Bank may apply foreign surcharge as EU considers BES Islands “Overseas Territories”

The Financial Services Complaints Institute (Kifid) in The Netherlands has rejected a complaint by a resident of Bonaire about the ‘foreign surcharge’ that ABN AMRO charges residents of the Caribbean Netherlands. The bank is allowed to do this because European legislation is not in force on Bonaire, St. Eustatius and Saba.

Several consumers have complained to Kifid about the fact that ABN AMRO has introduced a foreign surcharge on their bank account from 1 July 2021. The Disputes Committee concludes that the bank may charge this foreign surcharge, according to two judgments published today. The bank charges this foreign surcharge for accounts of consumers who live outside the  European Netherlands, so-called non-resident customers. The costs that the bank must incur for these customers to comply with international laws and regulations are, on average, higher than for consumers living in the European part of The Netherlands.

The judgments published today concern a complaint from a consumer who lives in Switzerland and a complaint from a consumer who lives on Bonaire. Both have a current account with ABN AMRO. In mid-April 2021, the bank informed both consumers that the monthly rate for the payment account will be increased with a foreign surcharge as of 1 July 2021. The consumer in Switzerland has to pay 8 euros more per month for his bank account and for the consumer on Bonaire an increase of 15 euros per month applies. This foreign surcharge is necessary because the bank has to incur more and more costs to comply with local and international legislation. For customers outside the Netherlands, the non-resident customers, these costs are on average higher than for customers in the European Netherlands. Both consumers dispute that the bank may introduce this surcharge unilaterally and selectively. In addition, they find the increase of 8 euros and 15 euros per month respectively unreasonably high.

Surcharge unfair or unreasonable?

The starting point for the Disputes Committee is that a bank may not include a provision in the terms and conditions that is unfair or unreasonably onerous. This follows from the European Directive on unfair terms in consumer contracts. Under the conditions applicable to both payment accounts, the bank may unilaterally change the terms and conditions, provided that such change has been notified to affected consumers two months in advance. Consumers should be given the opportunity to cancel the account if they so wish. With the message of mid-April 2021 to affected consumers, the bank has complied with this. In those more than two months, consumers could have opened a payment account with another bank. The Disputes Committee concludes that there is no question of an unfair or unreasonably onerous provision in the terms and conditions.

Foreign surcharge justified or not?

To comply with local and international laws and regulations, the bank has to incur more and more costs. For consumers outside the European Netherlands, non-resident customers, these costs are on average higher and certainly in countries where the bank has no activities or an office. The bank has said that it is forced to pass on these average higher costs partly to non-resident customers. The bank no longer wants those higher average costs to be paid by all customers. Neither consumer in these complaint cases has made it plausible that the introduction of the foreign storage would be unacceptable according to standards of reasonableness and fairness. Their arguments that an increase of 8 euros or 15 euros per month is unreasonably high and that canceling the account would entail a lot of administrative work for them, does not make this any different. The fact that other banks may have a different policy on this point also does not mean that the introduction of a foreign surcharge would be unacceptable.

Non-resident also applies to all BES Islands

The consumer on Bonaire disputes that the bank may treat her differently from other Dutch people because she lives on Bonaire. Bonaire is after all a special municipality of the Netherlands. The Disputes Committee notes that Bonaire has the status of ‘Overseas Territory’ in the European Union. As a result, European legislation on the relationship between bank and consumer does not apply to the BES Islands, as it does to consumers in the European Netherlands. That is why the Disputes Committee rules that the bank may treat the consumer on Bonaire differently than consumers who live in the European Netherlands.

In both judgments, the Disputes Committee concluded that the bank may charge the foreign surcharge of 8 euros or 15 euros per month for the payment account of both consumers.

More complaints

Kifid currently has a number of similar complaints pending. In assessing these complaints, the Disputes Committee will stick to the line as set out in this ruling. Of course, each complaint is assessed on its own merits and specific circumstances can lead to a ruling deviating.

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