According to the September publication, retail banking markets are already highly competitive, yet the EU is still seeking to introduce measures to address low customer mobility, which it argues results from barriers to competition.
The paper claims, however, that the existence of such causality is a "highly controversial matter". Direct banking, the proliferation of price comparison websites and the general openness of national markets to EU competition guarantee that customers can easily locate the most attractive offers, it adds.
Thus low customer mobility does not stem from barriers faced by consumers when switching between domestic service providers, but is simply a result of customers' general satisfaction with their current banks, Schäfer claims, citing numerous studies to back up his assertion.
Instead, the problem lies in the low cross-border mobility of accounting services themselves, he argues, as legal barriers resulting from different countries' regulatory frameworks will remain despite the ever-increasing integration of EU retail banking markets.
There is room for EU action to facilitate cross-border mobility, Schäfer argues, but he warns that financial services are already extensively regulated. Stricter customer protection rules may well impose unnecessary additional costs on both financial firms and customers, he adds.
Schäfer therefore recommends that EU regulation concentrate on "full harmonisation of core issues, combined with mutual recognition of non-core issues," sparing banks the cumbersome effort of complying with long lists of provisions.
The lesson to be drawn from the customer mobility debate is that "policymakers should not try to stipulate market results," the paper concludes. Instead, the EU needs to develop a reliable framework which allows banks "to develop targeted solutions that benefit European consumers best".