Today, I want to talk about financial services not from the institutional point of view, from the point of view of the consumer; about how the Single Market can bring real benefits to make people's daily lives easier and better.
Today, we don't have a real single market for financial services.Only three per cent of consumers have used bank services in another EU Member State. Only one per cent of loans in the euro area are made across borders. Credit card fees vary drastically between Member States, as does the cost of similar insurance products.
There can, of course, be good reasons for these variations. There may be different costs or risks or national legal frameworks that have to be taken into account. People may prefer to buy something from their own country – because of language, or face-to-face contact. But when high prices come from a lack of competition, or when consumers can't buy the product that's best for them, or when businesses would like to expand their services but are being blocked from doing so, then I think we need to be ready to change things.
Our goal is that consumers should be able to choose the right product at the right price for them and that businesses should be able to offer their services to customers wherever they are in Europe.
Developments in digitalisation give us a new opportunity to grapple with these issues. Location, being able to do business face to face, matters less than it has ever done. It is much easier to buy and sell consumer financial products across borders, at a distance.
We want a Single Market in finance for consumers to be of benefit to as many people as possible. Our focus therefore is on the vast majority of European citizens who don't move from their home country. But there will also be benefits for those who do move or are thinking about moving.
I hope that this Green Paper consultation we are launching today will help us identify the barriers to that Single Market and work out the best solutions. It covers the personal financial products that people use in their daily lives: bank accounts, loans, insurance.
Some issues are already clear: consumers first need to know what products are available. They also need an effective system of redress in case something goes wrong. Businesses need reliable credit information on customers from other European countries to decide whether or not to sell them a product. They need to be able to sell at a distance without weakening security requirements.
But if we can remove those and other barriers the effect could be far ranging. With more choice and competition, with our high standards of consumer protection, people would be able to choose a wider range of products in bank accounts, loans and insurance across the EU.
We will have to see from the evidence we receive during the consultation what we can achieve. I don't want to overpromise and then under-deliver. But as a result of this exercise, it should be possible for example to enable consumers to shop around Europe for a savings account that gives them better returns or a better balance between returns and accessibility.
We are also looking at some specific problems people encounter when they travel in Europe for work or leisure. Are costs for transferring money from Euro to non-Euro currencies, or between non-Euro currencies transparent enough, so that customers can get the best deal? Is there a fair balance between supplier and customer in insurance on rented cars?
Only 3 per cent of Europeans live in another country. But that makes 13 and a half million – still quite a lot of people. But they often find it hard to take products that are vital to their financial security, such as life or private health insurance, with them when they move. Having to start again can be very costly. It can be difficult to get a no claims bonus recognised in another country. And despite the Payments Accounts Directive we still have people coming to us with problems about keeping or opening a bank account when they've moved. So that's another area that we'll be looking at closely.
These are just some examples of the kind of benefits for European consumers we hope to bring about: a better choice of savings accounts, better deals on transfers, being able to take your key financial products with you when you move to another EU country.
This consultation is a first step. It will run for three months.
We want to hear about the experiences that people and businesses have every day. Have you faced high fees to transfer money in Europe or use a credit card while on holiday? Have insurance costs somehow come out of nowhere when you've hired a car? Why is it so difficult to open a bank account or buy a savings product in a different European country? Why is it sometimes impossible to keep the same bank account when moving abroad? And what explains these big price differences across Europe?
The evidence we gather will determine the action that we take. This is a genuinely "green" Green Paper. I have no pre-cooked perfect solutions. We will listen to good ideas from all sides, and then decide on what measures we need - working closely, as always, with Member States, the European Parliament, consumer organisations and business.
I hope this Green Paper will reinvigorate the debate, will help us to strengthen the Single Market and, most of all, help us deliver some real benefits for European citizens.