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New trends in the financial sector - What regulatory framework for digital retail financial services (data protection, new entrants)?

Retail finance strategy for Europe

By Nava Mario - Director for Regulation and Prudential Supervision of Financial Institutions, DG for Financial Stability, Financial Services and Capital Markets Union, European Commission


The Single Market for retail financial services markets does not yet exist. Retail financial services markets appear to lag behind other markets where the obstacles to cross-border trade have been removed (e.g. airline market). It remains difficult for consumers to access or transfer certain financial products cross-border. A better integrated Single Market for retail financial and insurance products would bring greater product choice, better value for money and lower prices for consumers. It could also mean more opportunities for firms to market their products, without physical establishment in another Member State, and therefore on a larger scale at lower cost.

Several important consumer protection initiatives have been adopted by the Commission over the past five years to restore consumers’ trust in retail financial services. Pre-contractual information and transparency requirements have been strengthened across the three sectors (banking, insurance, and securities) and conduct and advice rules have been reinforced. Rules on cross-selling of products and commissions were introduced and product access has also been facilitated (e.g. basic bank account). Implementation and enforcement of a number of European directives (on mortgage credit, on markets in financial instruments, payment account and payment services and insurance mediation) is currently underway in the Member States.

In order to address the outstanding problems, the European Commission launched a broad public consultation in December 2015 – a Green Paper on retail financial services. Its aim is to, on the one hand, help consumers access the best deals across the EU and, on the other hand, help providers sell their products in other Member States. In addition, in the context of the digital transformation of financial services, the Commission is keen to look at ways how to meet challenges and opportunities of online technology, including ways to support innovative companies (so called fintechs). The objective of the consultation is to find out what barriers prevent consumers and firms from purchasing or offering directly financial services cross-border and how best to tackle them, including with the help of digitalisation and innovation.

The consultation is the first step of our strategy to make EU retail markets work better for consumers and providers of financial services. Following an analysis of the responses, the Commission is likely to propose an Action Plan aiming to achieve a better integrated market for retail financial services in the EU.