partners is rich” and basically wants to make sure they pay the least amount of succession tax;
  • One of the partners is fighting with one of his/her children and wants to make special arrangements;
  • One of the partners does not want his/her children to have access to their share if they reach the age of 18 and both of the partners have passed away.

Furthermore, it is only possible that both partners get a will, HEMA will not arrange for a testament of one partner and have the other partner be left with no will.  If it is arranged, than it has to be arranged ‘properly for both parties’, according to HEMA.

Low price for standard situations
Each deed costs 125 EUR. This includes VAT and the costs for registering in the registry of testaments and/or keeping the particular agreement in the vault of the notary.

That HEMA can offer these deeds at such a low price, is explained by the fact that these deeds cover ‘standard’ situations, with little to no complicating factors such as one of the partners (or both) having quite a bit of capital, and no children from previous relationships. If a couple deviates just a little bit from the standard, then the HEMA deeds will not be suitable for them, and they are quickly looking at a price tag well above the 125 EUR.

This means that in particular young couples, that are about to move in together, or have just done so, preferably in a rental home, with little to no capital of their own, and without children, or with children of the two of them, will be eligible for the low price.

Standardisation of notarial deeds
The Royal Dutch Association of Civil-law Notaries (Koninklijke Notariële Beroepsorganisatie, KNB) has stated that initiatives like these are not new, and mentions that the low price offered by the notaries attached to HEMA for these deeds, is a consequence of the fact that since 1999 the market has been opened up and notaries have since been free to set their own prices for their services.

What is interesting is that with this opening up of the market, the process of standardization has taken flight. We see this also reflected in the deeds required for a transfer of land. Conveyancing of land in the Netherlands requires a notarial deed that is registered in the public land registry. This registry is kept by the Cadastre.

The Cadastre has attempted to facilitate the process of conveyancing with introducing KIK-deeds. In short, these electronic deeds are a way to electronically deliver, in standardized form, deeds of delivery of land or a deed to register a hypothec etc. (for some model deeds click here). The process of drafting up and subsequently registering a notarial deed is simplified and has become speedier by using these KIK-deeds. Because the process is quicker, also on the end of the notary, this automatically diminishes the workload of the notary, and hence the price for such a deed.

Note, this of course does not discharge the notary of his obligations to carefully inform the parties of the juridical consequences of these deeds, which the KNB stressed is a very important task of the notary when it commented on the HEMA deeds, nor does it discharge the notaries of their duty to check the accuracy of the deed, nonetheless it does do away with a some of the ‘paper mill’ that comes with the process of conveyancing land and limited property rights in land.

It is interesting to note that standardization efforts now also take place in the area of wills and co-habitation agreements. This in no-way diminishes the necessity of notaries, which are indispensible for those cases that are not ‘standard’, but for those cases which are ‘standard’ it makes arranging your affairs properly cheaper and hence more accessible.

Therefore, the fact that HEMA has started offering low-cost notarial deeds, aimed at arranging ones affairs vis-à-vis your partner and making sure your children and partner are taken care of in the event you pass away, is a welcoming development. This opens up the market of testaments and co-habitation agreements to those people with a little bit less to spend, and that should be supported. It will remain to be seen whether the standardised and simplified deeds satisfy an actual need in the market.

Criticism of the new service
Not every notary seems happy about HEMA’s new venture. One office of notaries has set up the website where they offer a discount of 125 EUR on their co-habitation agreement and testament, if you bring a warm HEMA smoked sausage. Another office of notaries states: “As HEMA has entered the notarial business, we are going to sell smoked sausages”, taking a jab at one of HEMA’s most well-known products.

Disciplinary court procedure
On 14 November, The Royal Dutch Association of Civil-law Notaries (Koninklijke Notariële BeroepsorganisatieKNB) had put out a press statement in which it announced that is taking the notaries (or some of them, this is unclear as of yet) to the Disciplinary Court for notaries, as the Board of the KNB questions whether or not the notaries attached to the HEMA-deeds live up to the notarial rules and regulations.

Issues of the KNB
In its statement the KNB expresses concerns and questions about the fulfilment of the duty of care exercised by the HEMA-deed notaries. In particular, the brunt of the work is left to the consumer(s) themselves, who supply HEMA (and with it the notaries attached to this project) all the required information by filling out a simple online form that they send via the HEMA website: Afterwards, a notary of their choosing will contact the consumer(s) to set up an appointment. It is at this point that the notaries become involved. They will meet with the parties and go over the deed and its (legal) consequences.

To me, this sounds no different from the regular practice of notaries, save for the fact that normally you would have a first meeting in person, via telephone or email by which you request the drafting of a deed and give the necessary information, rather than do all of this via the HEMA website. Hence, only the initial contact with the notary and the data-supply seems different, whereas the practice after first contact seems no different from an ordinary meeting with the notary. The KNB, however, is a bit more wary and has asked the disciplinary court to look into the matter.

Discussion starter
The KNB states that this practice, of taking work from the notaries and giving it to the consumer, could be a danger to the fulfilment of the duty of care the notary has for the legal protection of the consumer. It would therefore like to start a discussion within the ranks of the notaries about how these new societal and digital developments give rise to a possible new interpretation of the duty of care without degrading the legal protection awarded to consumers.

Thus, next to wanting to hear the disciplinary court’s opinion on the HEMA-deeds and the role of the notary, the KNB would also like to start a discussion about the role of the notary in a changing society.

Response of HEMA
When asked for a response, HEMA is stated it was ‘surprised’ by the statement of the KNB. According to a representative of HEMA:”this is not a new phenomenon. There are more websites that offer services like this.” According to her, perhaps the KNB was unpleasantly surprised by the large amount of attention given to the HEMA-deed.

Questions in Dutch Parliament

The discussion has also started in Parliament, where Member of Parliament Jan de Wit asked questions to the Minister of Justice of the Netherlands, about the HEMA initiative. His questions are as follows (my own translation):

  • Question 1
    What is your response to the announcement that HEMA has started a notary’s service?
  • Question 2
    Do you share the opinion that this practice can lead to clients being insufficiently informed about the effects of their choices? If not, why not?
  • Question 3
    Do you think that this practice is desirable and is there enough room for clients and the notary to come to a balanced judgement? If so, why?
  • Question 4
    In which way can it be ascertained, prior to payment having been made and the draft deed made, whether the client: is competent to act, can ascertain the consequences of a last will and testament or a co-habitation agreement, or that the client has not been pressured by a third party?
  • Question 5
    Are you going to take action against this notary’s service to ensure to prevent that clients, in the final execution of the deed, are confronted with unwanted situations which lead to an increase in (legal) procedures? If so, what actions are you going to take exactly? If not, why not and how are you going to prevent that this will apply to multiple legal areas?

Answers by Deputy Minister

Which brings us to this week. On 2 December, the Deputy Minister Fred Teeven, answered the questions. In brief, the Deputy Minister answered the following:

“The HEMA initiative shows entrepreneurship by notaries. (…) It is good that the notarial profession plays into the changing digital reality and also offers their services by using non-classical channels. A digital route can supplement the more traditional route, and could be useful for those people that know what they want and also understand the legal consequences of their actions. Whether there is a permanent and growing market for this, will have to be seen.”

Furthermore, the Deputy Minister states that:

“if the accessible initiative leads to people making use of the notarial services that would not have done so were it not for this initiative, then this means that, on balance, more people think about the effects of certain life choices.”

Additionally, the Deputy Minister does not currently see any reasons why he should intervene in these practices or prevent that this initiative spreads to other areas of the law. That latter point is very interesting, as HEMA has recently started offering a low-cost health insurance, and the CEO of HEMA, Ronald van Zetten, has said that while they are currently not working on it, they might in the future start offering mortgages as well.

While the Deputy Minister appears to be in favour, he was also keen to stress on numerous occasions in his answer, that of course these types of initiatives should stay within the limits of the law. Hence, he supported the fact that these practices were put before the Disciplinary Court. The Deputy Minister considers the question to be first and foremost one that requires the attention of the professionals themselves and is of the opinion that the Royal Dutch Association of Civil-law Notaries and its members together should set the professional standards and find the proper balance.

Therefore, it appears that the Deputy Minister seems to be in favour of the HEMA deeds, provided they are properly structured and fit within the rules and standards that come with the profession of civil law notary in the Netherlands. As the Deputy Minister reiterates that the HEMA deed notaries see their clients at least once, and talk to them on the phone also once, to me it seems perfectly logical that there should be no impediment to upholding the high standard that a notary has to fulfil in order to safeguard their clients’ interests. As I mentioned earlier, indeed the way to get to the notary is different, but the procedure when you are there is no different.  We’ll see what the disciplinary court says.


Final note: this post is a summary of posts on the author’s own website.


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Hunting for millions: Game show contestant presses button too quickly and ‘loses’ EUR 4.875.000

The Game

On 3 November 2013 a television game show contestant named Arrold van den Hurk, was the one chosen to play the game ‘Miljoenenjacht’. In this game he could potentially win EUR 5.000.000,-. However, Arrold pushed a red button to quickly and won only EUR 125.000. He now claims he lost EUR 4.875.000. Has he? It all depends on contract law.

In short the game works as follows: there are 26 people in the audience that all have numbered suitcase. In the suitcases there is a piece of paper with an amount of money on it. Potentially this is the amount of money you can win, if you sit out the entire game. The amounts vary from EUR 0.01 to EUR 5 Million. From the people with a suitcase, one of them is chosen at the beginning of the game to come forward to the game show host, Linda de Mol, and play the finale. That night it was Arrold. He brought his own suitcase down and started the game.

There is an extra player, the bank. The bank will have to give the amount of money in the suitcase to the player if the player never accepts the settlement offer. Which could possibly be EUR 5 million. Therefore, the bank will every now and then entice the player to accept a settlement. The settlement offer is based on the chance that the player has a high amount in the suitcase. At the start therefore, there is a 1/26 chance that the player has EUR 5 million in his suitcase, which he can take home. However as the game continues the player has the opportunity to open up certain suitcases and therefore play away those amounts. This means the chance that there is a large amount of money in his own suitcase fluctuates. The bank will calculate that risk and periodically will offer a sum of money for the contestant to walk away from the game.  This offer can be accepted by the contestant and then he gets the amount offered, not the amount in his suitcase. This means the contestant can walk away with thousands of Euro’s where he would, had he stuck with his own suitcase, only gotten 1 Cent. Because, neither the bank, nor the contestant knows how much is in the suitcase the contestant has.

At the time when Arrold made his decision there were 15 suitcases left (including his own). The amounts not yet revealed were: EUR 0,01; 0,50; 5; 10; 20; 50; 100; 2.500; 5.000; 100.000; 250.000; 500.000; 1.000.000; 2.000.000 and 5.000.000. The bank then made its calculation and offered Arrold EUR 125.000 on the spot. In front of Arrold, there was a huge red button. When pressed, the button symbolizes the acceptance of the offer of the bank (or does it?). After moments of contemplation, discussion with the host and his wife he made a decision. He then pressed the button.

Arrold pressed the button.. to his own and the Game Show Host’s surprise

After pressing the button he looks bewildered at the confetti falling down from above him, wondering what is going on and the following conversation ensues:

Arrold: “The moment I press it, I regretted it.”

Game Show Host : “Well, then we’ll just pretend you didn’t do that.”

Arrold: ”Is that possible?” (…) “It’s the nerves.”

Game Show Host: “I don’t know, (…) Let’s ask the notary”

Note, at this point, no-one (except the notary who fills the suitcases) knows that there is actually EUR 5 million in Arrold’s suitcase. However, the notary is independent and should have no interest in whether the contestant wins EUR 0,01 or EUR 5 Million.  The notary is strict and says:

’rules are rules, pressed is pressed’.

Arrold therefore won EUR 125.000. Nevertheless, they continue playing the game. It turns out there is EUR 5 million in his suitcase, the one his son told him would win him exactly that amount…

The Claim

Arrold, via his laywer, now claims the remaining EUR 4.875.000,-.
I have some issues with this claim. Indeed, his suitcase had the EUR 5 million, but that was only potentially his reward. Who is to say that had he continued to play away more suitcases he would not have accepted a later offer by the bank? Had he played away all the high amounts, the offer of the bank could potentially be lower than the EUR 125.000. True, it could also have been EUR 2.500.000 but who is to say that he would not have accepted another offer? Therefore, what is the basis for the claim of the ‘remaining’ EUR 4.875.000?

The Problem

The case turns on whether Arrold actually accepted the offer or not. When he saw the EUR 125.000 offered by the bank, he pressed the red button.

No-one is disputing that there was in fact an offer, however, the acceptance is hotly debated. Did Arrold accept the offer when he pressed the red-button which he immediately regretted and voicing this regret out loud?

The Rules

The rules of the game can be found online and are also given to the contestants on paper prior to starting the game. The rules online at the time of the taping of the show did not mention anything about the red button. However, the lawyer of Arrold found out, by making clever use of the Internet Archive, which periodically stores all that is on any website on the Internet, that the following sentence was added to the online version of the rules of the game a mere two days after the taping of this particular episode:

“Should the finalist want to accept the offer then he should press the ‘red button’ by which the game will end.”

The paper version of the rules of the game, which had to be signed by all contestants, also did not have this particular sentence in it.

The representatives of the show stated that this sentence was only a clarification of the rules, whereas the lawyer of Arrold states that this changes the rules of the game.

The Law

A contract in the Netherlands is formed through an offer and the acceptance thereof (Art. 6:217 Dutch Civil Code (DCC)). Acceptance of an offer in Dutch law can be done by in any form (Art. 3:37 DCC), which includes pressing a button. Now, Arrold could try to invoke mistake. A contract which has been concluded under the influence of mistake and would not have been concluded under a correct impression of the situation, is voidable in certain situations listed in Article 6:228 DCC. However, here it is difficult to assert that Arrold was mistaken. Rather, I suspect, his lawyer would state that the legal act of acceptance, was never given. Article 3:33 DCC states that

‘A legal act requires a will which is directed towards a legal consequence and which has been manifested by a declaration’.

As he immediately stated he did not want to accept, but rather he meant to close the transparent box over the red button, we could assume that his will was not directed towards this legal consequence. He conferred with his wife and decided to continue to play, but for some odd reason, as he stated because of the nerves, pressed the button instead. He never meant to end the game then and there. Hence, his will was not directed towards the legal consequence of accepting the offer which was manifested by pressing the button

However, of course, there is also the article that protects the other party, Article 3:35 DCC, which states:

“Against him who has interpreted another’s declaration or behaviour, in accordance with the sense that he could reasonably have attributed to it under the given circumstances, as a declaration of a particular scope directed towards him by that other, one cannot invoke the lack of a will which corresponds to his declaration.”

And here it depends on interpretation. Could the ‘bank’ have reasonably considered to be an acceptance? Or had, perhaps, Arrold (timely) revoked his acceptance? Arrold’s lawyer intends to bring the case to courts, so we will see.

 The Laywer

What is also a little bit odd about this case, at least for me, is the very proactive way in which the lawyer was acting. It was the lawyer who phoned Arrold, and told him that he might have a case and he should get a lawyer. Then when Arrold took him on as his lawyer the latter went on national television to explain the case for his client, and moreover, set up a website to set out the case again. Have you ever seen a lawyer set up a website for his client, detailing the case?

To watch the whole thing: Watch this YouTube video

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A Single Euro Payments Area but no free movement of bank-accounts

As of 1 February 2014 people in the European Union will have to use a lot more ink to fill out bank-account numbers. The International Bank Account Number (IBAN), formerly reserved for cross-border transfer of money, will be the new standard for everyone wanting to transfer money from one account to another, irrespective of a cross-border element. This means that some people in Europe will have to remember up to 31 characters (though the average of the IBAN numbers is closer to 20 characters). For your trouble you may rejoice in the fact that we should then be “one step closer to a proper functioning of the internal market” (Regulation No. 260/2012). A step closer, but a small one at best.


Making IBAN the standard for all accounts with European banks follows from EU Regulation No. 260/2012, which aims at advancing towards a Single Euro Payments Area (SEPA). In this area citizens, businesses and public authorities can make and receive payments in euro under the same basic conditions, rights and obligations, regardless of their location. The objective of SEPA is to increase efficiency and competition so that high-quality and competitively priced electronic payment products shall exist throughout the whole of the area.

Interestingly enough, the initiative of SEPA lies not with any of the EU institutions, but with the European Banking Industry, albeit with strong support of the European Commission and the European Central Bank. The SEPA project’s first success was the Direct Debit scheme, which enables consumers to make cross-border direct debit payments throughout all the SEPA countries. This provided consumers with easy payment of bills in other SEPA countries, from their home country by direct debit.

After this initial success, the European Commission did not consider the developments. The Commission also noted that not  all stakeholders were taken into account:

“In particular consumer and other user interests have not been taken into account in a sufficient and transparent way. The voice of all relevant stakeholders should be heard.”

The Commission thus took over, which led to Regulation No. 260/2012, which amended the earlier Regulation 924/2009 on cross-border payments in the Community.

Using IBAN as the standard, is considered to be “necessary for the proper functioning of the internal market” and will further that goal by increasing competition for (mainly) banks. This, as is often stated in favour of SEPA, will inevitably set a consolidation process in motion, with the resulting economies of scale leading to a lower cost price for payments. Which would be beneficial for consumers and businesses alike.


There are two things I do not understand about the upcoming change: (1) IBAN numbers were already in existence for those who wanted to make use of cross-border debits or credits, why would we need these for domestic debits and credits as well? (2) If advancing competition is the goal, then why no bank account number portability?


When the question came up whether the BIC, the Bank Identifier or SWIFT Code which locates the specific bank and helps the translation from IBAN to domestic bank, required in current cross-border transactions, should also come into play, it was specifically stated that:

“BIC is required only in a very small, residual number of cases. It seems unjustified and excessively burdensome to oblige all payers and payees throughout the Union always to provide BIC in addition to IBAN for the small number of cases where this is currently necessary.”

Whilst I understand that cross-border transactions which make use of IBAN without BIC are frequented more than those that do require such a code, one wonders why the movement towards a SEPA requires the sole use of IBAN. There is no reason to assume that for domestic transfers (within a single country) the IBAN ought to be used. Does this not also put an obligation to all payers and payees throughout the Union that is not necessary?

For cross-border transfers the IBAN is already used. Why not implement all that SEPA wishes to implement but leave out the necessity of going to IBAN for all transfers, including purely domestic ones? Removing hurdles for cross-border transfers is fine. I applaud the effort, but see no reason to extend it to purely domestic transfers. A 2012 Eurobarometer survey showed that 79% of people say they have not bought goods or services of any kind in another EU country over the past year. I suspect, that of the 21% that did, not an awful large part of all their payments was made up of those cross-border transfers, let alone direct credit/debit transfers, more-often a credit card will be used.

Inferences are drawn that a Single Euro Payments Area wishes to extinguish the difference between domestic and cross-border transfers, and therefore adheres to a single standard, that of IBAN. Such is closely tied to the competition argument, which brings me to my second question.


Had SEPA really wanted to make a step towards an increased competition, then the hurdles for setting up a bank account with another bank should be tackled as well, preferably by the ability to take your account number with you, to whichever bank you see fit, ie. number portability.

The Netherlands (and other Member States) have attempted to make the switching of bank accounts easier with introducing a 13-month switching period, in which you keep two accounts, your old and your new. You then have enough time to change your automatic credits and debits as well as inform all that need to know of your change of bank account. When the discussions in Dutch Parliament turned to the options available, the cheaper 13-month switching period was preferred over introducing number portability with its EUR 300-500 million price tag.

Part of the reason for these high costs was the fact that we had introduced IBAN not too long before that. Introducing number portability is not compatible with the IBAN system; as the latter is a number that is partly constructed by using the bank code. Number portability is therefore incompatible with IBAN. The Dutch Finance Minister at the time nevertheless was in favour of number portability. Yet, because the SEPA progress had already been in progress and EU involvement was present, the Minister considered this to be a matter of EU law, but stated he would do his best to bring number portability back on the table.

In Europe on the other hand, the lack of a Dutch implementation of number portability was an argument used by banking experts to oppose the introduction of EU-wide number portability. A somewhat circular reasoning if you ask me. From that same report is became clear that the banking sector is not in favour of number portability, due to the fact that their systems are designed for IBAN use, and a complete overhaul would cost an awful lot. Basically, had we wanted number portability we should have done it 20 years ago. Moreover, such a change would in their view still make it a burden for consumers (and companies) to change banks.

“Also, banks would still need to carry out money laundering checks on new customers and branded products such as debit card and chequebooks would still need to be re-issued by the new bank, and debit cards would need to be re-issued in any case because they carry the International bank identifier number. Finally, account portability would remove the one-to-one relationship between a bank and a sort code, which is important, for example to identify which branch a cheque needs to be sent, and a ‘number portability’ remedy would increase the risk of fraud. “

Consumers and companies do not, however, encounter difficulties with having to change a bank card in their wallet or throw out their old chequebook and replace it with a new one. No, the issue lies with having to inform all your debtors and creditors of the changed account. This is not mentioned by the banking experts, but is touched upon by the consumer experts.

In the summary of the public consultation on Bank Accounts, carried out by the Commission, one of the questions was particularly directed at switching bank accounts. It was asked:

What other measures [other than those directed at preventing misdirection of payment, AB] should be considered to improve bank account switching? Please describe.
Consumers and civil society
The majority of the stakeholders that replied to this question indicated that the introduction of bank account number portability offers the best solution, as it would eliminate the risk of misdirection of payments as well as most of the complications for consumers and third parties and would require only the banks concerned to make changes. As an intermediate solution, consumer organisations proposed to introduce a rerouting system, like the one currently in place in the Netherlands and in course of adoption in the UK. Stakeholders indicated that any long-term measure should focus on the portability of bank account numbers or the portability of customer account numbers linked to the underlying bank account numbers (like in the Swedish ‘Bankgiro’ system). Respondents also addressed the importance of ensuring compatibility between account number portability and the SEPA and IBAN frameworks, and called on the European Commission to launch an in-depth feasibility study on this topic. “ (emphasis added, AB)

By maintaining the bank-code in the IBAN number enhanced competition is intrinsically hindered by the administrative hurdles of actually switching to competing bank. By opting for the  IBAN-number a step towards a Single Euro Payments Area has been made, but one that will not necessarily be followed (easily) by consumers or companies. In the 2012 Euro Barometer, a mere 5% of the respondents would consider switching to a bank in another country, as opposed to 7% six years earlier. The number has only decreased. Perhaps 1 February 2014 will change the tide, but I expect number portability would do more to that number than switching to IBAN for all transfers would.

One final thought, should competition soar, and people in large numbers change accounts from (traditional) domestic to banks in other countries, the effects of this large scale movement of bank accounts might require another inspection of the Deposit Guarantee System. In volatile economies, banks might not survive, and consumers could lose their deposits with the banks. EU regulation in this area exits, but perhaps requires a recalibration should large scale switching of bank accounts in EU take place.

Future outlook

A Single European Payments Area has not been achieved yet as several areas have been left out of the scope of the Regulation. This leaves room for hope that in future legislation a truly competitive market will be achieved by implementing something of a free movement of bank-account numbers, which has been hinted at. Though, do not expect this in the upcoming 10 years. Nevertheless, I look forward to future developments in this area. For now, you have roughly 10 months to get used to your (new) account number.

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