Definition of Active Contractual Relationship

What is the definition of an Active Contractual Relationship?

Article 24(2)(a) of the Commission Delegated Regulation (EU) 2015/61 states that “For the purpose of paragraph 1(a) a retail deposit shall be considered to be part of an established relationship where the depositor meets at least one of the following criteria: (a) has an active contractual relationship with the credit institution of at least 12 months duration”. In terms of the identification of an ‘established relationship’ it is not entirely clear what might be meant by an ‘active contractual relationship’ or what might constitute a ‘minimum duration’ or ‘active products’. Further analysis and guidance in these areas would be useful. In particular, it is not clear whether the EBA is referring to the tenure of an existing customer relationship (i.e. how long the bank has had a relationship with a particular customer) or the contractual duration of a product. Moreover, we do not believe that duration is an indicator of stability, particularly in relation to retail customers who change their banking service providers’ infrequently, and we would support the view that ‘active’ means ‘not dormant’. Example 1: We would not consider a current account to be active if it had been opened various months ago and has not produce movements during the last month. Example 2: We would not consider a customer with 3 term deposits and no other products to have an active relationship.