Bank of Italy's long-awaited spotlight on unilateral changes

After the ECB's decision to lower interest rates by a modest quarter of a point, the US Fed decided in the following days to leave them unchanged once again. Two moves that were widely expected by analysts, who forecast interest rates to remain high for a long time to come. Even though a drop in the cost of money and a revival of investments are badly needed in Europe, in order to emerge from a situation of feeble economic recovery. "The fall in rates," as ECB President Christine Lagarde reiterated in an interview with Il Sole 24 Ore this week, "is not said to be linear. It will certainly benefit the banks, which will also be able to close 2024 with flourishing balance sheets, in the wake of the record profits already posted in 2023, mainly due to the strong expansion of the interest margin. And not only that.

In fact, the rise in rates has enabled credit institutions to make considerable gains from the difference between the average rate charged on loans and the average rate recognised on the sums collected from customers. The former has risen at a brisk pace, the latter at a more than slow rate. But also contributing to the prosperity of banking profits was Article 118 of the Consolidated Banking Act, concerning unilateral changes to contractual conditions, which in recent years has been used one-way in favour of the banks. The latter, in fact, have first made changes to contractual conditions that are worse for customers, with the debatable justification of negative rates, not only on the interest paid to customers but also on various expense items of current accounts, without then restoring the previous conditions when rates from July 2022 started to rise again. Thus the banks continue to collect a cost surcharge that no longer has any reason to exist. What is more, a number of banks in recent months have further increased their charges to account holders, citing the justified reason of rising inflation, which again - it should be remembered - has largely receded.

So far, therefore, the Bank of Italy's warning has fallen on deaf ears: on 15 February 2023, it announced that 'with the current increase in interest rates, intermediaries have been urged to revise their conditions in a customer-friendly direction'. But for current account holders there is still a shred of hope that the original contractual conditions more favourable to them will be restored. In its report on the activities carried out in 2023, published on 31 May, the Bank of Italy points out that among the investigations in progress, as part of its checks on the conduct of intermediaries, it has 'initiated contacts with 13 operators to investigate the initiatives adopted or planned following the indications provided to the system by the Institute with the February communication on the subject of unilateral changes to contractual conditions motivated by trends in interest rates and inflation'. There is therefore still no end in sight to the matter.