The Commission seeks to improve the choice and quality of products made available to consumers by opening up the markets to increased competition. The paper states that despite the significant progress made in recent years, markets are not yet fully integrated and lack sufficient competition in certain areas, which prevents consumers from reaping the benefits of lower prices.
But despite the increasing mobility of consumers and recent growth, cross-border retail financial services represent only 1% of the sector and customers are likely to remain focused on local services.
The Commission is especially considering opening up markets, which are up until now predominantly national. It is discussing the introduction of an optional, EU-wide legal framework, the so-called "28th regime", for long-term savings, retirement and pension schemes, operating in parallel to the national schemes.
However, most EU countries are critical of introducing such a regime at the EU level, which would run alongside the 27 different national regimes already in use in the member states. User groups are especially concerned about the confusion that may be caused by offering different regimes in parallel.
Moreover, many stakeholders are also critical of the initiative, as the Commission currently does not have responsibility for pensions and retirement planning. In addition, differing national tax regimes and social welfare systems are a major obstacle to such unified products.
Likewise, varying consumer protection and information rules represent another stumbling block.
Another issue under discussion is the introduction of an optional, simplified, standardised product, such as a basic bank account, which would facilitate access to retail financial services for poorer consumers. This idea, however, has encountered huge resistance from the industry, which argues that it would hamper innovation and competition.
In order to boost consumer confidence, the Commission is looking into ways of protecting consumers and ensuring the financial soundness of providers of retail financial services. It argues that differing consumer protection rules in each member state are a significant obstacle to the market for retail financial services, and therefore advocates the adoption of harmonised consumer protection rules.
Consumer groups, however, oppose maximum harmonisation of consumer protection rules and argue that local regulators are best suited to doing this job.
The consultation found that consumer education and financial literacy programmes are seen as ways of empowering consumers. The Commission wants to equip consumers with increased financial literacy and improve the transparency of information made available to them. This could be achieved through school curricula and education, for instance.
However, consumer groups warn that this could come at the cost of consumer protection rules and quality information. The industry warns of an information overload for consumers, while user groups call for a higher quality and consistency of information to be provided in clear language and a simple format.
One question raised with regard to this issue is whether those who provide retail financial services should also be obliged to advise consumers, as this would then create a conflict of interest.