EU Outlines Policy On Retail Financial Services

by Ulrika Lomas, for LawAndTax-News.com, Brussels

03 May 2007

The European Commission has set out, in the form of a Green Paper, its vision for future EU policy on retail financial services, which include financial products such as bank accounts, loans, mortgages, investments and insurance that are provided to individual consumers.

The Green Paper aims to strengthen and deepen the Commission's understanding of the problems faced by consumers and industry in this area, to set out the Commission's overarching objectives, and to highlight areas where more work may be needed.

Internal Market and Services Commissioner Charlie McCreevy explained on Wednesday that:

"We want to create a real single market for retail financial services and bring a range of tangible benefits to European consumers: quality products that meet their needs, increased confidence in the products and services on offer, and better information and advice on which to base their choices. I invite everyone to give us their views on how best to achieve this."

According to the EC, despite significant progress in recent years, studies show that retail financial services integration appears not yet to have reached its potential and that competition seems insufficient in some areas, leaving EU consumers unable to take full advantage of the benefits of the Single Market.

The Commission seeks to develop integration in retail financial services markets in three main ways:

First, the provision of products that meet consumers' needs, offering choice, value and quality, can be ensured through properly regulated open markets and strong competition.

Second, European consumers need confidence to make the right choices. This can be achieved by ensuring that consumers are properly protected where appropriate, and that providers are financially sound and trustworthy.

Third, consumer confidence in seeking out the best deals to meet their needs, regardless of the location of the financial services provider, can be promoted by empowering consumers to make the right decisions for their financial circumstances. Empowerment can be developed through financial literacy, clear, appropriate and timely information provision, high-quality advice and a level playing field between products perceived as having similar characteristics.

Stakeholders are invited to comment by 16 July 2007. The Commission will then organise a hearing on the matter on 19 September 2007.

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