A legislative proposal is advancing to regulate bank fees for closing accounts of deceased clients, aiming to eliminate such charges for minors and small estates. Supported by socialist deputy Christine Pirès Beaune, the bill has passed its second reading in the National Assembly and is set for discussion in the Senate. It restricts fee imposition significantly, with exceptions for certain complex cases. If enacted, this law will take effect in early 2025, potentially impacting banks’ revenue from estate processing fees.
Proposed Law to Regulate Estate Bank Fees
A new legislative proposal aimed at regulating the fees that banks charge for closing the accounts of deceased clients is nearing approval. This groundbreaking law seeks to eliminate these fees for deceased minors and small estates, as well as for estates where direct heirs are readily identifiable. Let’s delve into the specifics of this upcoming legislation, which is anticipated to come into effect in the first quarter of 2025.
Changes in Bank Fee Regulations for Deceased Clients
The era of banks having unrestricted freedom to impose fees related to estate processing is coming to a close. A bill championed by socialist deputy Christine Pirès Beaune has recently passed its second reading in the National Assembly with unanimous support. The next step involves a second reading in the Senate, following which the bill could be definitively adopted. This legislation significantly restricts the circumstances under which banks can levy charges for closing the accounts of deceased individuals.
For over two and a half years, these fees have faced intense scrutiny from both the public and regulatory authorities. The turning point came after a family publicly expressed their outrage over being charged €138 to close their deceased child’s Livret A account. This incident prompted former Economy Minister Bruno Le Maire to urge banks to reconsider their practices, specifically advocating for an end to fees associated with the accounts of deceased minors.
While some banks have responded positively, leading to a slight decrease in the average fees, a collective effort for self-regulation has yet to materialize. As it stands, the average fee remains high, with €194 in 2024 for an estate valued at €15,000, according to recent surveys. There is substantial variation among institutions, with fees ranging from €0 at BoursoBank to €450 at Allianz Bank and Crédit Agricole Martinique and Guyane for the same estate value.
This lack of initiative within the banking sector may result in significant repercussions, as banks will likely face the implementation of a stringent new framework that will make charging for estate processing fees the exception rather than the norm. This adjustment may lead to a loss of an estimated revenue stream of between €125 and €200 million annually, based on a parliamentary report.
The key aspect of the proposed law is the prohibition of estate processing fees when the deceased is a minor or when dealing with small estates. Specifically, the legislation sets a threshold, already established in existing regulations, allowing heirs to withdraw necessary funds for funeral expenses. This threshold, originally set at €5,000 in 2015, is now indexed to inflation and currently stands at €5,909.
The bill also extends its prohibitions further, banning charges for straightforward estates where direct heirs are known, regardless of the estate’s value. This change is expected to impact the vast majority of estate processing cases.
However, banks will still have the ability to impose fees under certain circumstances, such as when heirs are unknown or when there is no direct heir. Additionally, four “complexity reasons” are outlined that may justify a charge even when direct heirs are identifiable:
- Inclusion of a mortgage in the estate
- Existence of a professional account
- If the account has been secured as collateral for a debt
- Involvement of foreign elements requiring cross-border operations
Notably, a stipulation regarding “reasonable time” for settling estates, which may have allowed banks to charge for delays, was removed from the bill to prevent potential exploitation by banks.
When fees are applicable, they will be capped at 1% of the total value of the assets to be transferred. The law will encompass various account types, including deposit accounts, savings accounts, and regulated savings products, while excluding certain investment accounts.
As it stands, the bill has passed its second reading in the National Assembly, but it must still be approved by the Senate before becoming law. Although current political instability may pose challenges, advocates hope for the law’s enactment in the first quarter of 2025. Following adoption, there will be a six-month period for implementation, allowing the government time to publish necessary decrees and for banks to adjust their pricing structures accordingly. Presently, only a select few institutions seem prepared to meet the anticipated regulatory standards.
In conclusion, the proposed law marks a significant step toward protecting consumers from excessive bank fees associated with estate processing, with the potential to bring much-needed relief to families navigating the difficulties of losing a loved one.