How does the Green Paper on Retail Financial Services in the Single Market relate to the Single Market Review?
The Commission is currently reviewing the single market to ensure its policies are attuned to the 21st century. The interim report to the Spring European Council outlines the new approach to using single market instruments, and focuses on enhancing consumer welfare. The Commission will present its final report in autumn 2007, which will include concrete measures to benefit citizens.
Retail financial services represent an important part of this review. They are an essential part of the everyday lives of EU citizens. But 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 results of this extensive consultation process will be incorporated into the Single Market Review report to be published in the autumn.
How does the Green Paper on Retail Financial Services in the Single Market relate to the White Paper on Financial Services 2005-2010?
The White Paper on Financial Services 2005-2010 underlined the untapped potential of European markets and outlined the best ways to effectively deliver the benefits of integration to industry and consumers alike. The White Paper identified the completion of the retail financial services market as one of its key priorities.
The Green Paper on Retail Financial Services in the Single Market builds on the strategy set out in the White Paper, taking into account the results of the Commission’s sector inquiry into retail banking and the interim report on business insurance, and presents a blueprint for the integration of
What are the Commission’s objectives in the field of retail financial services?
The Green Paper sets out the Commission’s overarching objectives in the field of retail financial services. The Commission seeks to develop integration in EU retail financial services markets by:
- ensuring that properly regulated open markets and strong competition deliver products that meet consumers’ needs, offering choice, value and quality;
- enhancing consumer confidence by ensuring that consumers are properly protected where appropriate, and that providers are financially sound and trustworthy;
- empowering consumers to make the right decisions for their financial circumstances through improved financial literacy; clear, appropriate and timely information; high-quality advice; and a level playing field between products perceived as having similar characteristics.
Does the Green Paper suggest any new areas for EU action?
The Green Paper reports on recent developments and next steps for many ongoing initiatives such as those on investment funds, payments, insurance, mortgage credit, bank accounts and credit intermediaries. However, the Green Paper also identifies some areas, such as pensions, lifetime savings and financial literacy, where work is at a more preliminary stage and new initiatives might be envisaged.
Can new legislative initiatives be expected?
Action will only be pursued where there is evidence of clear and concrete benefits for citizens and a strong economic rationale. The Commission will consider the full range of policy tools, including those of a non-legislative nature, and, where appropriate, will take targeted action.
How does the Commission hope to integrate retail financial services markets with only 1% of retail financial services business being conducted cross-border?
Despite the increased mobility of the population and the growth of cross-border retail financial service provision (including through direct channels such as the Internet), most consumers still opt for products distributed locally through branches, subsidiaries, and intermediaries.
Notwithstanding that most customers of retail financial services are likely to remain domestically focused and that consumers must remain free to choose a local product or service if that is their preference, the Commission considers that further reforms may be needed to make markets work better for consumers. Reforms may focus on facilitating the supply of financial services to consumers in their home
Won’t the costs of integration of retail financial services outweigh the benefits?
The White Paper on Financial Services 2005-2010 emphasised the Commission’s commitment in the field of financial services to the better regulation agenda. The assessment of appropriate solutions will continue to be made on a case-by-case basis, according to the specifics of the market and problems identified. Rigorous impact assessments will be undertaken for any new Commission proposal and the Commission will only undertake new regulatory initiatives in retail financial services if the economic case is made.
What happens next?
The publication of the Green Paper on Retail Financial Services in the Single Market launches a public consultation. A public hearing is scheduled for 19 September 2007 to draw the conclusions of the consultation and discuss with all stakeholders which initiatives are needed to bring about a more efficient internal market for retail financial services. The results of the consultative process will be incorporated into the Single Market Review, to be published in the autumn.
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