The Competition Authority has in
a settlement was reached with Arion Bank, where the bank acknowledges having breached
a ban on arrangement fees on loans to small businesses and pays 80
millions of kroner in fines. The investigation and outcome of the case are detailed in Decision no. 4/2023,
which has been published on the supervisory authority's website.
The background to the matter is that during the year
In 2017, Arion Bank reached a settlement with the Competition Authority regarding an investigation that began
in light of complaints from a smaller competitor. This settlement is set out in the decision.
No. 24/2017,
Measures to enhance competition in general commercial banking services with
individuals and small businesses. In the case, the bank committed to
to take various measures and comply with conditions aimed, among other things, at reducing
costs incurred by customers when switching provider
financial services. Were the conditions thus intended and contribute to a more effective
competitive advocacy by individuals and small businesses.
According to Article 2 of the settlement of
In 2017, a ban was introduced on arrangement fees for loans to individuals and small businesses.
of companies bearing variable interest rates. In the monitoring of the Competition Authority
The settlement gave rise to suspicions about the bank's implementation of this.
conditions would be lacking. The Competition Authority therefore launched an investigation into this in August of this year.
last year. It concludes with the settlement presented today.
The conclusion of the study is
that Arion Bank acknowledges having breached the aforementioned ban on
Repayment charges on variable-rate loans to small businesses in
in certain limited circumstances. It thus emerged that the bank had, in nine loan agreements
which bear variable interest rates stipulate an early redemption fee or its equivalent. Then
The bank charged a redemption fee in one of these cases.
Furthermore, the bank agrees that
Information provision to customers regarding Article 2 could have been better.
of the settlement. Thus, the bank's tariffs did not include the aforementioned prohibition against
renewal fees, in addition to the fact that the then relevant borrowers were not
a specific provision is made for the effect of the settlement on their loan terms.
As previously stated, pays
The bank was fined 80 million in connection with the case. This has significant bearing on the assessment of
The amount of the fines has been reduced as Arion Bank has shown a strong willingness to cooperate, and the matter has been settled.
investigation and proceedings of the Competition Authority. Furthermore, it is taken into account that
When the Competition Authority launched an investigation into the conduct, the bank quickly took action.
to ensure its impact would be minimised. In addition, the bank has taken
various measures with a view to ensuring more reliable implementation of Article 2.
of the settlement thereafter.
Landsbankinn and Íslandsbanki
reached comparable settlements with Arion bank on measures to strengthen competition in
General commercial banking services for individuals and small businesses in 2017. Decision
The one presented here applies exclusively to Arion Bank and is aimed solely at
the bank's compliance with Article 2 of the settlement, which includes a prohibition on
Repayment charges on loans for individuals and small businesses that bear
variable interest rates.
The above-mentioned agreements with
The bank bailouts from 2017 are still of significant importance because they tackle the situation.
which undermine healthy competition in general commercial banking services with
individuals and small businesses. Then the conditions are conducive to it, along with
competitive discipline from smaller and/or specialised financial firms, to counteract the risk of tacit coordination
of the three major commercial banks.
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