GREEN PAPER on retail financial services Better products, more choice, and greater opportunities for consumers and businesses
Date: 2015-12-10
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: access to information, consumer information, cross-frontier data flow, digital technology, financial services, impact of information technology, insurance, provision of services, retail selling, single market

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 10.12.2015  COM(2015) 630 final   GREEN PAPER on retail financial services Better products, more choice, and greater opportunities for consumers and businesses  
 
 
Green paper on retail financial services 

Better products, more choice, and greater opportunities for consumers and businesses 

Section 1 

Creating a true European market for retail financial services 

The European Union’s Single Market and its four freedoms1 offer great opportunities for the 
EU’s citizens. In areas where the Single Market is well developed, as in air travel, 500 million 
consumers  benefit  from  the  breadth  of  competition,  giving  all  of  us  greater  choice,  better 
services  and  lower  prices.  One  of  the  priorities  of  President  Juncker's  Commission  is  the 
achievement of a deeper and fairer Single Market. 

Retail finance provides a number of services that are essential for citizens: where we keep our 
money,  how  we  save  for  our  old  age,  how  we  pay  for  a  house  or  other  purchases,  how  we 
insure  ourselves  or  our  property  against  health  problems  or  accidents.  Developing  effective 
Europe-wide markets for these services will improve choice for consumers, allow successful 
providers to offer their services throughout the EU, and support new entrants and innovation. 
But  Europe-wide  markets  in  retail  financial  services  do  not  really  exist  at  present.  Only  a 
small minority of retail financial service purchases take place across borders. There are many 
good  products  which  exist  in  domestic  markets,  but  it  is  difficult  for  consumers  in  one  EU 
Member State to buy products provided in another.  This does not just limit choice. Evidence 
shows  that  prices  vary  widely  across  the  EU:  for  example,  motor  insurance  for  the  same 
customer can be twice as expensive in some Member States than in others. 

Digitalisation – the development of new business models and services through technology – 
makes  information  easily  available  to  potential  consumers.  As  a  result,  physical  location  of 
the  parties  to  a  transaction  has  become  less  important.  Digitalisation  can  help  bring  down 
prices  and  improve  the  comparability  of  products,  empowering  consumers  in  their  financial 
choices.  In  the  long  run,  digitalisation  should  allow  firms  to  make  their  products  available 
anywhere in the Union, bringing a single European market closer to reality. 

Building  confidence  and  trust  will  be  crucial  to  the  expansion  of  the  Single  Market  in  this 
area: confidence among companies that they can do business across borders and trust among 
consumers that if they use a service across borders their interests will be protected. To achieve 
these objectives, services and products must be comprehensible: in other words, information 
on their function, their price and how they compare to other products should be available in a 
way that consumers can understand. 

Building on previous EU action in this area, this Green Paper explores what can be done to 
help the Single Market in financial services deliver concrete improvements to people’s lives 
in  the  EU.  An  improved  market  in  retail  financial  services  would  also  create  new  market 
opportunities for suppliers, supporting growth in the European economy and creating jobs. 

1 The Treaty on the Functioning of the EU (TFEU) guarantees free movement of goods, capital, services, and 
people within the EU. 

2 

 
 
                                                            
1.1  Objective 

This  Green  Paper  is  an  opportunity  to  comment  on  how  the  European  market  for  retail 
financial  services  –  namely  insurance,  loans,  payments,  current  and  savings  accounts  and 
other retail investments – can be further opened up, bringing better results for consumers and 
firms, whilst  maintaining an adequate level of consumer and investor protection. It seeks to 
identify the specific barriers that consumers and firms face in  making full use of the Single 
Market and ways in which those barriers could be overcome, including by making best use of 
new technology, subject to appropriate safeguards. The goal is to make it easier: 

  For  companies  based  in  one  EU  Member  State  to  offer  retail  financial  services  in 

other EU Member States; 

  For consumers to be able to buy retail financial services offered in other EU Member 

States; and 

  For citizens to take their financial service products with them if they move from one 
Member State to another, whether to study, work or retire – so-called "portability". 

The Green Paper aims to stimulate debate at EU and national levels.  It is an invitation for the 
European  Parliament  and  the  Council,  other  EU  institutions,  national  Parliaments  and  all 
those  interested  to  come  forward  with  suggestions  on  the  possible  short  and  longer  term 
policy actions that might be needed to achieve a well-functioning and competitive European 
market in this area.  It therefore explores:  

(1) the current state of the Single Market for retail financial services, and the recent trend 

of digitalisation (Section 2); and 

(2) the need for action at the EU or national level to overcome the barriers which currently  

stop consumers and firms from going cross-border (Section 3). 

1.2 

Previous EU action in the area of retail financial services 

Consumer trust in the financial sector and in retail financial services has diminished owing to 
the financial crisis and the reputational damage suffered by the financial industry. To restore 
consumer trust, and to help expand the Single Market, the EU has recently taken a number of 
legislative measures in the area of retail financial services.  Some of these initiatives are still 
being implemented nationally. They are discussed further in this Green Paper, but include: 

  empowering  consumers  to  make  informed  choices  through  increased  transparency 
requirements,  and  better  advice  in  some  areas,  before  the  sale  of  certain  financial 
products  such  as  payment  accounts,  consumer  and  mortgage  credit,  investment 
products and insurance; 

  encouraging  the  development  of  competitive  markets  in  payment  accounts  by 
providing  an  EU-wide  right  of  access  to  basic  payment  accounts,  prohibiting 
discrimination on the basis of residence for payment accounts and ensuring access to 
payment account switching services at national level; 
improving  consumer  protection  rules  for  investments,  mortgage  credit  and  insurance 
to give consumers confidence in shopping in their domestic markets and cross-border; 
  facilitating  cross-border  distribution  of  insurance  and  mortgage  credit  to  improve 

 

competition. 

3 

 
 
Retail financial services are also subject to a wide variety of requirements and regulations at 
the EU and national levels with the aim of protecting consumers and encouraging an internal 
EU  market  for  these  services.  These  include  cross-sectoral  requirements,  such  as  those 
relating to unfair terms in consumer contracts and to unfair business-to-consumer commercial 
practices,2 and sector-specific legislation on many financial products and payments services. 
The  Commission  is  closely  monitoring  the  implementation  and  enforcement  of  existing 
legislation  by  Member  States  and  continues  to  promote  cooperation  between  national 
competent authorities to ensure that it is effective across the EU.3 The work of the European 
Supervisory  Authorities  (ESAs)  is  also  relevant  in  this  context.4  Alongside  this  work,  the 
Commission has regularly reviewed the regulatory framework for the retail financial services 
sector  with  the  aim  of  creating  more  integrated,  competitive  and  fair  markets  for  financial 
services.5  

1.3  How this Green Paper fits with the Commission’s overall priorities 

This consultation complements other key pieces of Commission work: 

  The Digital Single Market (DSM). The DSM Strategy6 intends to ensure, among other 
points, better access for consumers and businesses to online goods and services across 
Europe  by  tackling  the  problem  of  unjustified  'geo-blocking'  (supplier-imposed 
restrictions  on  purchases).  It  also  addresses  the  issue  of  the  "level-playing  field" 
between  various  service  providers  and  envisages  a  comprehensive  assessment  of 
online  platforms,  with  a  particular  focus  on  handling  of  data.  Moreover,  the  DSM 
Strategy  aims 
through  supporting 
standardisation,  These  are  all  relevant  to  the  digitalisation  of  the  financial  sector, 
though not specific to it.  

interoperability 

technological 

improve 

to 

  The Capital Markets Union (CMU). By building a stronger single market for capital, 
the objective of the CMU7 is to offer businesses more choices of funding at different 

2 See, for instance, the Unfair Contract Terms Directive (UCTD), Council Directive 93/13/EEC of 5 April 1993 
on unfair terms in consumer contracts (OJ L 95, 21.4.1993, p. 29); Unfair Commercial Practices Directive 
(UCPD), Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning 
unfair business-to-consumer commercial practices in the internal market and amending Council Directive 
84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and 
Regulation (EC) No 2006/2004 of the European Parliament and of the Council (OJ L 149, 11.6.2005, p. 22). 
3 Notable tools include the Consumer Protection Cooperation Network established as part of the Regulation on 
consumer protection cooperation – Regulation (EC) No 2006/2004 of the European Parliament and of the 
Council of 27 October 2004 on cooperation between national authorities responsible for the enforcement of 
consumer protection laws (OJ L 364, 9.12.2004, p. 1). 
4 The three ESAs are the European Securities and Markets Authority (ESMA), the European Banking Authority 
(EBA) and European Insurance and Occupational Pensions Authority (EIOPA) 
5 For instance, the Commission’s Financial Services Action Plan (1999); Communication from the Commission: 
Sector Inquiry under Art 17 of Regulation 1/2003 on retail banking (COM(2007)33 final); Green Paper 'Retail 
Financial Services in the Single Market' (COM/2007/0226 final); and Green Paper 'Towards an integrated 
European market for card, internet and mobile payments' (COM/2011/0941 final). 
6 Commission Communication: A Digital Single Market Strategy for Europe 
(http://ec.europa.eu/priorities/digital-single-market/docs/dsm-communication_en.pdf)  
7 Communication from the Commission to the European Parliament, The Council, The European Economic and 
Social Committee and the Committee of the Regions –  Action Plan on Building a Capital Markets Union, COM 
(2015) 468 final, 30.9.2015. 

4 

 
 
                                                            
stages of their development and to provide more options and better returns for savers 
and retail investors.  

  The Single Market Strategy (SMS). The SMS8 consists of targeted actions in three key 
areas: creating opportunities for consumers, professionals and businesses, encouraging 
modernisation and innovation and ensuring practical delivery that benefits consumers 
and  businesses  in  their  daily  lives.  It  aims  to  facilitate  cross-border  provision  of 
services  and  to  address  key  barriers  for  business  services  and  construction.  The 
Commission  will  review  market  developments  and,  if  necessary,  take  action  in 
connection  with  insurance  requirements  for  business  and  construction  service 
providers. 

This  Green  Paper  takes  account  of  and  complements  other  more  specific  Commission 
initiatives  such  as  the  Call  for  Evidence  on  the  EU  regulatory  framework  for  financial 
services9,  the  ongoing  work  to  remove  obstacles  in  the  insurance  sector  related  to  contract 
law10,  the  assessment  of  the  potential  of  the  Distance  Marketing  of  Financial  Services 
Directive (DMFSD)11 and the current sector inquiry into e-commerce.12 

Section 2 

Current state of the retail financial services markets 

2.1 

Fragmented markets and insufficient competition 

There  are  wide  differences  in  price  and  choice  among  EU  Member  States.  Some  markets 
show  few  consumers  switching  products,  which  could  diminish  incentives  for  firms  to 
compete.  Furthermore,  some  Member  States’  markets  show  a  high  concentration  of  service 
providers. EU retail financial service markets also show little cross-border activity. To some 
extent, this reflects cultural and national preferences and customers' choice. Not all consumers 
want  to  buy  their  financial  services  products  cross-border.  There  is,  however,  merit  in 
considering whether more can be done to reduce fragmentation. 

 The growth of purchasing online offers significant potential to allow firms to serve customers 
in  other  Member  States  from  a  distance.  There  is  also  a  large  potential  market  amongst 
consumers who are mobile within the Union: 13.6 million EU citizens live in an EU Member 
State other than their own and many more may do so at some point in their lives.13 Moreover, 

8 Communication from the Commission to the European Parliament, The Council, The European Economic and 
Social Committee and the Committee of the Regions – Upgrading the Single Market: more opportunities for 
people and business, COM (2015) 550 Final 28.10.2015 
9 European Commission, Call for Evidence: EU Regulatory Framework for Financial Services 
(http://ec.europa.eu/finance/consultations/2015/financial-regulatory-framework-review/docs/consultation-
document_en.pdf) 
10 For further information see http://ec.europa.eu/justice/contract/insurance/index_en.htm  
11 Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the 
distance marketing of consumer financial services and amending Council Directive 90/619/EEC and Directives 
97/7/EC and 98/27/EC (OJ L 271, 9.10.2002, p. 16) 
12 For further information see http://ec.europa.eu/competition/antitrust/sector_inquiries_e_commerce.html  
13 Eurostat, EU citizenship - statistics on cross-border activities, April 2013, 
(http://ec.europa.eu/eurostat/statistics-explained/index.php/EU_citizenship_-_statistics_on_cross-
border_activities) (access March 2015) 

5 

 
 
 
                                                            
35% of European citizens live in regions bordering other Member States14, and many already 
do part of their shopping in their 'local' cross-border areas.15 This should also be possible for 
retail financial services, but often this is not the case. For markets to be accessible to all firms, 
unnecessary  and  unjustified  barriers  for  new  entrants  to  the  market  should  be  reduced, 
especially for those firms which may be able to provide their products cross-border within the 
EU.  

Do you reside in Belgium? 

Yes 

No 

If  your  place  of  residence  is  not  located  in 
Belgium,  it  is  not  possible  to  open  an 
account with ABC Direct. 

Limited cross-border activity 

in 

these  products 

largely  purchasing 

The current level of direct cross-border transactions in retail financial services is limited, with 
consumers 
their  domestic  market  and  firms 
overwhelmingly  serving  markets  in  which  they  are  physically  established.16  Recent  studies 
suggest  that  the  share  of  consumers  who  have  already  purchased  banking  products  from 
another Member State was less than 3% for credit cards, current accounts and mortgages.17 In 
consumer credit only 5% of loans had been obtained cross-border.18 Cross-border loans within 
the euro area account for less than 1% of the total household loans in the area.19  In insurance, 
cross-border  provision  of  services  accounted  for  only  about  3%  of  total  gross  written 
premiums in 2011 and 2012.20  

Price and choice differentials 

There  is  evidence  of  market  fragmentation  in  the  differing  prices  for  identical  or  similar 
products available in different domestic markets, even from the same provider. For instance, 
when  establishing  branches  in  other  markets,  firms  tend  to  adjust  their  pricing  to  local 
conditions  and  do  not  generally  export  more  competitive  pricing  to  other  markets.    Market 
fragmentation is also demonstrated by the constrained choices available to consumers in some 

14 Territories with specific geographical features, Working paper, European Union Regional Policy, n° 02/2009, 
pp. 4-5. 
15 European Parliament, EU contract law as a tool for facilitating cross-border transactions: a point of view from 
consumers, 2010 ( http://www.europarl.europa.eu/webnp/cms/pid/1483), p. 9.  
16 Special Eurobarometer survey 373 Retail Financial Services, p. 28 and thereafter 
(http://ec.europa.eu/internal_market/finservices-retail/docs/policy/eb_special_373-report_en.pdf) 
17 Special Eurobarometer survey 373 Retail Financial Services, p. 32 
18 Study on the functioning of the consumer credit market in Europe, July 2013 
(http://ec.europa.eu/consumers/archive/rights/docs/consumer_credit_market_study_en.pdf), pp. x-xi 
19 Source: ECB Statistical Data Warehouse  
20 DSF Policy Paper N°45s 'Cross-border insurance in Europe' Dirk Schoenmaker and Jan Sass, November 2014, 
p.12  

6 

 
 
 
 
 
 
 
                                                            
Member  States;  for  instance,  consumers  in  some  markets  can  only  access  fixed-rate 
mortgages, and in others they can only access variable rates.21 

In  the  banking  sector,  information  collected  by  the  Financial  Services  User  Group  (FSUG) 
indicates that differences between Member States – going beyond what can be explained by 
objective  differences  in  terms  of  purchasing  power  and  national  price  levels  –  can  be 
substantial for a number of products.22  Annual fees charged for a credit card can vary from 
€9.10  in  Romania  to  almost  €114  in  Slovakia.  Offline  credit  transfers  are  free  in  some 
Member  States,  but  can  cost  an  average  of  €3.58  in  France.  There  is  also  significant 
dispersion in interest rates that households pay on mortgage loans in different countries (see 
Chart 1).23 Greater dispersion can be observed for consumer credit than for mortgage credit.  

Chart 1: European Mortgage Federation data on interest rates on new residential mortgage loans 
by quarter (2012-2014) 

5,00

4,50

4,00

3,50

3,00

2,50

2,00

1,50

SE

DE*

ES

BE

NL

IE

UK

*Please note that the weighted average for the whole market is likely biased towards the 
short-term loans. This is due to the available weighting scheme: the loan volumes include 
prolongations, but prolongations tend to have shorter interest rate periods. 

In  the  insurance  sector,  the  same  policy  holder  with  a  similar  risk  profile  can  pay  twice  as 
much for a similar policy depending on his place of residence. Information collected by the 
FSUG  indicates  that  monthly  premiums  for  a  comparable  non-investment  25-year  term  life 
insurance product ranged from €10 per month in Slovakia and €12.40 per month in Spain to 
£65 per month in the UK. In the case of motor insurance, for example, quotes vary even for 
the same car model (Chart 2).24  

21 European Mortgage Federation, Hypostat 2015, p. 15 
22 Financial Services User Group, 'Retail Financial Market Integration' (http://ec.europa.eu/finance/finservices-
retail/fsug/papers/index_en.htm). 
23 Source: European Mortgage Federation 
24 Insurance Europe Report on European Motor Insurance Markets, page 40 (Chart 48), November 2015 
(www.insuranceeurope.eu). Please note that this graph has been edited to remove non-EU countries. See also 
Retail Insurance Market Study by Europe Economics (26.11.2009), p. 301 & 315 
(http://ec.europa.eu/finance/insurance/docs/motor/20100302rim_en.pdf) 

7 

 
 
 
 
 
                                                            
Chart 2: Average Mandatory Third Party Liability premiums by country 

€439 

€309  €308  €252 

€480 

€420 

€360 

€300 

€240 

€180 

€120 

€60 

€0 

2011

2012

2013

€237 

€192  €178 

€157 

€153  €143 

€136 

€94 

€106 

€99 

€62  €49 

IT

NL

BE

GR

DE

HR

ES

FI

SI

FR

PT

PL

CZ

EE

LV

HU

Differences  in  prices  can  be  attributed  to  factors  such  as  varying  conditions  in  domestic 
economies,  uneven  levels  of  purchasing  power,  financial  or  institutional  structures  (e.g. 
taxation, regulation or supervision), or differing funding costs, value propositions (sometimes 
related to product tying or packaging) and pricing structures in local markets. For insurance 
(specifically  motor  insurance)  variations  in  the  costs  and  risks  of  providing  cover  can  vary 
substantially between the different Member States, which can justify some price differences. 
However,  there  is  no  apparent  objective  justification  for  the  scale  of  the  price  difference  in 
products  that  are  less  tied  to  geographical  location  or  local  risk  characteristics,  such  as  life 
insurance  (even  if  life  expectations  may  not  be  identical  in  every  Member  State).  These 
factors do not always sufficiently explain the degree of price fragmentation across the EU. 

Insufficient competition and minimal consumer switching 

A  majority  of  Member  States'  retail  banking  and  insurance  markets  are  highly  concentrated 
and display signs of not being fully competitive, limiting consumer choice and the value and 
quality of the products they receive. For instance, at the end of 2013 the market share of the 
five largest providers in the banking sector ranged from close to 95 % in Greece to over 30 % 
in  Germany  and  Luxembourg.25  In  response  to  the  public  consultation  on  the  review  of  the 
Insurance  Block  Exemption  Regulation,  the  majority  of  insurers  and  their  industry 
insurance  markets  are  competitive.26  Nonetheless,  high 
associations  claimed 
concentration can be observed in life and non-life insurance; for example, concentration ratios 
in the life insurance sector, as measured by the market share of the largest five life insurance 

that 

25 See Banking Structures Report, ECB, October 2014, p.15 
(https://www.ecb.europa.eu/pub/pdf/other/bankingstructuresreport201410.en.pdf) 
26 Summary Report of the Replies to the Public Consultation on the Review of the Insurance Block Exemption 
Regulation (IBER) (http://ec.europa.eu/competition/consultations/2014_iber_review/summary_report_en.pdf) 

8 

 
 
 
                                                            
companies as of 2013, range from 100% in Estonia and Malta to less than 40% in Germany 
and  Croatia.27  These  large  variations  do  not  appear  to  be  justified  by  the  differing  sizes  of 
these markets. 

Switching  between  different  product  providers  is  at  a  low  level  in  the  EU.28  From 
Eurobarometer data, in  2012 over 85%  of respondents with  a personal loan or  a credit  card 
had not switched or tried to switch.29 In addition, on a Member State level, markets for cash 
savings have been shown not to be working well, with consumers remaining "locked-in" with 
the  same  provider  and  product  even  though  similar  products  with  better  returns  are 
available.30  In  fact  according  to  consumer  scoreboards,  retail  financial  services  are  amongst 
the  areas  where  consumers  are  most  dissatisfied  with  the  services  they  receive.31  This 
combination  of  high  levels  of  dissatisfaction,  varying  prices,  and  low  levels  of  switching 
could  indicate  that  competition  is  not  working  sufficiently  well  in  these  markets  for 
consumers, or that barriers to entry and to exit from products play to consumers' inertia and 
stop them from finding the best deals. 

Switching behaviour by consumers can encourage competitiveness amongst firms and provide 
incentives for new players to enter mature markets. Were it not for the obstacles that prevent 
cross-border transactions, switching behaviour could also encourage firms to provide services 
from  other  Member  States.  Two  of  the  markets  where  switching  can  be  most  difficult  – 
payments  accounts  and  mortgages  –  have  been  the  subject  of  EU-level  initiatives  in  recent 
years which are still being transposed at national level, with the Mortgage Credit Directive32 
(MCD) removing barriers to exit from  products and the Payment Accounts Directive33 (PAD) 
creating dedicated national switching services for payment accounts.  However, there are still 
further ways in which switching behaviour can be encouraged at the EU level – for instance, 
full portability of bank account numbers is being examined in some Member States. 

Tying  and  packaging  of  products  can  also  be  a  barrier  to  consumer  choice.  Alongside 
competition rules, the tying or the packaging of retail financial products is currently subject to 
sector-specific  rules  set  out  in  the  MCD  (which  will  ensure  that  borrowers  will  be  able  to 

27 See EU/EEA (Re) insurance statistics (table 10). (https://eiopa.europa.eu/financial-stability-crisis-
prevention/financial-stability) 
28 Monitoring consumer markets in the European Union 2013, pp. 43-44. 
(http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/market_monitoring/docs/consumer_
market_monitoring_2013_part_1.pdf.) 
29 Eurobarometer survey 373 “Retail Financial Services”, p. 85 
30 FCA, Cash Savings Market Study Report (http://www.fca.org.uk/static/documents/market-studies/cash-
savings-market-study-final-findings.pdf); Autoriteit Consument & Market, Barriers to entry in the Dutch retail 
banking sector, p. 69 
31 See the most recent Consumer Markets Scoreboard at 
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/index_en.htm  
32 Directive 2014/17/EU of the European Parliament and of the Council of 4 February on credit agreements for 
consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and 
Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p.34).  Article 25 addresses issues relating to early 
repayment 
33 Directive 2014/92/EU of the European Parliament and of the Council of 23 July 2014 on the comparability of 
fees related to payment accounts, payment account switching and access to payment accounts with basic features 
(OJ L 257, 28.8.2014, p. 214) 

9 

 
 
                                                            
choose  their  insurance  from  another  supplier)34,  PAD,  and  the  forthcoming  Insurance 
Distribution  Directive  (IDD)35.  The  revised  Markets  in  Financial  Instruments  Directive 
(MiFID II)36 also includes an empowerment for the ESMA (in cooperation with the EBA and 
EIOPA) to develop cross-selling guidelines. Customers should be informed if they are free to 
purchase  each  product  in  the  package  separately  (e.g.  insurance  from  another  provider)  and 
have clear information on the costs.  The Commission will continue to monitor whether this is 
the case and whether further action is needed in this area. 

2.2 

Changing landscape of the retail financial sector in view of digitalisation 

Digitalisation  and  innovation  have  rapidly  changed  the  shape  of  retail  financial  services  in 
recent  years,  and  promise  to  continue  to  do  so.  Financial  firms  increasingly  offer  products 
online or via applications and nowadays the vast majority of consumers regularly use online 
banking to handle their accounts and carry out transactions.37 In principle, these technological 
advances  offer  the  opportunity  to  smooth  the  process  of  making  some  cross-border 
transactions expand access to more effective information and advice for consumers, improve 
comparability of products and increase switching behaviour.38  

New players and new techniques in a digital market 

The  retail  financial  services  sector  is  experiencing  significant  change  as  it  is  affected  by 
digitalisation.  New  business  models  are  emerging:    online-only  providers  and  technology 
companies  are  entering  the  market,  offering  services  (within  Member  States  and  sometimes 
cross-border)  including  electronic  money  transfers,  intermediation  in  online  payments, 
financial data aggregation, peer-to-peer funding and price comparison. New players who are 
not traditional financial services providers and whose primary business model is not always 
financial services are also entering the market. Social media companies, for example, are now 
selling financial products. These new technologies can be beneficial for consumers, provided 
that appropriate security standards are maintained. 

Both established firms and new financial technology companies (Fintechs) are exploring ways 
of interacting with their customers, of integrating their distribution channels for products and 
of  providing  services  which  are  faster,  more  responsive  and  more  tailored.    For  established 
players,  digital  technologies  including  distributed  ledgers  (such  as  the  blockchain  method 
used  by  Bitcoin)  offer  the  opportunity  to  reshape  internal  processes  with  improved 

34 MCD Art. 12 (4): "Member States may allow creditors to require the consumer to hold a relevant insurance 
policy related to the credit agreement. In such cases Member States shall ensure that the creditor accepts the 
insurance policy from a supplier different to his preferred supplier where such policy has a level of guarantee 
equivalent to the one the creditor has proposed." 
35 Publication expected early 2016 , see also http://www.consilium.europa.eu/en/press/press-
releases/2015/07/22-insurance-mediation/.  
36 Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial 
instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p.349) 
37  Statista,  Online 
in 
(http://www.statista.com/statistics/222286/online-banking-penetration-in-leading-european-countries/)  
38 KPMG, Mobile Banking 2015: Global trends and their impact on banks, pp. 21-22. KPMG has posited that 
the increased engagement with financial products that stems from online banking encourages more active review 
of consumers' potential options. 

selected  European  markets 

penetration 

2014,  website 

banking 

in 

10 

 
 
                                                            
standardisation,  automation  and  economies  of  scale.  Established  players  are  also  partnering 
with or fostering fintechs, and working with major digital providers, to shape and stay on top 
of this trend. In addition, firms are increasingly using 'big data', drawn from points including 
social  media,  to  gather  information  on  their  potential  target  customers.  This  gives  them  a 
greater  understanding  of  customers,  but  also  raises  questions  about  the  appropriate  use  of 
these data.   

These changes will have a particular impact on existing providers, such as incumbent banks, 
because  of  their  reliance  on  significant  –  and  costly  –  branches  and  the  role  of  payment 
accounts as the traditional gateway to consumers, which will be challenged by the emergence 
of  fintechs  and  digital  wallets.    New  entrants  have  also  focused  on  profitable  ancillary 
activities such as foreign exchange.39 Banks and insurance companies are investing heavily in 
digitalising their sales and customer services in the hope of making cost savings and engaging 
more  closely  with  their  existing  customers.40  New  entrants  (who  do  not  yet  benefit  from  a 
stable customer base) have the potential to drive cross-border solutions and seize new markets 
from incumbents. 

The development of online distribution channels is of particular interest at the EU level.  By 
allowing providers and consumers to conclude and support distance sales more easily and at a 
lower cost, digitalisation offers access to a large consumer base in the Single Market that can 
benefit  from  the  best  available  offers.    Digitalisation  should  in  principle  foster  cross-border 
activity, without requiring firms to establish themselves in other Member States.  

Though innovative technologies offer opportunities to improve customer service and reduce 
prices, they may also pose regulatory challenges, particularly in relation to cyber-security and 
data protection. Cyber threats are a major concern for consumer and businesses; this issue is 
likely  to grow in  importance  as digitalisation  progresses and needs an appropriate response. 
New  players  may  not  always  be  regulated  to  the  same  extent  as  incumbents  by  current 
regulatory  and  supervisory  frameworks,  including  from  a  consumer  protection  perspective.  
Technological  developments  and  the  expansion  of  new  distribution  channels  may  make  it 
difficult  to  provide  appropriate  pre-contractual  information  to  customers  –  for  example,  by 
supplying  mandatory  disclosure  via  mobile  devices  with  small  screens.  The  appropriate 
response  to  these  challenges  (including  adequate  security  and  consumer  protection)  and 
opportunities will have to be carefully considered.  

New financial and payment products 

The  Commission  supports  the  growth  of  innovative,  consumer-friendly  technologies  and 
wants to ensure that they are available to a wide array of consumers across Europe, and cross-
border where possible. The digitalisation of financial services has led to the emergence of new 
products,  such  as  text  loans  or  peer-to-peer  lending,  some  of  which  bring  regulatory  and 
consumer protection challenges.  

39 KPMG, Mobile Banking 2015: Global trends and their impact on banks, p. 27. 
40 KPMG, Mobile Banking 2015: Global trends and their impact on banks, p. 21. 

11 

 
 
                                                            
In the area of payments in particular, new opportunities are emerging with the development of 
mobile, internet and instant payments in domestic markets. Mobile payments are developing 
fast in  Europe,  with  a wide variety of solutions for remote or  proximity payments currently 
available from  market players including  banks, card schemes,  mobile  operators and internet 
players.  These services include peer-to-peer payments, mobile wallets, banking applications 
and card applications, and use various technologies (Near-Field Communications and Quick-
Response  codes  being  the  most  developed  ones  for  point-of-sale  payments).  For  the 
consumer, this means that they can pay for their shopping via their phone, share the price of a 
meal or  send  funds to  friends via an application. However, solutions are often valid only  at 
domestic level and are generally not interoperable and firms or groups of firms are competing 
to  impose  their  own  standards.  Their  constrained  geographical  coverage  and  minimal 
interoperability  limit  their  acceptance  by  merchants,  which  reduces  their  effective  cross-
border use. 

Real-time  (or  instant)  payments  currently  exist  in  some  countries,  and  have  attracted 
significant interest in others as their speed has the potential to drive innovation and lead to the 
emergence  of  new  payment  applications.  They  are  the  logical  next  development  within  the 
Single Market for retail payments following the transition to the Single Euro Payment Area 
(SEPA)41:  EU  payment  services  providers  have  started  developing  an  Instant  SEPA  Credit 
Transfer scheme. The Euro Retail Payments Board and the European Payments Council42 are 
working on a pan-European standard for instant payments and peer-to-peer mobile payments 
which has the potential to create interoperable systems. The Commission supports both bodies 
in this work. 

Section 3  

Better products, more choice and greater opportunities for consumers and 
businesses 

The full benefit that may derive from the single European market for retail financial services 
has  not  yet  been  exploited.    One  of  the  most  direct  ways  of  improving  competition  and 
promoting  consumer  welfare  would  be  to  reduce,  where  possible,  the  obstacles  to  cross-
border trade in these services.  These obstacles originate from two main groups of root causes 
affecting both suppliers and consumers, which act together to reduce choice and competition 
and keep the European market fragmented:  

  consumers do not know about or do not have enough confidence in offers from 
other Member States and if they do, they have trouble accessing them (section 
3.1); and 

  suppliers do not offer products to consumers in other Member States because, 
even  in  a  time  of  digitalisation,  fragmented  markets  create  excessive 
operational and compliance costs (section 3.2).  

The Commission is particularly interested in whether the use of innovative digital technology 
can assist in solving any of these obstacles. Lack of confidence by consumers and a lack of 

41 Further information on SEPA can be found at http://ec.europa.eu/finance/payments/sepa/index_en.htm  
42 For further information see  http://www.ecb.europa.eu/paym/retpaym/governance/eu/html/index.en.html and 
http://www.europeanpaymentscouncil.eu/  

12 

 
 
                                                            
legal  certainty  for  traders  for  cross-border  transactions  may  also  arise  from  an  inconsistent 
enforcement of EU legislation across the EU. The Consumer Protection Cooperation Network 
covers  some  key  consumer  protection  legislation  in  the  field  of  financial  services.  If  the 
enforcement  of  EU  legislation  emerges  as  a  problem  more  could  be  done  through  such 
networks. 

General questions 

1.  For which financial products could improved cross-border supply increase competition 

on national markets in terms of better choice and price? 

2.  What  are  the  barriers  which  prevent  firms  from  directly  providing  financial  services 

cross-border and consumers from directly purchasing products cross-border? 

3.  Can any of these barriers be overcome in the future by digitalisation and innovation in 

the FinTech sector? 

4.  What can be done to ensure that digitalisation of financial services does not result in 

increased financial exclusion, in particular of those digitally illiterate? 

5.  What should be our approach if the opportunities presented by the growth and spread 

of digital technologies give rise to new consumer protection risks? 

6.  Do  customers  have  access  to  safe,  simple  and  understandable  financial  products 
throughout the European Union? If not, what could be done to allow this access? 
7.  Is the quality of enforcement of EU retail financial services legislation across the EU a 

problem for consumer trust and market integration? 

8.  Is there other evidence to be considered or are there other developments that need to 
be  taken  into  account  in  relation  to  cross-border  competition  and  choice  in  retail 
financial services? 

3.1  Helping consumers to buy financial products cross-border 

At a number of points over their lives, consumers have to make big financial decisions with 
long-term implications.  Whether purchasing life insurance, using a mortgage to buy a home, 
moving abroad or saving money for the future, consumers should be able to i) know what is 
available elsewhere in the EU, ii) get competitively-priced products suited to their needs, and 
iii) be confident that their products are safe and suitable and will act in the way they intend.  

3.1.1   Knowing what is available43 

I'm looking for the best possible deal in my Member State. I don't know that there 
are products in other Member States that might be cheaper or better.  

Consumers often lack access to information about cross-border offers of financial products; it 
is  therefore  difficult  for  them  to  shop  beyond  their  home  country.  Few  providers  of  retail 
financial  services  target  consumers  in  Member  States  where  they  are  not  physically 
established.  Furthermore,  consumers  face  a  number  of  barriers,  including  language,  if  they 
want to enquire about products in other Member States.  

43 The examples used in this document are inspired by a number of real-life cases brought to the Commission's 
attention. 

13 

 
 
                                                            
Better information for customers and helping them switch 

One  way  to  build  consumer  awareness,  and  encourage  them  to  switch  to  more  suitable 
products, would be to ensure that they have access to channels which allow them to find out 
about  products  available  from  other  Member  States  and  understand  their  features.  Such 
channels  could,  for  instance,  include  financial  intermediaries,  independent  comparison 
websites or internet-based independent financial advice services.  

Independent  comparison  sites  can  be  helpful  in  ensuring  that  customers  know  that  products 
exist, but their major benefit comes from the support they provide to consumers in switching, 
by  allowing  them  to  assess  and  choose  between  the  most  suitable  products  for  their  needs. 
EIOPA  has  found  that  comparison  websites  stimulate  competition  between  insurers  and 
insurance intermediaries and help enhance the transparency and comparability of information 
available to consumers.44 This concept could also apply for other product segments, as well as 
Member States which currently lack these facilities, though any action must take into account 
that  many  comparison  websites  themselves  are  sometimes  poor  at  outlining  the  metrics  and 
aspects  compared,  and  are  often  overly  focused  on  price.45    Comparison  websites  are  very 
common  in  the  insurance  sector,  and  the  PAD  has  introduced  an  obligation  to  establish  at 
least  one  comparison  website  (with  established  quality  criteria)  at  national  level  which  will 
present  the  offers  of  bank  account  services,  including  the  fees  charged,  from  different 
financial institutions. 

Other methods of improving switching rates may include moves to ensure that consumers can 
exit their products without being subject to onerous penalties, as in the MCD and Consumer 
Credit Directive (CCD)46, or efforts to overcome consumer inertia by reducing the obstacles 
and hassle involved in switching products.47  The use of targeted disclosure at key moments 
when a consumer may benefit from changing products could also ensure that consumers are 
more  engaged  with  their  financial  decisions  and  less  locked  in  to  the  products  they  have 
purchased.48 

Questions 

9.  What would be the most appropriate channel to raise consumer awareness  about the 
different  retail  financial  services  and  insurance  products  available  throughout  the 
Union?  

10. What  more  can  be  done  to  facilitate  cross-border  distribution  of  financial  products 

through intermediaries? 

11. Is further action necessary to encourage comparability and / or facilitate switching to 
retail financial services from providers located either in the same or another Member 

44 EIOPA report on Good Practices on Comparison Websites (January 2014) 
45 European Commission, 'Comparison Tools and Third-Party Verification Schemes', website 
(http://ec.europa.eu/consumers/consumer_evidence/market_studies/comparison_tools/index_en.htm) 
46 Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements 
for consumers and repealing Council Directive 87/102/EEC (OJ L 133, 22.05.2008, p.66)  
47 Firms are currently subject to EU legislation on unfair contract terms and unfair commercial practices (see 
footnote 3) which limit some contractual and non-contractual barriers to consumer switching.  
48 See, for instance, FCA Cash Savings Market Study, which proposes use of text alerts were a bonus period will 
soon end (https://www.fca.org.uk/static/documents/market-studies/cash-savings-market-study-final-findings.pdf)  

14 

 
 
                                                            
State? If yes, what action and for which product segments? 

Tackling complex and prohibitively high fees for foreign transactions 

I live in the Eurozone. I'm charged high fees by my bank each time I transfer money 
to a non-euro Member State. When I used my credit card abroad, I came back to a 
high  bill  because  the  conversion  rate  applied  by  the  bank  was  worse  than  market 
rates, and I was not properly informed in advance of the exchange rate that would be 
charged. 

As  regards  transaction  charges,  Regulation  924/2009  on  cross-border  payments49  eliminates 
the differences in charges for cross-border and domestic payments in euro, greatly benefiting 
consumers when they make payments in euro. However, citizens wishing to transfer money to 
other countries of the EU in currencies other than the euro are often faced with very high fees 
compared to those they pay for domestic transfers. These fees cover both transaction charges 
and currency exchange fees and can represent a significant part of the value of the transaction. 
Transaction  charges  for  ordinary  consumers  for  cross-border  payments  and  transfers  in 
currencies other than the euro tend to be very high in all Member States and are not always 
disclosed clearly to customers. Increasingly, websites are available for peer-to-peer currency 
exchange,  which  offers  much  better  rates  for  consumers  and  are  beginning  to  have  a  real 
impact on the markets. Though firms must be transparent regarding the fees and rates charged 
for currency exchange, these fees and rates are not specifically subject to any European rules. 

For card payments, consumers are not always aware of the currency conversion rate that will 
be  applied  to  a  transaction  executed  abroad,  for  example  for  cash  withdrawals  or  purchases 
with payment cards in Member States having a different currency. The currency conversion is 
usually offered by the bank that issued the card. In recent years, merchants have increasingly 
offered the option of using the currency exchange rate of their own bank (so called dynamic 
currency  conversion),  which  at  least  provides  some  transparency  to  consumers  and  could 
provide better value for money. However, the merchant rates are not systematically better for 
consumers  and  they  are  often  difficult  to  compare  on  a  case  by  case  basis  with  the  rates 
offered by the consumer's bank as the precise rates offered by the banks are not available to 
consumers at the time of the transaction. This means that, thus far, consumers have not been 
able to take advantage of competition from dynamic currency conversion opportunities. 

Given the existence  of different currencies within  the EU, and the continuing  integration  of 
retail  financial  services  markets,  this  issue  is  likely  to  grow  in  importance  as  e-commerce 
expands in the Digital Single Market and further examination of it will be needed. 

Questions 

12. What more can be done at EU level to tackle the problem of excessive fees charged for 

49 Regulation (EC) No 924/2009 of the European Parliament and of the Council of 16 September 2009 on cross-
border payments in the Community and repealing Regulation (EC) No 2560/2001 (OJ L 266, 9.10.2009, p. 11) 

15 

 
 
                                                            
cross-border payments (e.g. credit transfers) involving different currencies in the EU? 
13. In addition to existing disclosure requirements50, are there any further actions needed 
to ensure that consumers know what currency conversion fees they are being charged 
when they make cross-border transactions? 

3.1.2   Accessing financial services from anywhere in Europe 

We've moved to France for retirement, and want to keep our bank account in the UK 
in order to receive our monthly pension. But our bank refuses to renew a debit card 
because we don't have a permanent address in the UK. The bank only agrees to keep 
an account if we leave a large deposit. 
We  also  looked  at  a  well-known  price  comparison  website  about  the  best  interest 
rates  available  on  our  savings  and  saw  the  following:  "Before  you  apply,  please 
make sure you’ve read and understood the terms & conditions of the account. You’ll 
also need to be aged over 18 and living permanently in the UK." 

As  financial  services  providers  do  not  currently  make  their  products  available  cross-border 
unless they are established in the target market, EU consumers can rarely access any financial 
services from other Member States (except for some limited investment products).51 Though 
the PAD will foster the internal market by prohibiting discrimination on grounds of residence 
against consumers applying for or accessing payment accounts, in most cases consumers still 
find that they are not eligible for services if they do not reside in the provider’s country.52  In 
insurance, consumers' places of residence, rather than their individual risk profiles, define the 
options available, as insurers will draw up policies based  on the risk pool  as determined  by 
local  demand.  On-line  suppliers  may  apply  'geo-blocking'  techniques  by  blocking  access  to 
websites, rerouting to other websites or by not allowing for the conclusion of the transaction 
by requiring specific data formats limited to particular countries (e.g. postal codes or payment 
information).  These practices prevent consumers from applying for their chosen products. 

Consumers should not be treated differently  based  on their nationality or  place of residence 
when shopping in the EU, unless justified by objective criteria. Actions on geo-blocking and 
other forms of geographically-based discrimination have been announced in the Digital Single 
Market  Strategy  in  May  2015  and  the  Single  Market  Strategy  in  November  2015.53  The 
Commission  will  present  legislative  proposals  by  mid-2016  to  end  unjustified  geoblocking 
and,  more  generally,  to  prevent  discrimination  of  consumers  on  the  basis  of  residence  or 
nationality.  

50 European Parliament legislative resolution of 8 October 2015 on the proposal for a directive of the European 
Parliament and of the Council on payment services in the internal market and amending Directives 2002/65/EC, 
2013/36/EU and 2009/110/EC and repealing Directive 2007/64/EC (COM(2013)0547 – C7-0230/2013 – 
2013/0264(COD)). See Articles 59 and 60(3) 
51 BEUC, Protecting consumer interests in the retail financial services area, 2011, p.3  
(http://www.beuc.org/publications/2011-09879-01-e.pdf)  
52 See, for instance, the example available in Section 2.1. 
53 The consultation on geo-blocking will be open until 28 December 2015 (see 
https://ec.europa.eu/eusurvey/runner/geoblocksurvey2015/)  

16 

 
 
                                                            
Questions 

14. What can be done to limit unjustified discrimination on the grounds of residence in the 

retail financial sector including insurance? 

Increasing portability of products 

I  want  to  move to  another Member State to  take a new job.   I've long  had private 
health insurance in my home Member State but can't carry it to my new home and 
would  have  to  take  new  private  health  insurance.  I  discovered  that  my  premiums 
would be significantly higher in  my new Member  State, as the insurance  relies on 
my most recent health information rather than my previous history. 

Citizens  moving  from  one  Member  State  to  another  may  no  longer  be  able  to  benefit  from 
financial  products  acquired  in  their  home  Member  State,  and  they  may  see  themselves 
excluded from the financial sector in their new Member State of residence. This situation can 
be  particularly  burdensome  for  consumers  who  are  less  well  equipped  to  negotiate  with 
service providers in the new Member State of residence or for citizens who need to rely on 
frequent access to financial products they may have built up over a life time such as private 
health coverage. 

For private health insurance it appears that there are contractual terms and conditions in use 
which limit entitlement to benefits to the Member State where the policy-holder is habitually 
resident at the moment of the conclusion of the insurance contract. Habitual residence is by its 
nature something that may change over time. As a result, policy-holders may not be able to 
count  on  their  existing  policies  when  they  move  to  another  Member  State,  claim 
reimbursements  of  hospital  treatment  costs  or  enjoy  their  private  pensions  abroad.  This 
particularly  affects  elderly  people  who  are  often  charged  higher  health  or  long-term  care 
insurance premiums.  

Consumers face particular issues when attempting to rely on insurance-based old age savings. 
Alongside  the  significant  difficulties  policyholders  may  face  in  reconciling  duplicative  and 
contradictory taxation arrangements, many life insurance policies limit the insurance so that it 
is  only  valid  in  the  Member  State  where  the  policy-holder  is  habitually  resident.54  Such 
restrictions reduce consumer choice and cross-border competition and also represent a serious 
obstacle for consumers moving to other Member States. These obstacles affect most severely 
EU citizens seeking to settle for their retirement in another Member State. 

Questions 

15. What can be done at EU level to facilitate the portability of retail financial products – 

for example, life insurance and private health insurance? 

Facilitating access to and recognition of professional indemnity insurance cross-border 

In  sectors  where  professional  indemnity  insurance  is  mandatory55,  service  providers  often 
have difficulty in acquiring products covering the territory of more than one Member State for 

54 For private pensions, the issue is being addressed as part of the Commission's work on the CMU. 
55 Article 23 of the Services Directive allows Member States to require service providers to subscribe to 
professional liability insurance or to provide for some other form of financial guarantee. (Directive 2006/123/EC 

17 

 
 
                                                            
 
the  provision  of  services.  The  Single  Market  Strategy  announced  that  the  Commission  will 
review market developments concerning the availability and mutual recognition of mandatory 
Professional  Indemnity  Insurance  (PII)  and,  if  necessary,  will  take  action  in  relation  to 
insurance requirements for business and construction service providers.  

Questions 

16. What  can  be  done  at  the  EU  level  to  facilitate  access  for  service  providers  to 

mandatory professional indemnity insurance and its cross-border recognition? 

3.1.3  Having trust and confidence to benefit from opportunities elsewhere in Europe 

I found a great offer for a loan in another Member State, at a much lower rate than 
my  local  alternatives.    I  was  tempted,  but  I  was  worried  about  the  implications  if 
something went wrong with the product. So instead I chose to buy a more expensive 
product on the local market. 

Consumers need to know that they will be adequately protected before and after a purchase of 
a retail financial product, no matter where they buy within the Union.56  

Encouraging comparability and consumer understanding through improved disclosure 

Consumers  need  information  that  is  easily  understandable.  Information  should  be  clear  and 
concentrate on the elements that allow the consumer fully to understand a product; it should 
also take consumer behaviour into account. Financial education can help, but when consumers 
purchase a product they need to know how much they are being charged, by whom and how 
they  are  benefiting  from  it.  They  need  to  be  able  to  compare  costs  and benefits to  make  an 
effective  choice.  Consumer  organisations,  among  others,  have  an  important  role  to  play  in 
sharing and disseminating impartial reviews of financial products. 

Any action in this area could build on efforts taken over recent years to ensure that disclosure 
is effective, transparent and comparable.  In the last few years, a number of EU measures have 
addressed  this  area,  such  as  the  MCD,  the  CCD,  the  PAD,  the  Undertakings  for  Collective 
in  Transferrable  Securities  (UCITS)  Directive57,  MiFID  II, 
the  PRIIPs 
Investment 
Regulation58 and, for non-life insurance products, IDD. For distance marketing (e.g. online) of 
consumer  financial  services,  there  are  information  requirements  in  place  in  the  DMFSD. 
Under the CMU Action Plan, the Commission will ask the ESAs to work on transparency of 
long-term  retail  and  pension  products,  including  their  actual  net  performance  and  fees.  In 

of the European Parliament and of the Council of 12 December 2006 on services in the internal market, OJ L 
376, 27.12.2006, p. 36) 
56 Eurobarometer survey 373 “Retail Financial Services”, p. 42, which notes 'not having clear information' 
(29%), 'do not know your rights in there are problems' (28%) and 'less consumer protection in other EU member 
states' as concerns in purchasing from another Member State. 
57 Directive 2009/65/EC, as amended, most recently, by Directive 2014/91/EU of the European Parliament and 
of the Council of 23 July 2014 amending directive 2009/65/EC on the coordination of laws, regulations and 
administrative provisions relating to undertaking for collective investments in transferrable securities (UCITS) as 
regards depository functions, remuneration policies and sanctions (OJ L 257, 28.8.2014, p. 186) 
58 Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key 
information documents for packaged retail and insurance-based investment products (OJ L 352, 9.12.2014, p.1)  

18 

 
 
                                                                                                                                                                                          
addition, digitalisation, and the emergence of new products and new digital channels, provides 
an opportunity to examine further how firms' communications with their customers, including 
the disclosure required by EU law and national regulation, can  work best  in the interests of 
consumers, and support them in understanding and trusting the products they purchase.   

Questions 

17. Is further EU-level action needed to improve the transparency and comparability of 

financial products (particularly by means of digital solutions) to strengthen consumer 
trust? 

Improving redress in retail financial services 

It  is  often  difficult  for  consumers  to  find  an  adequate  redress  mechanism  in  cross-border 
situations and this may deter them from buying financial products in other Member States. 

To  help  consumers  in  such  situations,  the  Commission  founded  the  Financial  Dispute 
Resolution  Network  (FIN-NET)  in  2001,  aiming  to  facilitate  the  resolution  of  cross-border 
disputes  in  financial  services.59  This  voluntary  and  informal  network  brings  together 
ombudsmen,  arbitrators,  adjudicators  and  other  schemes  from  across  the  EU.    FIN-NET's 
members  have  a  range  of  different  powers  and  approaches,  varying  from  compulsory 
participation  and  mandatory  compliance  with  decisions  by  the  parties  to  voluntary 
participation in adjudication proceedings. Moreover, this network currently neither covers all 
Member States, nor all areas of each country's financial sector.60   

To make consumers more confident when purchasing products cross-border, FIN-NET could 
be  upgraded  to  ensure  that  all  members  have  been  listed  as  meeting  the  binding  quality 
requirements  for  “Alternative  Dispute  Resolution  entities”  under  the  Alternative  Dispute 
Resolution  (ADR)  Directive.61  To  benefit  from  a  strengthened  FIN-NET,  more  consumers 
would need to learn about the network's existence. Though FIN-NET treated over 3500 cross-
border cases in 2014, general awareness on FIN-NET is low. The Commission will examine 
whether raising awareness of FIN-NET should be an early priority. In the long run and in the 
event cross-border integration increases significantly, it might become necessary to think of 
additional measures to improve the ADR system in retail financial services still further on the 
basis of the experience gained from the implementation of the ADR Directive.  

In  2013  the  Commission  adopted  a  Recommendation  on  collective  redress.62  This 
Recommendation  calls  on  Member  States  to  put  in  place  collective  redress  mechanisms  for 
violations  of  rights  granted  under  Union  law,  including  in  the  financial  services  area. 
Collective redress actions have proven to be an effective tool to defend consumers' interests in 

59 For further information see http://ec.europa.eu/finance/fin-net/index_en.htm  
60 FIN-NET currently has 57 members from 22 Member States and the 3 EEA countries (Norway, Iceland and 
Liechtenstein). 
61 Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute 
resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (OJ L 
165, 18.6.2013, p. 63) 
62 Commission Recommendation of 11 June 2013 on common principles for injunctive and compensatory 
collective redress mechanisms in the Member States concerning violations of rights granted under Union Law 
(OJ L 201, 26.7.2013, p. 60) 

19 

 
 
                                                            
financial services.63 The Commission will assess the implementation of the Recommendation 
on the basis of practical experience by July 2017. 

Questions 

18. Should any measures be taken to increase consumer awareness of FIN-NET and its 

effectiveness in the context of the Alternative Dispute Resolution Directive's 
implementation? 

19. Do  consumers  have  adequate  access  to  financial  compensation  in  the  case  of  mis-
selling of retail financial products and insurance? If not, what could be done to ensure 
this is the case? 

Protection of victims where motor insurers are insolvent 

Consumers who become a victim of a car accident in another Member State face a risk of not 
receiving  compensation  if  the  liable  insurer  becomes  insolvent.    Not  all  Member  States 
currently participate in the voluntary agreement to ensure compensation of victims where an 
accident in one Member State is caused by a vehicle covered by an insolvent insurer based in 
another  Member  State.    In  a  recent  insolvency  of  an  insurer  providing  cross-border  motor 
insurance, a guarantee fund in another Member State had to compensate approximately 1,750 
claimants.     

Questions 

20. Is action needed to ensure that victims of car accidents are covered by guarantee funds 

from other Member States in case the insurance company becomes insolvent? 

Increasing transparency and comparability of ancillary insurance  

When I went to pick up my rental car, I was asked if I wanted to pay a substantial 
amount  for  additional  insurance  on  top  of  the  basic  rental  price  and  my  current 
insurance. 

Consumers are often not made aware of the cost or value of ancillary insurance products and 
can be exposed to high prices owing to a lack of competition and disclosure. One example can 
be  seen  in  the  car  rental  sector:  in  2014,  44.7%  of  the  1758  reported  consumer  complaints 
regarding  car  rentals  were  about  supplementary  charges  (e.g.  linked  to  damages  and  extra 
services  such  as  insurance  products  not  presented  at  the  booking  stage).64  For  insurance 
products,  including  those  that  are  ancillary  to  another  product,  the  IDD  will  strengthen 
information requirements (though not on pricing), to avoid consumer detriment. Furthermore, 
on  4  July  2015,  five  major  car  rental  companies  agreed  to  review  how  they  deal  with 
consumers and to provide better information at the booking stage about optional waivers and 
insurance products.65   

63 See, for instance, collective redress actions launched in regard to life insurance products in France, and in 
relation to preferred shares and financial pyramid schemes in Spain.. 
64 Car rentals: Key data from the European Consumer Centres case handling database 
(http://ec.europa.eu/consumers/enforcement/cross-
border_enforcement_cooperation/docs/car_rental_version2_en.pdf)  
65 European Commission, 'Better protection for consumers when renting cars', website 
(http://ec.europa.eu/justice/newsroom/consumer-marketing/news/150713_en.htm)  

20 

 
 
                                                            
Questions 

21. What  further  measures  could  be  taken  to  enhance  transparency  about  ancillary 
insurance products and to ensure that consumers can make well-informed decisions to 
purchase these products? With respect to the car rental sector, are specific measures 
needed with regard to add-on products? 

3.2   Creating new market opportunities for suppliers  

Service  providers  face  difficulties  when  going  cross-border  without  establishing,  i.e.  by 
opening a branch or subsidiary in another Member State. As a result they often do not offer 
their products in other Member States nor ensure that they are portable. This section focuses 
on  how  the  Commission  could  help  to  reduce  the  costs  and  risks  inherent  in  providing 
financial services cross-border, making this possible for firms and increasing competition and 
consumer choice across the EU. 

3.2.1   Meeting the challenges and opportunities presented by digitalisation  

As  firms  digitalise,  they  have  new  opportunities  to  engage  with  their  customers.    However, 
they  also  face  many  challenges.    For  services which  have  been  provided  face-to-face  in  the 
past, providing these services at a distance or cross-border – through digitalisation – can prove 
difficult.  This  section  explores  these  difficulties  and  the  need  for  EU  action  to  reduce  them 
alongside  work  stemming  from  the  Commission's  Digital  Single  Market  initiative.  This  has 
also been an area of particular interest for participants in the industry.66  

Helping firms make better use of digitalisation 

The  speed  of  digitalisation  means  that  some  competitive,  consumer-friendly  developments 
may not be possible or may be hindered by legislative or other arrangements which were not 
drafted  with  them  in  mind.    The  Commission  is  interested  in  how  innovative,  consumer-
friendly  services  can  be  encouraged  at  the  European  level  and  how  fragmentation  amongst 
domestic markets can be prevented. 

Questions 

22. What can be done at the EU level to support firms in creating and providing innovative 
digital  financial  services  across  Europe,  with  appropriate  levels  of  security  and 
consumer protection? 

Enabling electronic signature and verification of identity   

A  bank  offers  comparatively  high  interest  rates,  and  has  been  approached  by 
consumers from other Member States who want to deposit their money.  However, 
the bank has to identify its customers under Anti-Money Laundering requirements – 
this is difficult at a distance, so it must verify their identities at a branch.  Consumers 
do not wish to travel to its branches because of cost and time, so they choose not to 
deposit their funds there. 

66 See for instance, the European Banking Federation report, 'Driving the Digital Transformation', 
(http://www.ebfdigitalbanking.eu/)  

21 

 
 
                                                            
Feedback  from  firms  has  indicated  that  the  Know  Your  Customer  (KYC)  requirements  of 
anti-money  laundering  legislation  limit  their  ability  to  open  and  maintain  business 
relationships with customers at a distance. This is an obstacle that has also been confirmed in 
the  Commission  study  on  the  DMFSD.67  This  can  affect  many  financial  services,  but  has  a 
particular impact on savings and investment products.68  

These  KYC  requirements  will  generally  include  submission  of  documents  from  multiple 
sources which verify the customer's identity, as well as a face-to-face confirmation. The exact 
requirements  vary  between  Member  States,  with  some  allowing  distance  verification  of 
information  (subject  to  certain  requirements),  for  instance  via  the  use  of  webcams  and 
scanned documents, or with third-party verification of original documents through institutions 
such as postal offices.  Not all Member States have options of this nature in place, and as a 
result  the  arrangements  for  engaging  with  third  parties  may  not  be  accessible  for  firms 
providing products cross-border.  

Requirements in some Member States also limit the use of distance contract signature, further 
inhibiting cross-border providers' capacity to open business relationships with new customers. 
This  severely  limits  sales  of  products  to  customers  at  a  distance,  and  could  have  a 
disproportionate  effect  upon  cross-border  business.  The  eIDAS  Regulation69  shows  promise 
in  this  area;  it  will  provide  a  solution  for  cross  border  use  of  e-identification  as  well  of 
electronic trust services – electronic signatures, seals, time stamps, registered delivery service 
and  website  authentication.  It  should  allow  firms  to  more  easily  identify  customers  at  a 
distance, or strongly authenticate parties to payment transactions under the revised Payment 
Services Directive. In this context, the financial sector has been identified as one of the areas 
which can benefit most from e-identification solutions.  

This is an area where the potential for improvement could be considerable. The extension of 
measures  for  distance  verification  currently  available  in  some  Member  States  and  the 
successful take-up of eIDAS may help remove a major barrier to the cross-border provision of 
services.  Other  solutions  could  include  the  removal  of  administrative  limits  on  distance 
contracting, development of further e-identity schemes, or expansion of third-party measures 
for  verifying  identity  or  allowing  consumers  to  carry  their  verification  between  providers. 

67 Analysis of the Economic Impact of Directive 2002/65/EC concerning the distance marketing of consumer 
financial services on the conclusion of cross-border contracts for financial services between suppliers and 
consumers within the Internal Market, Final Report 
(http://ec.europa.eu/consumers/archive/rights/docs/final_rep_financial_services_2009.pdf)  
68 It should be noted that earlier this year the fourth Anti-Money Laundering directive was adopted. It provides 
for a risk-based approach that allows for more flexibility in order to take into account national specificities and 
the circumstances of individual business relationships or transactions. See Directive (EU) 2015/849 of the 
European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for 
the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the 
European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of 
the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73) 
69 Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic 
identification and trust services for electronic transactions in the internal market and repealing Directive 
1999/93/EC (OJ L 257, 28.8.2014, p. 73) 

22 

 
 
                                                            
Such  solutions  must  not,  of  course,  weaken  the  effectiveness  of  EU  measures  on  money 
laundering or the financing of illegal activities. 

Questions 

23. Is  further  action  needed  to  improve  the  application  of  EU-level  AML  legislation, 
particularly  to  ensure  that  service  providers  can  identify  customers  at  a  distance, 
whilst maintaining the standards of the current framework? 

24. Is further action necessary to promote the uptake and use of e-ID and e-signatures in 

retail financial services, including as regards security standards? 

Improving access to and usability of financial data 

A  lender  is  contacted  by  consumers  from  other  Member  States  seeking  loans.  
However, when it tries to assess their creditworthiness, it finds that there is limited 
information  available on them, as they are from other Member States.  The lender 
cannot substantiate the information they provide, so it decides not to lend to them. 

Without  access  to  data  on  consumers,  it  is  difficult  for  firms  to  provide  financial  products 
(particularly credit or insurance) in other markets as they cannot assess the risks to which they 
would be exposed. They are also unable to assess the risks of mobile consumers whose data 
was  accrued  in  another  Member  State.  With  the  growth  of  digitalisation,  firms'  appetite  for 
data is increasing as they use more sophisticated processes to price their products. At the same 
time,  in  some  instances  customers'  data  has  become  the  price  for  ostensibly  free-of-charge 
offerings  from  digital  service  providers,  as  these  firms  process  and  use  this  customer  data 
themselves for marketing purposes or sell it on to other companies. 

Under  the  CCD  and  MCD,  creditors  have  the  right  to  consult  credit  databases  in  other 
Member  States  on  a  non-discriminatory  basis  to  assess  the  creditworthiness  of  potential 
customers.  However,  firms  will  still  face  issues  when  attempting  to  use  this  data  as  the 
techniques  for  its  collection,  distribution  and  use  are  still  very  diverse  across  the  EU,  and 
opinions  vary  on  what  data  is  relevant  for  creditworthiness  assessments.    Certain  credit 
registers, for instance, only engage in ‘negative' data reporting70, whereas other databases also 
contain ‘positive’ data.71  This means that accessing and using this data can prove challenging 
and that many firms may find it difficult to provide their services cross-border economically. 
Private cross-border credit data sharing arrangements have been initiated by the Association 
of  Consumer  Credit  Information  Suppliers  (ACCIS)72,  but  this  currently  links  the  credit 
registers  of  a  limited  number  of  Member  States.  At  the  same  time,  private  credit  registers 
often collect more data than necessary for the purposes of a creditworthiness assessment, or 
data which might be of questionable relevance to a creditworthiness assessment. 

As  the  financial  services  industry  embraces  digitalisation,  insurance  companies  and  other 
financial  services  firms  are  using  modern  IT  and  big  data  analysis  to  offer  increasingly 
customised insurance products with  personalised risk pricing involving  close, data-intensive 

70 Credits will only be reported upon once the consumer did not manage to meet his/her payment obligations. 
71 Every single credit is registered. Data on other types of commitments may also be reported. 
72 Further information on ACCIS can be found at http://www.accis.eu/  

23 

 
 
                                                            
monitoring  methods  such  as  telematics  devices.  The  increased  use  of  data  offers  great 
opportunities  to  reduce  prices  for  many  consumers,  but  these  practices  also  raise  concerns 
about privacy and data protection which need to be taken into account. 

Consumers will also want to benefit from the increased availability of data when they rely on 
a  positive  claims  history  or  bonus/malus  rating.  The  Motor  Insurance  Directive73  currently 
includes a right for policy-holders to require at any time a statement of their claims over the 
last  five  years  from  their  insurer,  but  in  practice  this  often  does  not  translate  into  a  lower 
premium when concluding a new insurance contract. Among the reasons why are the varying 
methodologies of calculation of discounts, including different lengths of periods to be covered 
by such statements, a lack of confidence in non-harmonised statements provided by insurers 
and differing risk factors they take into account when determining premiums. 

Questions 

25. In your opinion, what kind of data is necessary for credit-worthiness assessments? 
26. Does the increased use of personal financial and non-financial data by firms (including 
traditionally  non-financial  firms)  require  further  action  to  facilitate  provision  of 
services or ensure consumer protection? 

27. Should  requirements  about  the  form,  content  or  accessibility  of  insurance  claims 
histories  be  strengthened  (for  instance  in  relation  to  period  covered  or  content)  to 
ensure that firms are able to provide services cross-border? 

Facilitating the provision of after-sales services  

An insurer wants to offer home contents insurance online in another Member State, 
but  doing  so  would  require  investment  in  a  customer  service  centre  in  the  local 
language.    It  does  not  think  it  will  have  enough  business  to  justify  the  expenses 
involved. 

After a sale, firms have obligations toward their customers which can be challenging to fulfil 
at  a  distance.  Answering  queries,  assessing  and  meeting  insurance  claims,  discussing 
customer  concerns  and  addressing  complaints  generally  requires  manual  intervention  by 
employees of a firm or claims handlers in insurance undertakings. Though this can be done at 
distance, this can still require substantial investment from a firm, particularly where there are 
requirements  to  provide  services  in  other  languages.  This  issue  particularly  affects  insurers 
given  their  claims  handling  obligations,  for  which  the  presence  of  a  representative  of  the 
undertaking (such as a branch or subsidiary) in the same Member State as its customers seems 
crucial.  Though  there  are  means  of  overcoming  this  through  third-party  contracting  or 
outsourcing, these options are not always available or attractive, particularly given the need to 
oversee any contractors acting on a firm's behalf. 

Questions 

28. Is  further  action  required  to  support  firms  in  providing  post-contractual  services  in 

another Member State without a subsidiary or branch office? 

73 Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009 relating to 
insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to 
insure against such liability (OJ L 263, 7.10.2009, p.11). 

24 

 
 
                                                            
Converging procedures for personal insolvency, property valuation and collateral enforcement 

A lender has been approached by consumers in other Member States, interested in 
the low fixed rates it offers for residential mortgages.  However, it is sceptical about 
how the value of properties in other Member States is assessed and whether it could 
enforce the guarantee if necessary.  It cannot provide loans to these consumers. 

Creditors may hesitate to offer more cross-border credits because they do not have sufficient 
knowledge about the applicable personal insolvency regimes in other Member States  (where 
these  regimes  exist).  Whilst  the  CMU  Action  Plan  takes  some  steps  towards  more 
convergence  in  certain  areas  of  business  insolvency  regimes  across  all  28  Member  States, 
such  as  on  early  restructuring  and  enhanced  effectiveness  of  administration  of  cross-border 
business insolvency proceedings, there are still substantial divergences in relation to personal 
insolvency  regimes  across  the EU.   This  creates additional  risk for firms wishing to  enter a 
cross-border  business  relationship  with  customers,  particularly  in  relation  to  provision  of 
credit  –  if  lenders  are  unable  to  assess  and  quantify  the  outcome  of  insolvency  proceedings 
and  repossession  laws,  they  will  not  feel  confident  lending  to  individuals.  Member  States' 
laws and practices on business failure and insolvency and on personal over-indebtedness are 
currently the subject of two studies due for completion in 2016. 

Similarly,  an  accurate  understanding  of  a  property's  value  is  essential  for  creditors  to  have 
certainty  about  the  collateral’s  value  in  the  event  of  default.  Though  MCD  requires  that 
reliable  standards  for  property  valuation  be  in  place  in  all  Member  States,  it  does  not  fully 
ensure  convergence  of  standards  at  an  EU  level.  In  the  absence  of  full  convergence,  some 
creditors might still have doubts about the value of collateral situated in other Member States. 

Questions 

29. Is further action necessary to encourage lenders to provide mortgage or loans cross-

border? 

3.2.2   Compliance with differing regulatory requirements in host Member States  

The  differences  between  Member  State  regulatory  regimes  have  a  significant  impact  on  the 
cost and risk of providing retail financial services cross-border. Though there is some measure 
of  legal  harmonisation  across  the  EU  as  a  result  of  Union-level  legislation,  there  are  legal 
differences  in  areas  such  as  contract  law  and  firms  must  comply  with  a  substantial  body  of 
regulatory requirements in each Member State.  

Different requirements can originate from specific aspects of Member State financial sectors 
or legal traditions. National regulatory frameworks diverge substantially on issues including 
contracts, data protection, consumer protection, disclosure, anti-money laundering or taxation.   
As regards the law applicable to the civil aspects of contracts, a distinction has to be drawn 
between  insurance  contracts  and  other  contracts.  For  insurance,  the  applicable  law  is  in 
principle that of the country where the insured risk is located, often where the policy-holder 

25 

 
 
has  his  habitual  residence.74  The  parties'  ability  to  choose  another  law  is  heavily 
circumscribed.  For  other  contracts  concluded  with  consumers,  the  parties  may  choose  the 
contract  law  of  the  seller's  Member  State  to  apply  to  cross-border  transactions,  which  may 
reduce legal compliance costs for firms in some cases; however where the seller carries out 
activities  in,  or  directs  activities  to,  the  Member  State  in  which  a  consumer  is  habitually 
resident, such a choice is without prejudice to the protection afforded to the consumer by that 
law.75  

These  differences can create significant costs and risks for firms which wish to do business 
with consumers located in another Member State.  The average contract law-related costs for 
non-financial  business  are  estimated  at  approximately  €10,000  for  each  Member  State.76 
Financial  firms  face  significant  extra  costs  on  top  of  this  figure  in  each  Member  State  as  a 
result of the specific laws and regulations which apply to the sector.77 Requirements and costs 
can also differ depending on whether a firm operates on the basis of freedom of establishment 
(with  physical  presence)  or  free  provision  of  services  (including  online).  A  firm  providing 
services generally needs to comply with only a part of host Member State's rules, for instance 
on conduct or consumer protection.  

EU  passporting  rights  are  currently  available  for  a  number  of  activities78,  and  allow  firms 
authorised in one Member State to provide its services in another Member State with reduced 
administrative  burdens  and  a  minimum  of  paperwork.    However,  passporting  does  not 
eliminate  legal  compliance  costs,  and  passporting  rights  do  not  extend  to  all  products. 
Potential other methods of incrementally reducing the costs and risks associated with differing 
legal requirements are outlined below. 

Making it easier for firms to comply with legal requirements applicable in other Member 
States 

An  online  financial  platform  has  faced  problems  when  attempting  to  offer  savings 
products in multiple Member States. Information has not been easily accessible and 
it has received little constructive support from the Member State authorities, despite 
the benefits its products can bring to consumers. Its compliance and legal costs are 
high, and have made its offer less attractive. 

Member States could do more to assist firms in working within the current legal framework 
and  facilitate  compliance  with  applicable  requirements  when  providing  services  in  other 

74 See Article 7 of Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 
on the law applicable to contractual obligations (Rome I), OJ L 177, 4.7.2008, p. 6. 
75 See Articles 3, 4(b) and 6 of Rome I; Commission Communication: A Digital Single Market Strategy for 
Europe, p. 11 (http://ec.europa.eu/priorities/digital-single-market/docs/dsm-communication_en.pdf)  
76  European Commission Press Release: Common European Sales Law, p. 2 
(http://ec.europa.eu/justice/contract/files/common_sales_law/i11_1175_en.pdf) 
77 Commission Expert Group on European Insurance Contract Law noted recently that some national 
requirements as to the form of insurance contracts clearly entail costs for businesses. See Final Report of the 
Commission Expert Group on European Insurance Contract Law 
(http://ec.europa.eu/justice/contract/files/expert_groups/insurance/final_report_en.pdf), p. 90 
78 Firms covered include, for example, credit institutions, insurance companies, insurance intermediaries and 
mortgage credit intermediaries.  

26 

 
 
                                                            
Member  States.    At  present,  the  EU-wide  SOLVIT  network79  helps  businesses  when  they 
encounter problems with public authorities who do not apply EU law correctly, and 'Points of 
Single  Contact'  give  assistance  to  firms  on  their  obligations  when  providing  services  cross-
border.80  Initiatives  such  as  these  could  potentially  be  extended  further  in  the  financial 
services  and  insurance  area  in  order  to  reduce  costs  and  risks  for  firms  wishing  to  trade  on 
other Member States' markets. 

Member  State  governments  or  national  competent  authorities  could  make  further  practical 
assistance  available  (e.g.  through  'one-stop-shops')  for  cross-border  compliance  procedures.  
This  could  help  support  firms  which  encounter  difficulties  when  going  cross-border, 
encouraging future progress in integrating the EU's markets and facilitating the development 
and spread of new technologies and of innovative, market-led solutions to competition issues. 

Questions 

30. Is  action  necessary  at  EU  level  to  make  practical  assistance  available  from  Member 
State governments or national competent authorities (e.g. through 'one-stop-shops') in 
order to facilitate cross-border sales of financial  services, particularly for innovative 
firms or products? 

31. What steps would be most helpful to make it easy for businesses to take advantage of 
the  freedom  of  establishment  or  the  freedom  of  provision  of  services  for  innovative 
products (such as streamlined cooperation between home and host supervisors)?  

Creating autonomous or more closely harmonised EU-wide regimes 

An insurer provides a simple life insurance policy at a competitive price in its home 
market, and it complies with all legal and regulatory requirements. It has seen that 
premiums are much higher in other Member States, and sees a business opportunity.  
However,  it  cannot  sell  the  product  in  other  markets  as  the  product  is  designed  to 
meet its home state's legal and regulatory requirements. 

In  some  instances,  a  separate  legal  framework  might  be  the  best  way  to  increase  choice  of 
product  while  decreasing  costs  for  business  and  ensuring  that  consumers  are  adequately 
protected. An opt-in regime could be a framework for identical product characteristics, to be 
used  on  a  voluntary  basis.  Its  advantage  would  lie  in  providing  standardisation  between 
Member  States  and  in  overcoming  many  national  regulatory  differences  in  some  areas. 
Moreover,  it  could  be  a  useful  means  for  offering  comparable  and  easy-to-understand 
financial products, thus increasing consumer trust and confidence for shopping cross border.  
The CMU Action Plan announces the Commission's intention to assess the case for a policy 
framework  to  establish  a  European  market  for  simple,  efficient  and  competitive  personal 
pensions. 

In  2015  EIOPA  consulted  on  the  creation  of  a standardised  pan-European  Personal  Pension 
product (PEPP). In view of their similar features, the work carried out by EIOPA could serve 

79 Further information on the SOLVIT network can be found on its website (http://ec.europa.eu/solvit/)  
80 Further information on the Points of Single Contact can be found on their website 
(http://ec.europa.eu/internal_market/eu-go/index_en.htm).  These entities were created in line with the Services 
Directive. 

27 

 
 
                                                            
as  a  basis  for  developing  an  opt-in  regime  for  a  pan-European  life  insurance  product.  This 
could also prove valuable for other products. 

Similar ends could also be achieved by bringing national regimes and rights closer into line to 
encourage convergence through guidance, improved comparability or standardised practices, 
potentially through further development of current or new passporting regimes, convergence 
in  supervisory  standards  (led  by  the  ESAs)  to  limit  issues  with  host  state  regulators.  The 
concept  of  'general  good'  rules81  in  insurance,  which  are  an  exception  to  the  fundamental 
principles of the Treaty with regard to free movement, would benefit from additional clarity. 
Inspiration  could  be  drawn  from  UCITS  as  a  current  successful  example  of  an  EU-wide 
regime. 

Questions 

32. For which retail financial services products might standardisation or opt-in regimes be 

most effective in overcoming differences in the legislation of Member States? 

33. Is further action necessary at EU level in relation to the 'location of risk' principle in 
insurance legislation and to clarify rules on 'general good' in the insurance sector? 

Section 4 

Next Steps 

Interested parties are invited to send their answers to the questions in this Green Paper by 18 
March 2016 through the online questionnaire: [Link].  

This  consultation  follows  the  normal  rules  of  the  European  Commission  for  public 
consultations. Responses will be published unless respondents indicate otherwise in the online 
questionnaire.  In  order  to  ensure  a  fair  and  transparent  consultation  process,  only  responses 
received  through  our  online  questionnaire  will  be  taken  into  account  and  included  in  the 
report summarising the responses. Should you have a problem completing this questionnaire 
or if you require particular assistance, please contact: [email address]. 

The  general  rules  on  personal  data  protection  are  accessible  on  the  EUROPA  website  here: 
http://ec.europa.eu/geninfo/legal_notices_en.htm#personaldata. 
specific  privacy 
statement for this consultation can be found here: [Link].  

  The 

Please also reflect whether there are any obstacles which are not discussed in this document, 
and whether any of the obstacles described particularly affect Small and Medium Enterprises. 

During the consultation process, the European Commission: 

  will engage with the European Parliament to get direct feedback from its Members; 
 

invites  Member  States  to  organise  consultations  and  events  with  the  public  and 
national parliamentarians to promote discussion on these issues at national level; and 

81 A Member State may have recourse to the concept of the general good in order to enforce compliance with its 
own laws by an insurer wishing to carry on its business within its territory under either the right of establishment 
or the freedom to provide services. However, insurance directives do not lay down the concept of the general 
good, but it is described in the Interpretative communication of the Commission concerning the freedom to 
provide services and the general good of the insurance sector (OJ C 43, 16.02.2000) on the basis of 
requirements laid down by the Court of Justice. 

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  will  organise  in  a  transparent  and  balanced  manner  workshops  to  consult  those  with 
specific  technical  expertise  (such  as  academics  and  market  participants)  to  reach  an 
informed view on specific issues. 

The  Commission's  goal  is  to  maximise  the  practical  benefits  of  a  Single  Market  in  retail 
financial services for as many European consumers as possible by opening up the market and 
making  it  work  better  for  them,  so  that  they  have  a  bigger  and  better  choice  of  financial 
products. Our action will also aim to break down some of the practical barriers that prevent 
businesses from offering their services across borders. The Commission will also maintain a 
focus on its broader goals of ending unjustified geo-blocking and other form of discrimination 
based on nationality or place of residence, supporting consumer confidence in the availability 
of  appropriate  redress,  and 
to  comprehensible,  comparable  and 
proportionate information on retail financial service products. 

improving  access 

The Commission will organise a conference in early 2016 to examine the evidence yielded by 
the  consultation  and  discuss  priority  areas  mentioned  in  the  present  Green  paper.  The 
Commission  envisages  publishing  an  Action  Plan  on  Retail  Financial  Services  to  follow  up 
the consultation around summer 2016.  

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