Bunq (and others?) - banks paying different interest rates to depositors of different EU countries

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podgerodge

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As most know, Bunq pays a lower rate of interest to Irish (and other) depositors than it does to Dutch customers. Most recently, following the last ECB increase, they have widened the gap again in favour of Dutch depositors.

As far as I know, there is no EU law preventing them doing so, and it is a commercial decision for them.

However, they have now posted, presumably in reaction to being asked, a statement on their website:

Why do MassInterest rates vary in different countries?

We strive to offer our users the most competitive interest in all countries. Each country has its own set of rules and regulations (for example regarding taxes), resulting in different interest rates across Europe. As a bank we need to comply with those rules, which is why we maintain different interest rates in the Netherlands, Germany, France and other countries.

I find it nearly impossible to believe that this could be true, and it reads more like somebody in their comms unit just pieced something together in a minute to defend their policy in this regard. Anyone on here know of any potential truth to this - surely we are all EU citizens and Bunq can pay whatever rate it wants to, to all of us?
 

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I already voted with my feet when they offered different rates for Netherlands months ago, and all my savings are in raising now. If more people would be doing the same they would have chance course already but I think they are aware interest rates are peanuts here anyway and that they can get away with it
 
I presumed the fact that they offer mortgages in the Netherlands was part of the reason as they charge 4.85-5.25% whereas the ECB deposit rate where they probably put Irish deposita is 3.5%
 
podgerodge said:
As most know, Bunq pays a lower rate of interest to Irish (and other) depositors than it does to Dutch customers. Most recently, following the last ECB increase, they have widened the gap again in favour of Dutch depositors.

As far as I know, there is no EU law preventing them doing so, and it is a commercial decision for them.

However, they have now posted, presumably in reaction to being asked, a statement on their website:

Why do MassInterest rates vary in different countries?

We strive to offer our users the most competitive interest in all countries. Each country has its own set of rules and regulations (for example regarding taxes), resulting in different interest rates across Europe. As a bank we need to comply with those rules, which is why we maintain different interest rates in the Netherlands, Germany, France and other countries.

I find it nearly impossible to believe that this could be true, and it reads more like somebody in their comms unit just pieced something together in a minute to defend their policy in this regard. Anyone on here know of any potential truth to this - surely we are all EU citizens and Bunq can pay whatever rate it wants to, to all of us?
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Rules and regulations sounds like a made up excuse by Bunq.

Bunq pay less to depositors in Ireland because they can get away with it. There is less competition for deposits than places like Germany and German customers are also paid a higher rate by Bunq (2.55% for the first 4 months).

Raisin act similar. Raisin give lower rates for Irish customers than they do in other markets for the exact same products. Again, because they can get away with it.

Is this legal? I vaguely remember hearing once that EU companies are supposed to charge the same for goods/services to all EU citizens all other things being equal? or is that totally incorrect?
 
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Lightning said:
Rules and regulations sounds like a made up excuse by Bunq.

Bunq pay less to depositors in Ireland because they can get away with it. There is less competition for deposits than places like Germany and German customers are also paid a higher rate by Bunq (2.55% for the first 4 months).

Raisin act similar. Raisin give lower rates for Irish customers than they do in other markets for the exact same products. Again, because they can get away with it.

Is this legal? I vaguely remember hearing once that EU companies are supposed to charge the same for goods/services to all EU citizens all other things being equal? or is that totally incorrect?
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There is EU law/opinion that has addressed this (I will try and find it), which says they are entitled to. My issue is that they are trying to push the excuse onto individual "rules and regulations" and "as a bank, we have to comply" - that's an untruth, and they should be called out on it.
 
First reaction was that that sounded like piffle from a marketing department. Having looked at the bunq website (what a shambolic mess) the interest rate issue appears to be more nuanced than simply ripping of the Irish. In reality, it is only Dutch savers who are advantaged with the higher rate. All other EU savers (with the exception of a 4 month promo for "New" German savers) suffer the lower 1.56% rate. A possible explanation is that there may be some NL tax provision which results in a benefit to NL depositors. Frankly, it sounds tenuous, but remember that the tax codes are not in any way harmonised. The only way to get an answer to this is to make a formal complaint to bunq and then to KiFiD. Complaint process is here: https://together.bunq.com/d/41186-how-to-make-a-formal-complaint (Complaints are a two stage process, first a email to [email protected], subject Formal Complaint and after you receive a totally unsatisfactory answer you go to www.kifid.nl)

Incidentally, off topic, interest payment has now changed to weekly (shows as Thursday on my account). It's in the Profile section under "Bunq Payday". You are also advised to ensure that "bunq Payday" toggle is ON. Switching it off allows you to ensure that you won't receive any interest payments - very useful feature there...... (You may need to install the latest version of the App to see the Bunq Payday options).

And is there any way to stop autocorrect changing "bunq" to "buns"..........
 
Freelance said:
Incidentally, off topic, interest payment has now changed to weekly (shows as Thursday on my account). It's in the Profile section under "Bunq Payday". You are also advised to ensure that "bunq Payday" toggle is ON. Switching it off allows you to ensure that you won't receive any interest payments - very useful feature there...... (You may need to install the latest version of the App to see the Bunq Payday options).
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Interesting that interest is now weekly. Interest payment frequency seems to be increasing with some banks offering daily interest.

Bunq have also launched GBP and USD savings accounts. 3.71% interest in all countries. Not as good as Lightyear but it might interest some. https://twitter.com/bunq/status/1681379141889785858?t=FBGknlsetFOtQnmsOWaYig&s=19
 
If there are objective factors businesses can charge more for cross-border provision of services but I can't see how it applies here. Interest is the pure cost of a deposit and Bunq's whole business model is set up on the basis of attracting deposits from all over the EU.

Freelance said:
First reaction was that that sounded like piffle from a marketing department. Having looked at the bunq website (what a shambolic mess) the interest rate issue appears to be more nuanced than simply ripping of the Irish. In reality, it is only Dutch savers who are advantaged with the higher rate. All other EU savers (with the exception of a 4 month promo for "New" German savers) suffer the lower 1.56% rate. A possible explanation is that there may be some NL tax provision which results in a benefit to NL depositors.
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Even if there is I don't think this is a valid reason for discrimination on rates.

Freelance said:
Frankly, it sounds tenuous, but remember that the tax codes are not in any way harmonised. The only way to get an answer to this is to make a formal complaint to bunq and then to KiFiD. Complaint process is here: https://together.bunq.com/d/41186-how-to-make-a-formal-complaint (Complaints are a two stage process, first a email to [email protected], subject Formal Complaint and after you receive a totally unsatisfactory answer you go to www.kifid.nl)
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This is indeed the correct way to do it. If anyone tries it do let us know how you get on!
 
Found the relevant piece I was talking about (this does not get Bunq off the hook for potentially telling porkies about WHY they are discriminating. They might be better off just saying "cos we want to", rather than blaming EU countries' law.

Article 15 of the Payment Account Directive[1] obliges Member States to ensure that credit institutions do not discriminate against consumers legally resident in the Union by reason of their nationality or place of residence. This rule, however, only applies as regards payment accounts, but not for instance, as regards savings accounts.

Furthermore, it is settled case law[2] that while citizens can invoke the breach of fundamental freedoms, the Commission can only act against State measures in its role as guardian of the Treaty. In this particular case, the Commission understands that the residence requirement for opening of savings accounts is a practice of some of the payment service providers but there is no national measure adopted by the concerned Member States (in the current case in Belgium or in Germany) imposing that requirement.

The Commission does not have information on different interest rates offered by credit institutions to residents of different Member States for similar deposits. Interest rates may differ per country based on supply and demand. As such, it is considered part of the commercial freedom of banks to determine what rate to offer.

The Commission does not currently consider any legislative changes to the Payment Accounts Directive in this respect.
 

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Worth noting that the GBP and USD savings accounts with Bunq are not protected under the Deposit Guarantee Scheme.
 
So my formal complaint to Bunq suggesting that different EU rules and regulations that it needs to comply with are the reasons it offers different interest rates, resulted in a response. The link they provide in the response still brings you to the piece referring to local rules and regulations that it needs to comply with:

"Your core complaint is about the reason that Bunq has provided for our decision to not raise interest in Ireland. According to you, Irish rules and regulations, along with tax differences, shouldn't prevent us from offering higher interest rates.

Kindly note that the decision to raise interest rates for Personal and Business Savings Accounts is influenced by various factors, for example, market conditions. This has been provided on our Together page: https://together.bunq.com/d/57157.

I hope to have sufficiently informed you."
 
I don't hold out much hope of any real response to this, but I've now esclalated it to KIFID for a "binding" response. If I had realised how tortuous it would be I wouldn't have started, the whole website for the actual submission is in Dutch only, and I couldn't get it to translate on the fly.

Will probably just get a response saying Bunq can do what they want. Which they can. It's the potential porkies that annoy me (or perhaps there are rules and regulations in Ireland that I don't know about!)
 
Hi podge

Good to keep them on their feet.

Interesting reply

Different regulations would certainly result in higher mortgage rates. Not sure why it would result in lower deposit rate.

This covers everything though

for example, market conditions.

They don't need to pay higher rates because Irish banks are paying so little.

Brendan
 
Yep, definitely, their "market conditions" is perfectly fine (even if vague) for them to state. And if they change their statement on the website to that, I would have no problem. It's the statement that insists there are rules and regulations they need to comply with, which should be withdrawn or clarified.
 
podgerodge said:
I don't hold out much hope of any real response to this, but I've now esclalated it to KIFID for a "binding" response.
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Good work!

In general Dutch financial supervision is of a high standard so it's worth a try. My guess is you'll get a no unless there is a specific Dutch consumer protection rule that prohibits discrimination on the basis of member state of residence. I suspect there is no such rule.

Let us know how you get on. If there is a KIFID rejection you could take a fundamental freedoms complaint to the European Commission. It will cost you nothing and the only way to get traction on these kinds of issues is to make the Commission aware of it. It might be worth writing to your MEP as well as this is the kind of consumer issue that many of them would publicise.
 
Yep. For me I think the main issue is not the discrimination on rates (as I previously posted the EU Commission views this as legal), so it's more about Bunq giving false reasons for doing something that IS legal, but trying to imply to depositors that lower interest offerings in other EU countries like Ireland is beyond their control due to "rules and regulations" they need to comply with. They should post such rules, or give the real answer ("market conditions" etc.).
 
The wording in the second sentence is very interesting. Although they refer to Irish rules, regulations and taxes in the first sentence (as they did on the website) they move on to use "Market Conditions" in the second sentence. It's as though they were agreeing that you could well be right about Irish rules and regulations, along with tax differences, not preventing them from offering the same rates. And they feel the need to introduce something else, market conditions. I'd say you have them a little bit concerned. Well done on pushing this.
 
podgerodge said:
For me I think the main issue is not the discrimination on rates (as I previously posted the EU Commission views this as legal), so it's more about Bunq giving false reasons for doing something that IS legal, but trying to imply to depositors that lower interest offerings in other EU countries like Ireland is beyond their control
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I’d be a bit more maximalist myself:)

Just because the EU Commission says something is legal doesn’t mean that the EU Court of Justice will agree. In any case the Commission doesn’t pick every battle due to (a) finite resources; (b) lack of public or stakeholder pressure.


Bunq is segmenting the market purely for the benefit of its own profits in my view. For me the issue is the legality of what Bunq is doing per se rather than what its stated reasons are.
 
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