Brussels, 30/04/2007 (Agence Europe) - More than ever, the creation of a common market in financial services is in the European Commission's firing line. Days after the vote at the European Parliament on the draft directive on payment services (see EUROPE 9413) and against the backdrop of the battle for control of Dutch banking giant ABN Amro (see EUROPE 9415), the Commission is starting a new project with the publication of a Green Paper on financial services in retail. Adopted on Monday 30 April, the Green Paper aims to gain greater understanding of the issues facing consumers and industry, assessing obstacles to European integration of retail financial services, and looking at future initiatives to gradually achieve a common market. A consultation exercise is being held, due to end on 16 July 2007 and a public hearing will be held in September. The Commission will publish the outcome of the consultation as part of its overall review of the internal market strategy in the autumn (see EUROPE 9269 and 9371).
Current situation. Financial services in retail are vital for the daily life of EU citizens because they help them participate in economic life, plan the future, and protect themselves against the unforeseen, explains the Commission. Retail financial services include bank accounts, payments, personal loans, mortgage lending, various types of saving, pensions and investment and insurance products. Retail banking accounts for more than half of all banking in the EU, generating 2% of European gross domestic product. In its Green Paper, the Commission explains that integration of retail financial services does not seem to have reached its full potential yet, and there seems to be too little competition on various markets, particularly in areas like payments and retail banking. As an illustration, it explains that there is little cross-border business in retail financial services with only 1% of EU consumers buying financial services from another country. There are also huge differences in charges for a limited range of products and huge variations in terms of market performance. The Commission notes the difference in national rules governing consumer protection, taxation and fragmented market infrastructure, not shying away from the fact that consumer behaviour and consumer preferences may also restrict market integration.
Action. The Green Paper lists action under way or to be undertaken in the future in three areas namely stimulating competition for retail financial services, increasing consumer confidence and empowering EU citizens. Mentioning its special survey of retail banking (see EUROPE 9356), the Commission says that it will apply EU competition rules to bankcards and payment cards. It will publish a report before the end of the year looking at progress in implementing the Single European Payment Area (SEPA). An expert group on consumer mobility will publish recommendations in May on national and EU measures to enable individuals to change bank accounts and to increase the transparency and comparability of offerings. The Commission is still in the process of drawing up standard bank accounts. The White Paper on mortgage lending will address issues like early repayment, consumer information requirements and lenders' access to credit details. The results of a market survey on long term savings will be unveiled at the end of the year.
To increase consumer confidence, the Commission mentions the current debate on the draft consumer credit directive (see EUROPE 9200 and 8821). It explains that it is now reviewing Directive 2002/65/EC on remote selling of financial services and will be publishing a full report in 2008. Bearing in mind the collapse of UK insurance company Equitable Life (see EUROPE 9407), it will be closely monitoring the work of the Committee of European Insurance and Occupational Pensions (CEIOPS) on cooperation among national supervisors for the processing of cross-border complaints. It will also be looking at measures to boost out-of-court dispute settlement schemes at EU level (Alternative Dispute Resolution).
The Green Paper wants to give consumers greater ability to evolve their behaviour on the retail financial services market, listing initiatives to improve the quality of information provided to consumers in key areas like consumer credit, mortgage lending, investment funds and payment services. The draft Solvability II directive, expected to be unveiled in July, will publish more detailed rules for non-life insurance policies and the Commission will be assessing the impact of Directive 200/92/EC on insurance mediation from the angle of consumer protection. (mb)