Brussels, 16 July 2007

1. General overview

1. Openness and competitiveness

Retail financial services are of the utmost importance for consumers since they directly influence household's budget, and as a consequence, their expenses. That is why, it is essential that consumers benefit from all the advantages of the single market, including in this sector which is characterised by its fragmentation and its weak openness.

Theoretically speaking, the retail financial services market seems open. In reality, consumers meet obstacles when they want to purchase financial services abroad, such as opening a current account in another country. Foreign consumers often have to provide more vouchers than nationals, which might deter them to purchase services provided abroad. There is a genuine gap between theory and practice. A greater openness, along with the introduction of more competition would benefit European consumers.

Euro Coop welcomes the fact that the Commission wants to take measures in favour of consumers in this sector by putting the stress on a greater openness of the retail financial services market.

2. Enhancing confidence

A greater openness must however come along with measures aiming at protecting consumers. The lack of confidence towards financial services providers hinders consumers' mobility. Therefore, the Commission must take strong actions to restore this confidence. Consumers are too often "taken hostage" by financial services providers. The Commission has taken into account the problems that have been raised to its attention regarding abusing practices of some services providers 'such as fees for terminating an account or policy, poor or complex information, product tying and the high administrative burden of changing providers' . It has clearly stated its willingness to eradicate that kind of practices in the Green Paper, and Euro Coop is strongly supportive of this resolution.

3. Fair access to information and financial education

It is important to stress the fact that competition alone cannot solve all the problems met by consumers. That's the reason why the Commission must pay great attention to the issues regarding information and financial education of consumers.

True, greater competition will result in a quantitative improvement of the financial services supply, but it will very likely not result in a qualitative improvement. The range of financial services is indeed large enough to allow consumers to find what they want. Nevertheless, they are too often overwhelmed by excess of information, too numerous and not clear enough to allow them to make their choice with full knowledge of the facts. As a consequence, they naturally choose proximity financial services, in which they trust more. That's why the Commission should take measures so that services providers are obliged to provide consumers with clear, understandable and useful information to allow them to make a rational choice, This is one of consumers' fundamental rights.

Even if financial education is one of the priorities on which the Commission should focus, it should be a complementary measure to the provision of clearer information by financial services providers.

4. Tools

Facing those challenges, the Commission must actively engage and propose binding legislation. Self-regulation is indeed not a valuable option; proof is the failure of the voluntary Code of Conduct on Home Loans launched in 2002.

Besides, Euro Coop stresses the importance for consumers and citizens of coherent rules, which allow them to understand and be fully aware of their rights. In this regard, the Commission must watch over to avoid overlapping and contradictions between the various legal decisions it takes.

5. Consultation

As it has already been stressed, consumers are primarily concerned by retail financial services and must therefore actively participate in the decision-making process, in a democratic perspective. Through the launching of the 'Healthy Democracy' action, in which Euro Coop participated, DG SANCO takes part in this effort. Euro Coop welcomes the conclusions of the final report of this action and calls upon the Commission to extend this kind of initiatives to all its services.

2. Specific issues

1. Alternative dispute resolution (ADR)

Consumers need ADR schemes, they represent a quicker and less expensive option than legal recourse and are, therefore, more practical for consumers. Euro Coop therefore supports the creation of such networks, with the condition that they do not replace legal recourses.

Nevertheless, Euro Coop thinks the Commission should use the already existing networks and give them real means to fulfil their mission. The limited success of FIN-NET might partly be the result of its lack of ambition. A greater advertising of ADR possibilities must be done towards consumers. They should be given better access to the procedure. The FIN-NET network should also be given material means, in order to be able to respond to a larger amount of demands in a more efficient way.

Such networks entirely rely on a principle of co-operation between the stakeholders. To make the participation in these networks compulsory will not help the mediators in their task. They might face reluctance from services providers, which might regard this system as a pressure. A voluntary system, based on good willingness, would be more efficient. However, it is important that the public authorities supervise the system to make sure that services providers fulfil their obligations in contractual matters.

2. SEPA

The implementation of the SEPA is in principle good for European consumers. It indeed enhances the confidence the consumers have in financial companies, when they make financial transactions on the EU territory. As a consequence, consumers have the possibility to benefit from the opportunities of the single market in a safer way. The offer at their disposal widens with the possibility to make secure financial transactions in all the countries of the SEPA. Consumers enjoy a wider choice and benefit from increased competition.

Consumers are de facto primarily concerned by the implementation of the SEPA. Expressing their views on such topics is one of the fundamental rights of consumers and they use this right through consumers associations that represent them. These organisations have to be involved in the implementation and in the governance of the SEPA.

3. Provision of Advice

As it has already been underlined, there is a clear asymmetry of information between consumers and financial services providers. Therefore, it seems obvious that, in the current state of play, consumers can not rely only on the information provided by financial services providers. The provision of advice could be a good means to compensate for these shortcomings. However, financial services providers should not be obliged to provide advice. The provision of advice is a service in itself, which has production costs and, therefore, making this service compulsory might have a damaging influence on the price of financial services, to the detriment of consumers. Should the service providers however decide voluntarily to provide advice, it is essential that consumers are well informed of the clauses. Advice should also be objective and aiming at consumers' interest. The provision of financial advice should also be regulated at the European level.

4. Cross-border consumer credit data-base

Lenders should be given access to a cross-border consumer credit data-base, in the same way it is done at the national level, so that they can get information about credit consumers. It would benefit both the lenders and consumers. Lenders would be able to provide consumer credit with a full knowledge of the facts, and therefore in a less risky way. Since there is less risk for lenders, the prices decrease, at the benefit of consumers. Consumers will also benefit from the exchange of information on consumer credit which would allow avoiding some over-indebtness situations.

A European data-base gathering information regarding consumer credit, open to all the credit companies should be set up. The Commission should however ensure that this data-base respects consumers' rights related to data protection. A mere memorandum of understanding shared by consumer credit companies doesn't provide sufficient guarantees in this respect. That's the reason why the data-base should be run by a public and independent body.

5. Fragmentation of retail insurance market

Noticed fragmentations of the retail insurance market prevent European consumers to benefit of the advantages of the single market. They can not buy their car-insurance as easily as their car. Consumers have less choice and can not rely on competition to get competitive products. The Commission should therefore be active in order for the single market to become a tangible reality that consumers can enjoy in every trading sector, including retail financial services and among them insurance. Euro Coop agrees that the Commission should act for further harmonization in this sector.

Contact :
M. Rodrigo Gouveia; Secretary-General
Tél. + 32 2 285 00 70
Fax. + 32 2 231 07 57 - Email : infoateurocoop.coop