EU action plan for consumer financial services may strengthen trust in the single market

The European Commission presented its 'Consumer Financial Services Action Plan: Better Products, More Choice' in Brussels today. The four associations – National Association of German Cooperative Banks (BVR), German Savings Banks Association (DSGV), Association of German Public Banks (VÖB), and Association of German Pfandbrief Banks (vdp) – support the action plan's objectives of strengthening consumer confidence, reducing regulatory obstacles to the cross-border provision of products and services, and supporting the development of innovative digital financial services for consumers. It is right and indeed necessary that the Commission is applying the tried-and-tested tools of its 'better regulation' approach, which includes public consultations, impact studies, etc. 

The Commission's action plan examines fees for cross-border payments involving EU currencies other than the euro. However, there is already a great deal of transparency in this area for consumers. The prices form as a result of competition in the market. The four associations are therefore against regulatory intervention in the price formation process. These prices include the cost of the transaction and the related charges for the currency conversion. The latter are based on the rate at which a currency is acquired on the selected currency market. This entails higher costs than for euro-denominated national and cross-border payments within the EU. Banks and savings banks in Germany already provide information on the charges for payments processing transactions in the tried-and-tested format of lists of charges and services, which can be accessed by all customers. The banks also publish the exchange rates used to convert foreign currencies on a daily basis. 

In the context of digitalization and innovation in financial products, it must be ensured that all providers of financial services – including fintechs – are bound by the same regulatory requirements as banks. This particularly applies to consumer protection. This creates a level playing field and avoids distortion of competition between the different providers. 

The four associations support the European Commission's intention to review the current rules on pre-contractual disclosure in order to make them suitable for digital financial products. The associations believe it is particularly important to avoid duplication. The rules, when combined, should not result in an obligation to disclose the same information several times, for example because the same requirements can be found in legislation on consumer lending and laws on electronic transactions. If the plethora of information that has to be provided about financial products were to be scaled back, they might be easier to understand. After all, more information does not automatically lead to greater clarity. At the same time, the simplifications and exemptions offered in many areas must apply to all distribution channels in equal measure.