How to boost consumer confidence in cross-border financial services was the main focus of the EESC's opinion on the European Commission's proposed Action Plan for consumer financial services. A key role for local retail banks, regulation of non-European Internet giants and simple, "flagship" products accessible across borders were the EESC's key recommendations to build consumer trust in the single market.
Only 7% of European consumers have so far used cross-border financial services and products, says Eurobarometer 446. One of the main reasons why consumers are reluctant to avail themselves of the broader choice they offer is lack of confidence – something the Commission has acknowledged by making consumer trust one of the pillars of its Action Plan. The EESC has put forward a few suggestions which it believes could effectively help change consumer attitudes towards cross-border financial services.
One way is to look at the role for traditional retail banks as key intermediaries in promoting financial products and services: "regional and local service providers are very close to their consumers geographically. They are seen as reliable, trustworthy providers of financial services. These providers – the so called 'boring banks' - need to become part of an innovative approach to competition, said opinion rapporteur Michael Ikrath (AT – Employers' Group), pointing to the hurdles now facing people who wish to look for the best products across borders, such as language and legal barriers, fees which are often higher for non-nationals, different taxation regimes which make products attractive only for domestic consumers and risks linked to different currencies.
The need for product-comparison tools certified by independent authorities was also stressed to boost consumer confidence: "We think that a combination of comparable products and digital means for these often innovative products is the only way to a deepened single market," said the rapporteur, "products should not be harmonised as such, because there are different markets with different specificities, but they should be comparable and transparent - products that consumers can understand: that would be the first step towards a single market of financial services."
Along the same lines, the EESC suggested the Commission could define some simple, easily comparable and completely transparent products with the same characteristics to offer as "flagship products" across the entire EU via various distribution systems (FinTech, traditional branches, etc.), and encourage consumers to trust these products. Sound information and product transparency (harmonised terminology, avoidance of professional jargon, understandable contract terms) should help consumers choose the best provider from across the EU in a risk-free way.
As an additional measure to ensure consumer protection, the EESC insisted on the need to regulate non-European IT giants, such as Google, Apple, etc. which use their customer databases to offer customised products for direct sale without being subject to EU consumer protection rules.
Finally, the EESC called on the Commission to carry out a study into loan shopping in the EU to take the measure of this worrying phenomenon whereby economic vulnerable borrowers who are not credit-worthy in their country turn to loan sharks across borders to obtain credit and rapidly fall into a spiral of over-indebtedness with dramatic legal consequences: "It is important to have a clear idea of how widespread this trend is and what mechanisms are at play here to address this sensitive issue and show consumers that the EU is there to protect their best interest," concluded the opinion co-rapporteur Carlos Trias Pintó (ES – Various Interests Group).