The National Bank has not given a definitive rejection to the idea of eliminating the fidelity premium on savings accounts. It has suggested that such a move could be feasible, but it also cautions the government to consider the potential impact on the stability of the banking industry. This news is reported by L’Echo, De Tijd, and Le Soir.
This comes amidst debates that the interest rates on savings continue to remain at a low level. Last year, Economy Minister Pierre-Yves Dermagne (PS) had requested the Belgian Competition Authority (BMA) to conduct a thorough investigation into the various services provided by banks, with a special focus on savings interest rates.
The BMA, after examining the market, concluded that there was insufficient competition among the four major banks. They suggested that banks should discard their unclear base rates and fidelity premiums. Following this, the Minister proposed the idea of a uniform interest rate for all savings accounts, which would make it easier for customers to make comparisons.
Dermagne sought advice from the National Bank, which is responsible for overseeing banks, and the Financial Services and Markets Authority (FSMA). In response, Pierre Wunsch, the governor of the bank, did not object to the idea of scrapping the fidelity premium. He considered the recommendations from the BMA to be a good basis for contemplating measures to enhance transparency and customer mobility in the savings market.
Stability
However, the National Bank also highlighted the importance of ensuring stability within the banking sector. The bank pointed out that the fidelity premium, which is only earned after a year, contributes to this stability. It mentioned that savings serve as a vital source of funding for loans being given to households and businesses. If the fidelity premium were to be abolished, Wunsch suggests that a transition period would be essential.
The National Bank also proposed other alternatives. These include simplifying the system of fidelity premiums or reducing the time required to earn the premium from one year to six months as a way to encourage more mobility in the savings market.
