The European Union should open up retail financial services to more competition to bring lower prices for consumers who will also then see how EU membership can produce tangible benefits, the bloc’s new financial chief said on Tuesday (18 November).
Jonathan Hill, European financial services commissioner since 1 November, pointed to liberalisation of telecoms as an example where EU action has pushed down the price of a cross-border mobile phone call, one of the EU’s most popular policy moves.
EU legislation has also helped low-cost airlines Ryanair and easyJet to shake-up air travel across the continent to bring down fares.
“Can we apply those lessons in the sphere of financial services? And if so, how? Competition gives consumers choice,” Hill said in a speech in Brussels.
He said prising open financial services to more competition would also bring wider political benefits at a time when anti-EU political parties are in the ascendancy.
“The EU’s legitimacy depends on the continued provision of tangible benefits to the public. Retail financial services and consumer policy is, I believe, an area where we can do exactly that,” Hill said.
The retail financial service industry in the European Union is still fragmented and regulated along national lines, with products reflecting long-established cultural idiosyncracies.
Hill said that travel insurance in Britain was €55 but €150 in France, for the same level of coverage. Car insurance in Poland cost €700 but rose to €1,300 in Belgium.
“These figures surely suggest that we do not have a fully functioning Single Market that is working properly in consumers’ interests,” Hill said, adding: “We have some knotty problems to resolve if we are to succeed in opening up retail markets.”
More and more financial products are brought online and price comparison websites could be a powerful tool for finding the best deals, Hill added, stating his “belief in the virtues of transparency”.
“Consumers must be able to understand what they are buying, and why they are being sold a particular service: is it because it is the right service for them? Or because it is a product that earns the biggest commission? The availability of information to consumers is crucial: transparency is the foundation of consumer protection.”
- Speech by Jonathan Hill: Turning around the telescope – consumers at the centre of financial services policies (18 Nov. 2014)
- Jonathan Hill's European Commission page