The European Parliament’s Economic and Monetary Affairs Committee (ECON) voted this Tuesday on its proposal for the EU’s future work on retail financial services, such as insurances, investment products or payment services (the so called “Green Paper on Retail Financial Services”). This Green Paper sets the stage for the EU’s measures and legislative initiatives to allow consumers to benefit more from the Single Market, for example through an enlarged choice of insurance or investment products. Likewise, yesterday’s vote is the important basis for European Parliament’s answer to the European Commission’s Green Paper on the subject, adopted in December 2015. The next step will be a vote by the European Parliament’s plenary in November which is likely to follow the positions of ECON.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“This vote was a milestone for greening finance. For the first time the economic and monetary committee urges the Commission to support sustainable and green investments. Now it is high time for the Commission to come up with an action plan for Green finance.
A majority of MEPs also endorsed a strong call for simpler products, such as insurances or pension products. This has the potential to boost competition and comparability of products to the benefit of consumers.
Lastly, digitalisation provides great opportunities for more efficient and consumer friendly financial services, if prudently managed. It was high time that the European Parliament recognizes now the chances of the FinTech revolution! ”
More specifically, a majority of ECON MEPs anchored the following key points in the voted text of the Green Paper:
Calling on the Commission to promote sustainable investment and green finance “Welcomes the Commission engagement in the area of encouraging finance for sustainable and green investments and urges the Commission, building on past consultations and closely involving the European Parliament, to play a more proactive role in using the Capital Markets Union, as part of the implementation of the Paris agreement, to support the growing Sustainable and Responsible Investment (SRI) market by promoting sustainable investments”
Encouraging simpler products that are easier to understand and compare:
“Emphasises, in particular in order to boost consumer trust and strengthen consumer satisfaction, that the Green Paper initiative can succeed only if it has a strong focus on creating an EU market in which well-protected consumers have equal opportunities and access to transparent, straightforward and good-value-for-money products; acknowledges the positive value of providing customers with simple, safe and standardised products; calls on the European Supervisory Authorities to regularly assess the impact of tying practices on prices and competition of retail financial services; calls on the European Commission to introduce a simple, standardised, portable and safe financial products framework; furthermore calls on the Commission to look into the possibility of creating a harmonised legal framework for standardised default options for the most commonly used EU financial products along the lines of the Basic Bank Account and PEPP-model”
“Notes the increasing complexity of retail financial products; insists on the need to develop initiatives and instruments that improve competition and that allow consumers to identify and compare safe, sustainable and simple products within the range of products available to them (…)”
“Considers simplifying legislation, which is facilitated by discouraging overly complex products and services, to be crucial in efforts to make products more easily comparable across the EU’s various markets, particularly in the insurance sector;”
“Fintech” can create new, better financial products and allow consumers to reap a greater benefit:
“Whereas the rapid transformation brought about by digitisation and fintech innovation not only has the potential, if prudently managed, to create new and often better financial products for consumers and contributes to financial inclusion including by means of lowering transaction costs and easing the access to finance, but also involves key challenges in terms of security, data protection, consumer protection which do not effectively enhance consumer protection and go beyond MiFID II itself; calls for lessons to be learned from this experience”
“Stresses, not least given that otherwise positive digitisation processes could trigger exclusionary tendencies, that the financial inclusion perspective should always be kept in mind, and that measures should be taken to ensure that all consumers have equal access to at least the most essential financial services also through non-digital channels to avoid financial exclusion;”
Stressing the fragmentation of Europe’s retail financial services
“The EU market in retail financial services remain rather underdeveloped and highly fragmented, for example in terms of the low number of cross-border transactions, requiring urgent efficient action to unlock the full potential of the Single Market and to facilitate innovation beneficial to end users”
Calling for proportionality in financial market regulation citing the bad example of bureaucracy in MiFID implementation:
”Points out the shortcoming in the national implementation of the MiFID II directive, which has led in many cases to labour-intensive reporting requirements for intermediaries”
More transparency and more robust risk assessment for occupational pensions
“Calls on the Commission to follow up on EIOPAs proposal for a Common Framework for Risk Assessment and Transparency for IORPs, in order to promote a sound pillar 2 system across the Union, comparability of schemes and contribute to a better understanding of the benefits and risks to consumers by regulators, supervisors and consumers themselves;”
Requesting investigations on misleading features of financial services
Asks the Commission to investigate further the confusing and sometimes misleading practices with which consumers are faced when making card payments and ATM withdrawals involving currency conversion, and to present a coherent solution that would make it possible, including in practice, for the consumer to understand and control the situation fully, including for payments relating to the digital market;
Further efforts to increase the provision of cross-border financial services:
“Asks the Commission to study further the feasibility, relevance, benefits and costs of removing existing barriers towards the cross-border provision of financial services, thus guaranteeing domestic and cross-border portability in various parts of the retail financial services market; for example as regards personal pension and insurance products; (…)”