PURPOSE: presenting an action plan that sets out ways
to provide European consumers with greater choice and better access
to financial services across the EU.
BACKGROUND: retail financial services - bank accounts,
payment cards, consumer and mortgage credit, insurance and
long-term savings products - are an integral part of peoples
daily lives.
The EU has already taken a number of measures to
achieve a single market in consumer financial services. These
include providing an EU-wide right of access to basic bank
accounts, facilitating cross-border distribution of insurance and
mortgage credit, protecting consumers' rights in consumer credit
contracts and improving consumer protection rules for investments
in securities, mortgage credit, and insurance.
Markets for these services remain fragmented,
notwithstanding the high degree of harmonisation that has been
achieved over recent years. Only 7% of consumers have purchased a
financial service from another EU Member State.
Innovative on-line services are transforming the way people use financial
services. However, truly harnessing this potential requires a
framework and working methods that are fit for a rapidly changing
financial services sector.
The Commission presented in December 2015 a Green
Paper on retail financial services. This action plan draws the
Commission's conclusions from the consultation. It is one of the
commitments of the action plan on building a capital markets union,
and it tackles many of the issues raised by the European Parliament
in its report on the green paper on retail financial
services.
CONTENT: the action plan sets out further steps
towards a genuine technology-enabled Single Market for retail
financial services where consumers can get the best deals while
being well protected.
The Commission has identified three main
strands to move a step closer to towards a genuine single
market for retail financial services:
(1) Increase consumer trust and empower consumers when
buying services at home or from other Member States.
There are several reasons for the low level of
cross-border shopping for financial services, such as: (i)
potentially excessive fees; (ii) the nature of products available
in other countries; (iii) redress procedures abroad; (iv) opaque
terms and conditions (particularly when drafted in a foreign
language); (v) territorial restrictions (geo-blocking,
residency requirements).
The Commission intends to:
- propose an amendment to the Regulation
on cross-border payments to reduce charges for cross-border
transactions in all Member States;
- review good and bad practices in dynamic currency
conversion and, on that basis, consider the most appropriate means
to allow consumers to choose the best rate;
- explore further steps to make it easier for
consumers to switch to more advantageous retail financial
services, building on what has already been achieved through
the Payment
Accounts Directive;
- enhance the protection of traffic accident
victims and to improve the cross-border recognition of claims
history statements (which are used to calculate no-claims bonuses)
through the review of the Motor
Insurance Directive;
- examine whether further legislative and
non-legislative action is needed to extend transparent practices
to the entire car rental market;
- explore ways of facilitating access to loans across
borders whilst ensuring a high level of consumer protection. In
this context, the Commission will also consider ways of addressing
in a more efficient manner consumer over-indebtedness linked to
credit activities.
(2) Reduce legal and regulatory obstacles affecting
businesses when providing financial services abroad.
Businesses stressed that they cannot build a business
case to provide services abroad due to lack of demand coupled with
regulatory uncertainty, i.e. the risks (and costs) of having to
comply with another Member State's national legislation which may
go beyond EU legal requirements.
Differences between national legal systems, as well as
a tendency to add national rules on top of the EU provisions when
implementing EU law, can distort competition to the detriment of
new entrants, who are confronted with high compliance
costs.
It is necessary to facilitate cross-border credit.
However, credit providers face difficulties assessing
creditworthiness of borrowers from other Member States, due to poor
availability and comparability of relevant data in other
countries.
The Commission intends to:
- examine national consumer protection and conduct
rules to assess whether they create
unjustified barriers to cross-border business.
- introduce common creditworthiness assessment
standards and facilitate the exchange of data between credit
registers in cross-border creditworthiness assessments.
(3) Support the development of an innovative digital
world which can overcome some of the existing barriers to the
single market.
Innovative firms regularly express concerns that EU
and Member State legislation and supervisory practices limit their
ability to innovate and to offer services across borders. At the
same time, concerns around payment security and the fear of digital
fraud are wide-spread among citizens.
The Commissions role is to create a regulatory
and supervisory environment across the EU that supports digital
innovation. A major step is the recently adopted Regulation
on electronic identification (eIDAS) which allows the
cross-border recognition of electronic identification for public
services and trust services across the EU Single Market.
The Commission intends to:
- determine, based on the work of the FinTech Task Force
and the public consultation, which actions are required to support
the development of FinTech and a technology-driven single market
for financial services;
- facilitate the cross-border use of electronic
identification and know-your-customer portability based on
eIDAS to enable banks to identify customers digitally;
- monitor the distance selling market to identify the
potential consumer risks and business opportunities in this market
and, on that basis, decide on the need to amend distance selling
(including disclosure) requirements.
Many of the actions set out in the action plan will
need to involve stakeholders such as national supervisory
authorities, service providers and consumer
organisations.