European Commission's Green Paper on retail financial services

The European Commission launched its consultation on retail financial services on 10 December 2015, with the aim of improving choice, transparency and competition as part of a more integrated market.

Barriers to accessing financial products across EU borders 

The Commission reports that one in three Europeans live in regions bordering other Member States and that 13.6 million EU citizens live in another EU Member State, but that only 3% of European consumers purchase banking products (such as current accounts) from another Member State and buy only 5% of their loans from abroad. 

The consultation seeks to explore concerns that the structure of the retail market still largely operates on a national basis and that barriers exist which prevent:

• consumers from accessing financial products from other EU Member States and from transferring them if they move from one EU Member State to another (the so-called “portability“); and
• businesses from selling financial products and services across borders. 

The Commission’s aims

The Commission acknowledges that not all consumers and businesses want to operate on a cross-border basis. However, for those that do, the Commission believes that a better integrated Single Market for retail financial and insurance products will bring greater product choice, better value for money and more competitive prices for consumers. It would also lead to more opportunities for firms to market and sell their products on a larger scale and at lower costs.

Through the consultation, the Commission hopes to “stimulate debate across the EU and garner a broad range of views and evidence on how to best achieve a well-functioning and competitive market in financial services at the retail level“. 

What does the consultation cover? 

The Green Paper covers the markets for insurance, loans, payments, current and savings accounts and other retail investments. It considers and seeks feedback on issues including:

• whether innovative digital technology can assist in removing barriers to cross-border trade;
• whether further action is necessary to encourage comparability and/or switching providers located either in the same or another Member State;
• what can be done at the EU level to facilitate the portability of retail financial products (e.g. life insurance and private health insurance); and 
• how the EU can support to provide innovative digital financial services, with appropriate levels of security and consumer protection. 

Originally announced in the Capital Markets Union Action Plan, this consultation follows a number of other initiatives in this area, some of which are still in the process of being implemented across the EU including the Mortgage Credit Directive, the Payment Accounts Directive, PDS2 and investment the Markets in Financial Instruments Directive (MiFID2). 

While the Commission has confirmed that the Green Paper is not intended as a review of any particular Directive, the feedback received will inform any further action. 

What happens next? 

The consultation will last for three months and consumers, stakeholders and other interested parties have until 18 March 2016 to respond. The Commission is encouraging wide participation; in addition to responding by completing the questionnaire available via the Commission’s website, interested parties are invited to share their views on social media using the hashtags #MyMoneyEU and #EUHaveYourSay.

A conference is proposed to be held in early 2016, at which the Commission will examine feedback, discuss priority areas and consider potential action that can be taken at the EU level to overcome the barriers identified. The conference will be followed by an Action Plan on Retail Financial Services later in 2016.