Approved at the meeting
of the Council of
the Commercial Banks Association of Latvia
11.11.2009.

COMMON PRINCIPLES ON THE NATURAL PERSONS'
CURRENT ACCOUNT SWITCHING
(COMMON PRINCIPLES)

1. PREAMBLE

These Common Principles have been derived from the Common Principles on Bank Account Switching developed by the European Banking Industry Committee. The aim of the Common Principles is to ensure that current account switching is not complicated for consumers, not hampered by unnecessary delay or insufficient support from the banks, and to raise the customers' awareness of the account switching services.

2. DEFINITIONS

The bank means the former bank or the new bank that adheres to the Common Principles.

The 'former' bank means a bank registered in the Republic of Latvia or a Latvian branch of a bank registered in another country, in which the Customer has opened a current account.

The 'new' bank' means a bank registered in the Republic of Latvia or a Latvian branch of a bank registered in another country, to which the Customer wishes to move his/her current account.

The Customer means a natural person who has a current account with the 'former' bank and who wishes to transfer his/her payments to another bank (the 'new' bank).

Payments relationship means maintenance of a current account on which the Customer makes and receives payments and maintenance of recurrent direct debits and/or standing orders.

The current account means an account opened by a natural person with the bank for making and receiving payments.

Standing orders means regular transfers of funds to a specified creditor according to the Customer's orders to the bank.

Recurrent direct debits means a legal relationship established between the bank and the Customer whereby the Customer orders the bank to make payments according to the creditor's orders.

3. IMPLEMENTATION OF THE COMMON PRINCIPLES

3.1. The Common Principles are applied when the Customer in Latvia wishes to switch his/her payments relationship from the 'former' bank to the 'new' bank.

3.2. Switching of the payments relationship takes place by opening an account in the 'new' bank and using the option A+B or only the option B (see below).

Option Description Proscriptive factors A closing of the current account in the 'former' bank 1) The Customer's current account in the 'former' bank is closed 2) All agreements on recurrent direct debits and standing orders with the 'former' bank are cancelled and 3) the current account balance is transferred to the customer's current account with the 'new' bank A loan or other credit agreement is signed with the 'former' bank and the current account is used for settlement of payments arising from the credit agreement. A securities account is connected to the current account in the 'former' bank The current account in the 'former' bank is used for accumulation of the currency and the balance in it is insufficient to pay for the services related to forex operations A term deposit, a savings deposit or other type of deposit or a deposit product is connected to the current account in the 'former' bank The Customer has an outstanding debt in the' former' bank (e.g. commissions for a service) The funds in the current account are arrested and/or subject to collection or the Customer's rights to handle the funds in the current account are otherwise restricted by the law B Switching of recurrent direct debits or standing orders At the Customer's discretion the recurrent direct debits or standing orders are cancelled in the 'former' bank and new agreements on recurrent direct debits and standing orders are concluded with the 'new' bank. A loan or other credit agreement is signed with the 'former' bank stipulating that the customer's salary must be paid on this account or this account must be used for settlement of daily payments. The funds in the current account are arrested and/or subject to collection or the Customer's rights to handle the funds in the current account are otherwise restricted by the law The 'new' bank has not concluded agreements with the creditors of the recurrent direct debits operating at the 'former' bank and the Customer wishes to continue this arrangement.

3.3. There may be other, previously unmentioned factors that can be considered proscriptive if the current account in the' former' bank is tied to other products or services whose terms forbid switching of the account, or other important reasons.

3.4. If the aforementioned proscriptive factors do exist, switching of the account may not be implemented.

4. INFORMATION ON SWITCHING OF PAYMENTS RELATIONSHIP

4.1. The banks will provide clear and complete information (hereinafter - the Customer Information) to the Customers wishing to switch their payments relationship.

4.2. The Customer Information shall include:

4.2.1. Description and options of switching of the payments relationship;

4.2.2. The activity framework of the banks and the Customer:
- the duties of the 'former' bank;
- the duties of the 'new' bank;
- the Customer's duties;
- the timescale of the process as indicated in Item 5.6 of the Common Principles;
- fees, if applicable.

4.2.3. The Customer Information shall conform to the provisions of Annex 3 of the Common Principles.

4.2.4. The Customer Information shall be placed on the Bank's website. The Common Principles and annexes thereto are available on the website of the Commercial Banks Association of Latvia www.bankasoc.lv .

5. THE PROCESS OF SWITCHING THE PAYMENTS RELATIONSHIP

STEP I

5.1. The Customer approaches the 'new' bank with a request to switch the payments relationship. Upon receipt of the Customer Information the Customer submits to the 'new' bank the application on switching of his payments relationship (hereinafter: - Application No 1; Annex 1).

5.2. The 'new' bank will:

5.2.1. provide the Customer with the Customer Information (Annex 3.);

5.2.2. identify the Customer;

5.2.3. open a current account for the Customer if it has not been opened earlier and the Customer wishes to do it at that moment. The current account can be also opened for the Customer at a later date (see Item 5.4.4);

5.2.4. accept the Customer's Application No 1;

5.2.5. send the Customer's Application No 1 to the 'former' bank;

5.2.6. explain the Customer:

5.3. The 'former' bank will:

5.3.1. Upon receipt of the Customer's application No 1 from the 'new' bank check if there are any proscriptive factors for switching of the payments relationship;

5.3.2. If there do exist any proscriptive factors of those listed in part B, Item 3.2 of the Common Principles, the 'former' bank will:

5.3.3. If there do exist any proscriptive factors of those listed in part A, Item 3.2 of the common Principles, the 'former' bank will:

5.3.4. If there do not exist any proscriptive factors, the 'former' bank will provide the 'new' bank with information on the standing order or recurrent direct debit agreements signed with the Customer;

5.3.5. The information provided by the 'former' bank to the 'new' bank on the recurrent direct debit agreements must contain:
   - the creditor's name, surname, identity number or the firm name and the registration number;
   - payment identification data (e.g., the Customer's number with the creditor, the agreement number etc.);
   - payment debiting date/period, if applicable;
   - daily or monthly limit of payment (minimum and maximum), if applicable;
   - expiry date of the agreement, if such has been set;

5.3.6. The information provided by the 'former' bank to the 'new' bank on the standing order agreements must contain:
   - the creditor's name, surname, identity number or the firm name and the registration number;
   - the creditor's current account number, name of the creditor's bank and BIC code;
   - payment debiting date/period;
   - payment amount or its calculation method, if such has been determined;
   - payment identification data (e.g., the Customer's number with the creditor, the agreement number etc.);
   - expiry date of the agreement, if such has been set.

STEP II

5.4. The 'new' bank will:

5.4.1. forward to the Customer the information received from the 'former' bank and suggest the option of switching the payments relationship and/or inform the Customer of the proscriptive factors proscribing switching of the payments relationship;

5.4.2. accept the Customer's Application No 2 on switching of the payments relationship (hereinafter- Application No 2, Annex 2) in duplicate;

5.4.3. send the 'former' bank one copy of the Customer's Application No 2. The Customer him-/herself submits to the 'former' bank one copy of Application No 2, if he/she has ordered the 'former' bank to close the current account and has submitted the payment order to transfer the account balance;

5.4.4. inform the 'former' bank of the Customer's decision not to switch the payments relationship;

5.4.5. conclude a new current account agreement if such has not been already signed with the Customer;

5.4.6. conclude with the Customer the standing order and recurrent direct debit agreements;

5.4.7. provide the Customer with a draft letter informing the persons making payments for the Customer's benefit.

5.5. The 'former' bank: performs the operations indicated in the Customer's Application No 2 and fulfils the Customer's payment order, if such is given by the Customer.

5.6. Timescale¹

T = date, when the 'new' bank has received Application No 1 from the Customer;
T + 3 = the 'new' bank forwards Application No 1 to the 'former' bank;
T + 3 + 8 = The 'former' bank submits to the 'new' bank the information on the Customer's current account (depending on the indications in the Application);
T + 3 + 8 + (n days)² = (E) date, when the Customer arrives at the 'new' bank, receives the information on the possibility of switching his current account from the 'former' bank and the creditors of his recurrent direct debits at the' new' bank. The Customer makes a decision;
E + 3 = the 'new' bank forwards to the 'former' bank the Customer's Application No 2 or the Customer personally takes it to the 'former' bank if the Application contains the order to close the current account with the 'former' bank;
E + 3 + 8 = the 'former' bank performs the actions indicated in the Customer's Application No 2. If a payment card is connected to the Customer's current account with the 'former' bank (including a debit card), the current account can be closed not earlier than 45 days following the receipt by the 'former' bank the order to terminate the current account agreement and the respective payment card agreements;
E + 3 + 8 + (n days) = the Customer concludes with the 'new' bank the standing order agreement and the recurrent direct debit agreement.

6. RESTRICTIONS

The Customer must arrive personally at the 'new' bank to sign the applications on switching of the payments relationship.

7. EXCHANGE OF INFORMATION

7.1. Exchange of all the information between the banks specified in the Common Principles shall be facilitated by the Latvian Post and the courier service. If the Latvian Post Office is used, the information must be sent by registered mail.

7.2. If the bank receiving from another bank the information referred to in the Common Principles has reasonable doubt about the authenticity of the Customer and/or the sender, the bank has the right to contact the Customer and refrain from fulfilment of the actions indicated in the applications if the Customer has not confirmed his signature under the application.

7.3. The bank is obliged to ensure that the information on the Customer's accounts and transactions acquired in the course of fulfilment of these Common Principles is used solely for the purposes determined in these Principles.

8. CHARGES

8.1. The 'former' bank may not charge a commission for closing of the current account unless the current account has been open for less than 12 months.

8.2. The Customer is provided with free of charge access to the Information on switching of the payments relationship and to the information on the existing standing orders and recurrent direct debits, if such information is available electronically at the bank and is not older than 13 months.

8.3. The banks may not charge the Customer a fee for transfer of the information on the Customer's existing standing orders and recurrent direct debits from the 'former' bank to the 'new' bank.

8.4. The banks will see to it that any charges for their services of current account switching are adequate and commensurate to the banks' costs. The banks must inform the Customers of such costs when providing them with the information on current account services.

8.5. The banks may charge the Customers the costs of the Latvian Post and/or courier mail services.

8.6. For all transfers of Latvian lats and other currencies and for all foreign exchange transactions related to switching of the payments relationship the banks may charge the Customers fees and commissions according to the relevant bank's pricelist.

9. IMPLEMENTATION OF THE COMMON PRINCIPLES

9.1. The Common Principles are binding to the banks - members of the Commercial Banks Association of Latvia.

9.2. Each bank informs the Commercial Banks Association of Latvia of implementation of the Common Principles by sending a letter signed by the chairman of the board of the bank or the manager of the foreign bank's branch. Simultaneously, the bank places on its website the Customer Information and samples of forms (Annexes 1, 2, 3 and 4).

9.3. The Commercial Banks Association of Latvia on its website www.bankasoc.lv maintains the list of the banks that have announced their adherence to the Common Principles.

10. SUPERVISION OF COMPLIANCE WITH THE COMMON PRINCIPLES AND REVIEW OF COMPLAINTS

10.1. The Commercial Banks Association of Latvia supervises implementation of the Common principles and compliance thereto.

10.2. Complaints on application of the Common Principles are reviewed by the Ombudsman of The Commercial Banks Association of Latvia.

Annexes:

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