The European Commission took a gamble that has paid off: it was seeking to coordinate the actions taken by the financial industry to improve the response to the Covid-19 crisis. European banking, insurance, business and consumer associations have agreed on a common list of “best practices”, which was published on Tuesday 14 July.
The document reflects the outcome of discussions at roundtables organised by the Commission on 28 May (see EUROPE 12496/14) and 29 June, which brought together 25 organisations, including BETTER FINANCE, Finance Watch, BusinessEurope, SMEunited, the European Banking Federation and Insurance Europe.
Amongst other things, the Commission organised this dialogue with stakeholders to encourage the banks to lend to the economy during the crisis. It had noted significant differences between countries with regard to the implementation of exceptional banking measures and, on some occasions, had observed some negative practices.
The document states that: “Banks and non-bank lenders should grant credits without prejudice to their financial stability and prudential obligations and maintain high standards of risk and creditworthiness assessment”.
New loans to mitigate the impact of the crisis on businesses should be provided “swiftly and without unnecessary delays and administrative burdens”. They should also not be subject to “excessive fees or interest rates”, it states.
The document also encourages banks and non-bank lenders to offer borrowers who temporarily find themselves in financial difficulties as a result of the pandemic the option of deferring the payment of the instalments of their credits for a period of typically three to six months, unless circumstances indicate that a different period is appropriate.
It is also identified as “good practice” to continue to enable secure cashless payments, while ensuring that cash payments remain available for those who need them.
With regard to insurance, the document encourages insurers to demonstrate flexibility towards customers who may not be able to fulfil all of their contractual obligations during the pandemic, including postponing payments of insurance premiums in the event of financial difficulties.
The document stresses that legitimate claims should be processed and paid out “as quickly as possible”.
The Commission plans to organise another roundtable in September to review progress in the various sectors. The list can be found at: https://bit.ly/2AWKHoi (Original version in French by Marion Fontana)