COMMISSION STAFF WORKING DOCUMENT Ex-ante evaluation for establishing a Union Programme to support activities enhancing the involvement of consumers and other financial services end-users in Union policy making in the field of financial services for the period of 2017-2020 Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on establishing a Union Programme to support specific activities enhancing the involvement of consumers and other financial services end-users in Union policy making in the field of financial services for the period of 2017-2020
Date: 2016-06-15
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: EU aid, EU policy, EU programme, consumer information, financial services, non-profit organisation

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 15.6.2016  SWD(2016) 196 final   COMMISSION STAFF WORKING DOCUMENT Ex-ante evaluation for establishing a Union Programme to support activities enhancing the involvement of consumers and other financial services end-users in Union policy making in the field of financial services for the period of 2017-2020 Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on establishing a Union Programme to support specific activities enhancing the involvement of consumers and other financial services end-users in Union policy making in the field of financial services for the period of 2017-2020 {COM(2016) 388 final}  
 
 
1. 

INTRODUCTION 

At the end of 2011, the Commission launched a two years' pilot project to provide support for 
the development of a financial expertise centre to the benefit of European end-users and other 
non-industry organisations, with the objective to enhance the latter's capacity to participate in 
the  Union  policymaking  in  the  area  of  financial  services.  This  decision  was  taken  in  the 
context  of  the  financial  crisis  and  ahead  of  an  important  political  agenda  for  the  financial 
sector.  Through  this  pilot  project  and  the  subsequent  preparatory  action,  the  Commission 
awarded  via  yearly  calls  for  proposals  operating  grants  to  two  Brussels-based  non-profit 
entities, Finance Watch1 and Better Finance2 between  2012 and 2015. A preparatory action 
can be used up to three years. As of 2017, a legal base, adopted by European Parliament and 
Council  would  be  necessary  to  continue  funding  such  actions,  for  instance  on  multi-annual 
basis.    In  that  context,  the  Commission  launched  an  evaluation  of  the  pilot  project  and 
subsequent preparatory action at the end of 20143. The outputs of this evaluation have been 
made publicly available in a Commission Staff Working Document4 on DG FISMA website 
at the end of 2015. 

2.  PROBLEM DEFINITION 

Since  2007,  the  financial  and  economic  crisis  has  significantly  shaken  the  confidence  of 
consumers, retail investors and SMEs in the regulations that are meant to protect them from 
failings  in  the  financial  system.  Therefore,  the  European  legislators  considered  that  the 
concerns  of  end  users  and  other  non-industry  stakeholders  should  be  systematically  and 
adequately taken into account in designing initiatives that aim to restore citizens' confidence 
in the soundness of the financial sector.  

Several actions have been undertaken by the European Commission to ensure that the views 
of end-users and citizens are heard, notably with (i) the establishment in 2010 of the Financial 
Services  Users  Group  (FSUG)  which  acts  as  a  forum  where  non-industry  stakeholders’ 
representatives  are  regularly  kept  informed  about  the  financial  services  policy  issues  under 
development and are invited to give their views and express their concerns and suggestions 
on  the  way  forward  and  (ii)  the  systematic  inclusion  of  consumers  and  civil  society 
organisations’ representatives in the various expert groups set up to assist the Commission in 
the financial services area.  

Besides direct participation in stakeholders groups, civil society organisations were also able 
to avail themselves of the various consultation mechanisms used by the Commission in the 
context of the "better regulation" approach, by contributing formal submissions for instance 
on  green  papers  or  draft  Commission  initiatives,  or  by  providing  views  in  meetings  with 
stakeholders or conferences. 

The  Commission  had  identified  the  scarcity  of  resources  and  specialised  expertise  among 
financial  end-users  and  non-industry  stakeholders  and  the  organisations that  represent  them 
as  an obstacle to taking a proactive role in  the discussions  on the EU policy making in  the 
financial  services  area.  The  obstacle  limits  the  range  of  stakeholders  that  can  provide  the 
European legislators with relevant input during the policy making process. Consumer bodies 

1 http://www.finance-watch.org/fr 
2 http://www.betterfinance.eu/ 
3 Before Better Regulation Package new rules have been adopted 
4 http://ec.europa.eu/finance/finservices-retail/docs/users/151222-staff-working-document_en.pdf 

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as  well  as  civil  society  organisations  did  not  have  adequate  resources  to  properly  cover  a 
wide range of often highly technical topics and develop the expertise to take a more proactive 
role  in  the  Union  financial  services  policy  making.  This  was  unsatisfactory  because  the 
Commission could not benefit from the widest possible range of input for its policymaking, 
and its public perception is hence negatively affected. 

In  order  to  remedy  this  obstacle,  the  Commission  initiated  a  pilot  project  and  a  subsequent 
preparatory  action  aimed  at  providing  grants  to  support  the  development  of  a  financial 
expertise  centre  to  the  benefit  of  end-users  and  non-industry  and  enhance  their  capacity  to 
participate in  EU  policy  making  in  the  field  of  financial  services.  Between  2012  and  2015, 
the Commission awarded operating grants to two non-profit organisations based in Brussels 
who  conducted  mainly  research  work,  policy  analysis,  advocacy  and  communication 
activities.  

The  evaluation  concluded  that  the  objectives  of  the  pilot  project  and the  preparatory  action 
have  generally  been  met.  The  overall  objective  to  develop  a  European  financial  centre  of 
expertise  has  been  met  with  two  complementary  centres  of  expertise  having  emerged.  The 
activities  implemented  by  both  beneficiaries  contributed  to  providing  European  policy-
makers with other views than those expressed by the financial industry in that period and by 
succeeding  in  communicating  those  views  to  the  wider  public.  Both  Finance  Watch  and 
Better Finance have been in close contact with EU policy makers since 2012, as evidenced by 
their participation in various meetings, and even hearings organised in national or European 
Parliaments.  Their  expertise,  made  public  in  a  number  of  publications  and  responses  to 
consultations, enabled them to bring another voice in the public debate.  

Lastly,  both  developed  effective  communication  capacity  through  websites,  press  releases 
and conferences which enabled them to inform their members and even a wider public about 
the  issues  at  stake  in  the  financial  sector.  Finance  Watch  and  Better  Finance  have  been 
working  on  different  policy  areas  and  targeted  different  audiences,  but  together  they  have 
covered,  through  their  activities,  most  of  the  EU  financial  political  agenda  since  2012.   
However, the  evaluation underlined that both  organisations were  not financially sustainable 
without  EU  funding,  despite  efforts  to  diversify  their  resources  during  2012-2014.  At  the 
same time, the evaluation stressed that no other applicant responded to the three yearly calls 
for  proposal  during that  period  which  tends  to  prove  that  no  other  organisation  is  currently 
able to carry out similar activities.   

3.  MAIN POLICY OBJECTIVES 

The main policy objectives of the legislative initiative are to ensure that (i) EU policy-makers 
are provided with views other than those expressed by the financial sector professionals when 
initiating new legislation, (ii) the wider public is informed about issues at stake and (iii) the 
participation  of  end-users  and  consumers  of  financial  services  is  enhanced  in  EU  policy-
making in the area of financial services resulting in well-balanced legislation. 

According  to  the  evaluation  results,  since  2012,  these  policy  objectives  have  been  met 
through  two  centres  of  financial  expertise  partly  set  up  thanks  to  public  funding  and  in  the 
context of a pilot project and the subsequent preparatory action. However, these two centres 
are still dependent on EU funding and would not be able to continue their respective mission 
and activities without these funds. Legislation work is still on-going in the financial sector at 
various levels (e.g. level 1 but also level 2 measures) and new legislative initiatives will come 
in  the  near  future  (e.g:  CMU).  Therefore,  the  need  for  enhancing  the  participation  of  end-

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users  and  consumers  of  financial  services  in  EU  policy-making  via  a  centre  of  expertise  is 
still valid. 

4.  OPTION MAPPING 

4.1.  Baseline scenario: discontinuing the EU co-financing (no action) 

Under this scenario, Finance Watch would not receive any EU funding as of 2017. Between 
2012 and  2014, the actual  expenses of the organisation amounted to  €1.9M in  average,  co-
financed  up  to  60%  by  EU  funding  under  operating  grants.  During  that  period,  Finance 
Watch managed to get in addition to EU funding only one significant and stable Dutch donor, 
the  Adessium  Foundation.  However,  there  is  no  certainty  that  this  donor  will  continue 
funding  Finance  Watch  after  2016.  Besides,  despite  regular  efforts,  Finance  Watch  did  not 
manage to attract other donors or significant sources of funding.  Its members’ contribution 
remained  very  limited  during that  period,  around  €50K  yearly.  According  to  the  evaluation 
carried  out  in  2015,  Finance  Watch's  members  confirmed  that  they  intend  to  continue  their 
current contribution at the current level, but cannot increase it significantly. In that context, in 
the absence of EU funding, Finance Watch revenues would be limited to 40% of the actual 
income, around €0.7M, as of 2017. The activities of the organisation would be reduced and 
significant  staff  cuts  would  be  necessary  rapidly.  Furthermore,  the  remaining  donors  might 
also  be  frightened  by  the  sudden  EU  withdrawal  and,  as  a  consequence,  might  stop  their 
funding quickly. In that case, the organisation would probably stop its activities completely 
already  in  the  course  of  2017.  If  such  a  scenario  would  happen,  the  policy  objectives 
currently  achieved  thanks  to  the  activities  carried  out  by  Finance  Watch  could  not  be 
achieved anymore as of 2017. 

Regarding Better Finance, its budget amounted to 0.5M€ in average between 2012 and 2014, 
also co-financed up to 60% by EU funding. During that period, one specific member of the 
organisation  brought  a  significant  and  regular  contribution  to  cover  the  remaining  40% 
budget. However, this contribution was significantly reduced in 2015 and should stop as of 
2016. Since then, Better Finance managed to compensate this contribution partly, by attracted 
other funds, in particular higher membership fees. However, the organisation cannot rely yet 
on the same level of income. In that context, in the absence of EU funding, Better Finance 
revenues  would  be  quite  low,  around  €0.2M  yearly,  which  means  that  the  current  level  of 
activities  could  not  be  maintained  as  of  2017.      The  secretariat  of  the  organisation  being 
already quite small (4-5 staff), staff cuts would probably lead to the end of its activity. 

4.2.  Status quo: continuing the grant programme along the same lines 

The policy objectives  set up in the pilot  project  and preparatory action carried out between 
2012  and  2014  were  overall  achieved  through  the  grants  awarded  to  Finance  Watch  and 
Better  Finance  during  that  period.  The  evaluation  carried  out  in  2015  concluded  that  both 
organisations were assessed as relevant, effective, and efficient towards the objectives of this 
pilot  project  and  preparatory  action.  The  feedback  received  from  consumer  or  investor 
organisations, mainly represented by members, was overall positive. Based on the results of a 
broad  survey,  these  organisations  underlined  that  both  Finance  Watch  and  Better  Finance 
managed to provide them with expertise of high quality since 2012 and also allowed complex 
financial matter to become accessible for non-technical stakeholders. Also, according to this 
evaluation, Finance Watch and Better Finance brought EU added value for two main reasons: 

4 

 
 
 
 
at EU level, there are a few organisations that represent the general interest of consumers, but 
there  are  no  civil  society  organisations  focusing  on  financial  markets  and  its  regulation;  at 
national  level,  there  are  organisations  dealing  with  consumer  issues  but  they  often  lack 
technical expertise and resources and cannot cover such a broad scope of policy areas related 
to financial services.  

However, the financial sustainability of both organisations has been evaluated as very fragile 
and it has been quite challenging for Finance Watch and Better Finance to raise other sources 
of funding. 

In that context co-funding from the European Union would ensure the resources necessary to 
achieve the policy objectives (see 3.) in the coming years. It would provide financial stability 
for these organisations who have so far managed to start-up these relevant activities in a short 
period of time.  

These EU grants could be action grants rather than operating grants, allowing for focusing on 
the  most  effective  activities  to  achieve  the  policy  objectives.        In  line  with  the  on-going 
Multi-annual Financial Framework, this grant programme would run during four years, from 
2017 to 2020. It should then be re-evaluated. Choosing this option would leave some time for 
these organisations to find other stable sources of funding, private or public.   

4.3.  Reducing the level of EU co-funding 

Based on the current financial situation, Finance Watch's sustainability remains very fragile.  
The organisation managed to get sufficient income to support 40% of its costs between 2012 
and  2014.  However,  only  one  significant  donor  remained  stable  over  that  period  and  the 
organisation  has  no  certainty  about  the  continuation  of  this  funding  after  2016.  In  that 
context, reducing the level of co-funding from 60% to a lower ceiling as of 2017 is risky. In 
such  context,  it  is  very  likely  that  Finance  Watch  would  have  to  reduce  its  budget,  mainly 
limiting staff costs and therefore level of activities carried out. 

With respect to Better Finance, the situation is more critical. As mentioned in the first option, 
the organisation could rely on only one main contributor between 2012 and 2014 besides the 
EU  grants.  Since  this  donor  decided  to  reduce  significantly  its  contribution  in  2015  and  to 
stop  it  afterwards,  Better  Finance  is  already  currently  struggling  to  compensate  this  loss  of 
income.  In  that  context,  reducing  the  level  of  EU  co-funding  is  likely  to  jeopardize  Better 
Finance's financial sustainability rapidly. 

This option would mean that the policy objectives are likely to be only partly achieved, and 
probably by Finance Watch only. 

4.4.  Comparison of options 

The matrix below is used to compare the relative merit of three competing options based on 
the  evaluation  outputs.  The  option  "stop  funding"  used  as  baseline  with  no  more  Budget 
intervention  from  the  Union  is  compared  to  the  two  other  options  based  on  the  following 
main criteria: 

  The level of risk of not implementing the policy objectives  
  The impact on costs for the EU    

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Table1: Summary of policy options 

Assessment of options 

Option 1 
Discontinuing funding 

Achievement of 
policy objectives 
--- 

Implication for 
EU budget 
+++ 

Option 2 
Continuing  along  the  same 
lines 
Option 3 
Decreasing EU funding 

+++ 

- 

-- 

- 

Overall assessment 

0 

++ 

-- 

Option 1:  The Union budget would incur no direct costs but the policy objectives would not 
be achieved. A stop to the funding of these  organisations would run counter to the positive 
ex-post evaluation that has  been  carried out  in 2015 and would imply  the end of these  two 
organisations.  Besides,  the  absence  of  other  applicants  during  the  four  successive  calls  for 
proposals proves that no other actor would replace them in that case. 

Option 2: Although the Union budget would carry the same level of direct costs as today, it is 
the only option which ensures that the same policy objectives set at the end of 2011 can be 
properly achieved in the coming years.  

Option  3:  while reducing  the  impact  on  the  Union  budget,  this  option  would  mean  that  the 
policy  objectives  completed  so  far  could  not  be  achieved  to  the  same  extent  in  the  coming 
years.  This  option  could  rapidly  jeopardize  the  financial  sustainability  of  the  two  entities 
since members or donors might withdraw their support in such context. 

4.5.  Method of implementation of the selected option 

As a general rule, financial support from the Union budget could be provided either: 

  By contributing to the overall budget of the body (via operating grants) 
  By co-financing specific targeted activities of the body (via grants for action) 

Between  2012  and  2015,  the  two  organisations  have  been  co-funded  through  EU  operating 
grants. Since 2016, it was decided to use rather action grants that enable to better understand 
the  activities  that  will  be  co-funded  by  the  Union  budget.  Indeed,  to  benefit  from  action 
grants,  potential  beneficiaries  have  to  provide  detailed  information  about  the  planned 
activities (type of action, estimated costs, timeframe). It would also better take into account 
for control purposes the fact that since 2015 Finance Watch is a beneficiary of other smaller 
EU action grants as a partner organisation in specific research projects. Overall, using action 
grants ensures a better control over EU budget spending.  

In that context, it is considered that a direct contribution from the EU budget by the way of 
action grants, is at this stage the best solution for the future legal base.  

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4.6.  Volume of appropriation 

Table 2: Volume of appropriations 

and 
Finance 

Million EUR 
Finance  Watch 
Better 
estimated budgets 
Total  EU  co-funding 
(60%) 

2017 
2.50 

2018 
2.50 

2019 
2.50 

2020 
2.50 

TOTAL 
10.00 

1.50 

1.50 

1.50 

1.50 

6.00 

The volume of appropriations is estimated based on following assumptions: 

  The  volume  of  appropriations  would  cover  four  years,  from  2017  to  2020,  in  line 

with the on-going multi-annual framework; 

  The  estimated  budgeted  costs  for  the  period  2017-2020  would  correspond  to  the 

average actual costs incurred by each organisation between 2012 and 2014; 

  The co-funding rate (60%) would remain unchanged. 

4.7.  Impacts 

The impacts that have been assessed so far by the evaluation should be maintained. Thus, the 
expected impacts of the potential policy initiative should be: 

  Providing relevant expertise to EU policy makers through responses to consultation, 

policy papers and in-depth research reports; 

  Strengthening  the  voice  of  end-users  in  the  reform  of  financial  regulation  by 
conducting  advocacy  and  presenting  public  interest  arguments  to  lawmakers  and 
citizens; 

  Act  as  an  “umbrella”  for  national  organisations  (if  they  exist)  and  represent  their 

interests vis-a-vis the European authorities; 

  Bridge  the  gap  of  absence  of  national  organisations  in  various  Member  States 
representing  the  interests  of  investors,  shareholders,    savers,  consumers  with  life 
insurances, bank savers, pension fund participants and other financial service users;  
  Developing a strong communication "device" with end users consisting of a multitude 
of  communication  modalities,  most  of  which  should  be  readily  accessible  through a 
website translated in several languages; 

  Ensure  a  solid  representation  in  various  EU  financial  policy  advisory  bodies,  for 
instance in the ESAs stakeholder groups (ESMA Securities and Markets Stakeholder 
Group, EBA Banking Stakeholder Group and EIOPA Insurance and Reinsurance and 
Occupational Pensions Stakeholder Group). 

Under option 2 all the impacts that have materialised during the first three years of operation 
according  to  the  evaluation  results  are  likely  to  continue.  If  different  modalities  would  be 
chosen,  the  same  policy  objective  could  be  achieved  only  under  certain  conditions.  For 
instance,  in  case  of  a  decrease  in  EU  funding,  the  organisations  should  be  able  to  raise 
sufficient external sources of funding to compensate potential decrease of public funding.  

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4.8.  Conclusion 

In  view  of  the  above,  it  is  important  that  the  Union  contributes  to  the  funding  of  Finance 
Watch  and  Better  Finance,  who  have  been  properly  evaluated  and  proved  to  be  relevant, 
effective and efficient in achieving the policy objectives set up at the end of  2011. These two 
organisations  have  managed  to  build  a  strong  technical  expertise  and  communication 
capabilities in a short period of time thanks to previous EU funding. It has proved to be more 
difficult for them to find other stable sources of funding while remaining fully independent 
from  the  financial  industry.  Continuing  funding  them  along  the  same  lines  in  the  coming 
years would ensure that the positive impacts assessed so far will be maintained. The situation 
should be re-evaluated by 2020. 

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