The European Commission is currently seeking to answer this and many other questions that citizens have posed about retail financial services. In 2015, the Commission launched a public consultation that is set out in a document containing requests from citizens, presented by the European Parliament at the close of 2016. The next step was the publication of the Consumer Financial Services Action Plan: Better Products, More Choice, with specific proposals for eliminating the barriers to retail banking in Europe.
Only 7% of European consumers have contracted a financial product or service in an EU member state other than their own. To reverse that trend, the Commission has proposed this Action Plan. It seeks to achieve greater transparency in currency conversion transactions and transfers between countries; facilitate the changing of service providers and cross border credits; and drive the development of digital banking services in Europe.
Only 7% of European consumers have contracted a financial product or service in an EU member state other than their own
But customers are not the only ones facing barriers. The Commission recognizes that providers of these financial services also confront obstacles. One example is the difficulty in accessing data about the credit history of customers in other countries, and the lack of regulatory standardization.
What are the Commission´s goals? To increase confidence and consumer choice among European users of financial services, eliminate crossborder obstacles for SME’S and make use of digital technologies to benefit companies and individuals in the financial space.
What does the plan consist of? It comprises 12 actions - two of which are legislative initiatives - grouped into three blocks. In the first, which affects consumers, the EC proposes reducing the commissions on transfers between EU member states. Another goal is to review the good and bad practices in currency conversion and decide whether it is necessary to adopt measures in this regard.
The EC proposes reducing the commissions on transfers between EU member states
In addition, the Commission wants to make it easy for consumers to change their provider of retail financial services, especially between countries. At the same time, the EC will work to reinforce the quality of websites that compare financial services. Finally, it seeks to facilitate access to crossborder loans, while giving a high degree of consumer protection.
In the second block, which affects small- and medium-sized enterprises, the Commission proposes reducing the regulatory obstacles to customers seeking financing in an EU country other their country of origin - for example, by creating a standard to define the credit history data for a bank customer in another country, to which any financial institution could accede. The objective is to facilitate crossborder credits.
Regarding small- and medium-sized enterprises, the Commission proposes reducing the regulatory obstacles to customers seeking financing in an EU country other their country of origin
In the third place, the EC wants to support the development of an innovative digital world. To this end, it has published, in parallel with the Action Plan, a public consultation on fintech. This consultation, which will be open until June 15, 2017, is meant to collect information about the effect of the new technologies on the financial sector as a whole, and to evaluate whether the EU’s norms of regulation and supervision are suitable. All this takes place in the context of the development of a single digital market for financial services.
The EC wants to support the development of an innovative digital world. To this end, it has published, in parallel with the Action Plan, a public consultation on fintech
In this block, the Commission’s plans include facilitating the crossborder use of electronic identification, so that the banks can identify their customers digitally. In addition, there will be monitoring of the remote sales of financial services and identification of the possible risks for consumers, as well as the business opportunities. Based on the results of this evaluation, the Commission will decide whether it is necessary to amend the Directive on remote marketing of financial services.
But this is not an isolated initiative. The Commission places it within the Action Plan for the Union of Capital Markets, which went into effect in September, 2015 and on which progress will continue during 2017 and 2018.