"The EU banking industry will be invited to develop, before mid-2008, via self-regulation, a set of common rules to the benefit of all customers," the Commission announced on 20 November. "Should the banking industry fail to set up adequate arrangements, initiating legislation would need to be considered," it added.
The aim is to make it easier to switch from one bank to another, which is currently difficult in many countries, according to Internal Market Commissioner Charlie McCreevy. This lack of customer mobility means foreign banks are reluctant to penetrate new markets and therefore limits consumer choice, he explained.
"Essentially, I want consumers to be able to shop around for the best deal in financial services in the same way that they do when buying a TV or a car," said McCreevy, outlining some of the initiatives that the EU would be taking in a move to make European retail financial services markets more competitive and efficient.
Product tying, whereby, for example, banks oblige customers to take out life insurance policies in exchange for obtaining a loan, is also "identified as a potential concern" where action may be needed, because it impedes price transparency and raises switching costs, he said.
The Commission said it would also seek to put an end to discriminatory practices where individuals are "abusively" prevented from opening accounts on a cross-border basis because of their nationality or place of residence. It will also launch a debate on the issue of "financial education and inclusion", with the aim of ensuring that "by a certain date, nobody is denied access to a basic bank account".
The announcements were made as part of a drive to streamline the EU's single market and make it more consumer-friendly (EurActiv 21/11/07), and come on top of an ongoing general review of financial services industry regulation (LinksDossier on Financial Services Agenda).
As part of this review, McCreevy announced, on 20 November, that the he wants national regulators in the banking, insurance and securities sectors to become more accountable to EU institutions.
While he stressed that there was no need for an EU "super-regulator" that would impose working methods on national authorities, he insisted on the "the introduction of a European dimension into the mandates of national supervisory authorities". This would help deepen cooperation and EU-wide convergence in the face of a rapidly changing economic environment, increasingly dominated by large international financial groups proposing sophisticated products, he said in a speech in Frankfurt.
The need to reinforce supervisory mechanisms had also been highlighted by European finance ministers last month when they set out a 'roadmap' for improving financial rules to better face up to cross-border banking crises such as the one generated by the US sub-prime mortgage crunch in early August (EurActiv 10/10/07).
