Green Paper on retail financial services. Better products, more choice, and greater opportunities for consumers and businesses

The European Union’s Single Market and its four freedoms 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.

ESO: Background information: Giving Europeans more choice in financial services: the European Commission consults http://www.europeansources.info/record/press-release-giving-europeans-more-choice-in-financial-services-the-european-commission-consults/

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