Brussels, 10/12/2015 (Agence Europe) - In a Green Paper adopted on Thursday 10 December, the European Commission has initiated a three-month public consultation on the obstacles to the emergence of a single market for retail financial services in the fields of banking and insurance.
“Today, we don't have a real single market of financial retail services”, said the Commissioner for Financial Services, Jonathan Hill. For instance, although 13.6 million Europeans live in a member state other than the one in which they were born, less than 3% of consumers acquire banking products (credit cards, current accounts, mortgages) on a cross-border basis. Additionally, within the eurozone, less than 1% of loans taken out are cross-border.
On the basis of the results of the public consultation, the Commission may draft a specific action plan for summer 2016, which could contain legislative initiatives. We have “no precooked or perfect solution”, Hill warned.
Over and above the structural barriers (e.g. language, currency, taxation), the Commission notes that the costs brought about by acquiring car insurance, a consumer loan, credit card or mortgages vary greatly from one country to the next. Annual motor insurance premiums, for instance, could cost €439 in Italy and €66 in Hungary. In some cases, Europeans have noted that the premiums related to a financial product increase sharply if they go and live in another country, due to the absence of rules on the 'mobility' of the product in question.
The European institution takes the view that an increased range of available services, particularly cross-border, will stimulate competition and ultimately benefit consumers through an increased choice and reduced prices whilst maintaining protection and security standards at a sufficiently high level. “The combination of factors such as a high level of dissatisfaction, difference in prices between countries and low rates of changing service providers show the competition is not benefiting consumers on these markets and that there are barriers to entry and leaving”, it notes.
Digitisation. The Green Paper also looks at the process currently underway of the digitisation of the banking and insurance sectors. Our aim is to see how digitisation is an “opportunity” allowing new services to emerge and also raises questions related to security and data protection, a European official said.
Digitisation still does not allow people to cross borders easily. In the field of insurance, it is mainly the place of residence of the consumer, rather than his or her risk profile, which determines a service provider's policy. This means that online providers of travel insurance can restrict access to their website, redirect the Internet user to a national website or prevent a contract from being taken out by requiring data in specific formats (e.g. postcode). Having announced a cross-cutting initiative by the middle of 2016 to fight unjustified 'geo-blocking', the Commission is hoping to gather the specific stories of individuals who have fallen victim to this kind of discrimination.
The stakeholders are also asked whether action should be taken at European level to improve the transparency and comparability of financial products, particularly by means of “digital solutions”, in order to reassure consumers.
Reacting to the presentation of the Green Paper, the European Consumer Organisation (BEUC) said that “a digital revolution is shaking the financial sector to its core. This will bring new opportunities for consumers as well as risks”. “Consumers who manage their finances online do so without national borders getting in the way. The EU must have a close look at this development and adapt the legal system if necessary”, the organisation states in a press release.
Mixed reactions at EP. The committee on the single market and consumer protection of the European Parliament will assess the Commission's proposals on the basis of its long-standing work in favour of consumers' rights to information on retail products, its chair, British Conservative Vicky Ford, pledged. Sven Giegold (Greens/EFA, Germany) said that there was nothing ecological about the Green Paper except its name. With climate negotiations in full swing in Paris, it lacks social and environmental sustainability criteria, he said. (Original version in French by Mathieu Bion)