Brussels, 22/11/2007 (Agence Europe) - Very different national consumer protection rules are complicating the creation of a genuine European retail financial services market, which involves bank accounts, payments, personal credit, savings and insurance products (EUROPE 9417). Harmonisation of these rules was one of the main questions posed by several organisations representing industry and consumers at the very well attended public hearing on retail financial services, organised by the European Parliament's economic and monetary affairs committee on Wednesday 21 November. The lack of competition linked to inter-banking commissions in the area of payment services was also another question raised.
Guido Ravoet speaking on behalf of the European Banking Federation (EBF) declared that fragmentation of the retail financial markets can be particularly explained by “the maximum margin of manoeuvre left to member states, especially with consumer protection”. According to Ravoet, “there is too divergent legislation on consumer protection, which is upsetting product supply” in the financial field. He also affirmed that “if we want this sector to remain competitive, we need economies of scale and, therefore, integration”.
All the participants acknowledged that pre-contractual information provided to consumers who wanted to invest in retail financial services was disproportionate. Michaela Koller from the European Insurers Committee (CEA) stated: “There are too many demands from consumers for information, especially concerning the pre-contractual aspect”. She pointed out that European legislation required no fewer than “49 elements of pre-contractual information” that a provider has to communicate to his customer - some of them, by the way; being useful such as the “damage compensation procedures”. Nonetheless, Koller highlighted the need to provide quality information rather than a quantity of information. Andreas Pangl of the European Association of Cooperative Banks (EACB) also shared this view and said that information distributed to consumers “is too heavy, too expensive and unusable because it's too detailed”. He said that they needed to focus on the essential and make sure the format was comprehensible.
Bob Schmitz speaking for the Luxembourg Union of Consumers (ULC) agreed and said that there was too much information. He asserted that “in order to enable consumers to see what information was essential” they would need to “strengthen advisory and regulatory requirements”. Schmitz deplored the absence of European harmonisation on “unfair trading practices” and regretted that nothing was being done at a European level in this connection, but suggested that black lists were drawn up of unfair practices such as “easy credit”, where abuses are being committed over mobile phones. The ULC representative also underscored the necessity of “strengthening the role of the brokers”, given that consumers were very attached to the notion of proximity when they call on retail financial service providers. According to Schmitz, current rules governing relations between customers and an agent in the car sector could be taken as a case in point. In response to Commission document on retail financial services accompanying internal market revision (EUROPE 9547), Schmitz explained that this again demonstrated that only competent consumers were being highlighted whereas there were “increasing numbers of consumers in financial difficulty”. He warned that “people who cross borders” to consume a cross-border retail financial product “have a knife at their throat and often get taken in by professionals who have few scruples”.
At the end of the session, Gianni Pittella (PES, Italy) said that he understood that information for consumers constituted “a main subject” in retail financial services integration. The EP rapporteur in the Commission's retail banking sector investigation (EUROPE 9356) added: “Letter boxes are full with information brochures no-one reads”. According to Pittella, “information brochures need to be harmonised” and also be “exact, concise, understandable and of good quality”, as well as focusing on the costs to consumers. French Socialist, Pervenche Berès, would have liked to have discussed other subjects such as being in debt, the link between “advice” and “financial education” to consumers, the “dividing line between professional investors and small savers” and lessons to be learned from the implementation of the “consumer credit” directive (EUROPE 9429). Othmar Karas (EPP-ED, Austria) EP rapporteur on the Commission's Green Paper on retail financial services said: “This is not just about consumer protection because our aim is creating a single market”. He also said that “consumer protection is a means and not a primary objective. There's a slight difference”. (M.B.)