Competition: Sector inquiry on retail banking - Retail Financial Services in the Single Market (debate) 
President
The next item is the joint debate on the following reports:
by Gianni Pittella, on behalf of the Committee on Economic and Monetary Affairs, on Competition: Sector inquiry on retail banking
;
by Othmar Karas, on behalf of the Committee on Economic and Monetary Affairs, on the Green Paper on Retail Financial Services in the Single Market.
Gianni Pittella
Mr President, ladies and gentlemen, thanks to the careful investigative work carried out by the European Commission, we have been able to put the rigidity that is characteristic of retail banking services under the spotlight. This investigative work is one to which we have dedicated ourselves, alongside Mr Karas, and so far it has enjoyed a very broad, and in fact nearly unanimous, consensus in the relevant committee. I would therefore like to take the opportunity to express my particular thanks to Commissioner Kroes for the way in which she has always been available for debate with Parliament on this delicate matter.
The relationship between consumers and banks in Europe remains complicated because of the distortions that are a feature of the sector. This relationship is, however, of fundamental importance and we ought to put it right by pointing out inadequacies and inefficiencies, identifying the main problems and possible approaches for solving them. As my report and the report by Mr Karas state, actions of this type ought above all to be directed towards facilitating consumer mobility, so as to push the banks, indirectly, to operate at higher standards of efficiency.
That is why, in my report, I ask for it to be made simple and inexpensive for consumers to change banks. Changing banks is still, in too many cases across Europe, a slow and difficult operation. We are also opposed to any sort of contractual tie that is not clearly necessary, that prevents or hinders customer mobility. We recommend that the European banking industry should improve the procedures for closing current accounts, and that only fully justifiable charges should be made, ensuring that this service takes place swiftly and that costs are not duplicated.
We also call on the Commission to act to ensure that the banks supply information of a better quality that is more easily accessible to consumers, through an information pack set out under cost headings, in a format that enables comparisons to be made easily. I myself hold a current account at a bank, and when information packs arrive at my house I throw them away because they are not comprehensible; the same goes for millions of citizens like me. This can no longer be accepted. Mrs Kroes, Mr McCreevy, if the banks do not make moves in line with these suggestions I call upon the European Commission to put forward a legislative proposal on this point.
I also ask for an assessment to be made of the feasibility of a European Internet search engine, enabling customers to compare the services offered by different bank sites. We need to be able to click on a computer, access the Internet and have an IT platform that enables us to say: here is a better choice for me. Today we do not have these options available.
On the other hand, 'interchange fees' are another matter. With regard to the position taken by the European Commission on this debate, I have made a proposal: that once and for all criteria should be given to the operators, by means of some kind of guideline, for establishing the method for calculating interchange fees, in such a way that the proper and transparent operation of the sector can be guaranteed.
I will end here, so as not to go over my four minutes. I hope that with regard to these proposals, that I hope Parliament will adopt tomorrow morning, the Commission will provide an immediate follow-up, that is, at least, speedy and specific.
Othmar Karas
rapporteur. - (DE) Mr President, Commissioners, Mr Pittella, first of all I should like to emphasise once again that the Commission proposals, Members' aims and demands in the two reports and the effects of these reports on Europe's citizens deserved a better time for debate and a bigger audience.
Secondly, with these reports and the debate with the Commission we are initiating the next stage in strengthening supply and demand in the financial services sector. I should like to thank Mr Pittella, Mr Schmidt and Mrs Starkevičiūtfor their effective cooperation. The broad majority in committee has shown that we have moved closer together yet have been making further demands.
What do we want? We want to continue developing the internal market for retail financial services and turn it into a domestic market for all consumers and small- and medium-sized enterprises. I say this even though I know that the retail market is and will remain more of a local business than a global business. Nevertheless, there is great potential, since only 1% of EU consumers purchase cross-border financial services via distance communication methods, while this figure is at least 26% inland.
There are - as the reports by the Commission and Parliament state - unjustified obstacles, despite differing responsibilities, which does not mean that in the past nothing would have happened. I should like to point out that since 1988, the liberalisation of the movement of capital within Europe has continued. The introduction of the euro has brought benefits to the buying public and to the economy: the Financial Services Action Plan, the White Paper on Financial Services Policy 2005-2010 and SEPA, the Single European Payment Area - consumers and suppliers benefit from this political development. This is not the end, but we are moving purposefully along the path.
Both of the Commission's reports - like ours too, perhaps - do of course have their weak points. One of these can be found in the Green Paper where it talks almost exclusively of consumers. This concerns the internal retail market as well as SMEs. Furthermore, consumer protection measures alone are still not able to encourage any suppliers - and we know this - to go beyond the borders. When you examine the sectors, the weak point without doubt is the fact that we draw only on a small amount of data. We suspect a potential market foreclosure based on prices alone.
In our report we therefore ask the Commission to carry out a proper impact study, which must also include a component correctly ascertaining the original market conditions and assess the integration and competitiveness of the market and the impact of an initiative not just by means of one indicator but by the largest possible number of measurements.
We do, however, also support the Commission in its aim only to pursue initiatives that demonstrably offer citizens tangible benefits, are soundly justified by thorough cost-benefit analysis and have been subject to proper impact studies.
I could now highlight other weak points, but I should also like to limit myself to what we, too, have emphasised specifically in the reports. An important message from this Parliament is that we clearly recognise the decentralised sector. We need savings banks and cooperatives along with public limited companies. We need cross-border local champions, not just global champions. They are responsible for local service provision, economic development in the individual regions and security of supply. The second point is that we need a balance between supply and demand. Thirdly, we need harmonisation of the licensing and registration formalities. Insurance companies and banks working across borders are subject to supervision by several financial authorities. We should be harmonising here and creating equal entry requirements.
We should be expanding e-commerce. Promoting the remote connection of businesses must drive forward the use of a safe electronic signature and there should be a reform of the Money Laundering Directive wherever it conflicts.
Further points are addressed: agents and brokers are important for greater competition in the financial services sector. We need easier access to the credit data register and credit card registers and we need the block exemption regulation to be extended because we do not think cooperation distorts competition in this area if the conditions are clearly stipulated.
I am asking the Commission and my fellow Members to examine this report in its entirety and to adopt and support the other considerations - the 44 clarifications and measures in my report.
Neelie Kroes
Member of the Commission. - Mr President, it is a real pleasure for me to join you here today to talk about the Commission's review of, and views on, the Pitella report.
But first let me congratulate both Mr Pitella and Mr Karas on a wonderful job and thank Parliament for its interest in this issue.
We share many views on this issue, and that is a good starting point. Along with my dear colleague Charlie McCreevy and the Internal Market and Services DG, my services and I have put much effort into being students of retail banking and, like you, we are asking ourselves what could be improved. It would of course be stupid to say that everything is perfect, so 'What could be better?' is our main line of approach to this issue.
In our sector inquiry the EUR 1 350 billion a year card-payment-systems market gained much of our attention. That is not coffee money - EUR 1 350 billion on a yearly basis. We also looked at improving credit registers, helpful and unhelpful cooperation between banks, and bank fees.
In response specifically to a key point in the Pittella report, I may conclude that we have many points of agreement and one point of difference. On customer mobility: the ball is now in the industry's court. It needs to develop a code of conduct, and it may face legislation if it does not take this opportunity and this challenge.
On consumer information and transparency: price comparison and product disclosure information is critical for consumers. But industry heavily contests suggestions for change so I fear that there might not be any progress. My colleague Commissioner Kuneva is collecting evidence on retail banking fees as part of one of her Consumer Market Scoreboard follow-ups. She will certainly be able to assess the diversity and transparency of banking fees and the corresponding level of consumer awareness. This fact-gathering is the first step for change.
On credit registers I have good news. The first meeting of the expert group on credit histories is planned in September 2008, which is not long now. Experts should present their recommendations to the Commission by 1 May 2009.
Credit intermediaries, such as mortgage brokers, are a growth industry with many vulnerable customers, so the Commission's study of them will be of great interest. The results of that study are expected to be available in October 2008.
Concerning cooperation between banks, the Competition DG is still doing further fact-finding for our sector inquiry, so it is too early for me to make detailed comments on this matter at this stage.
SEPA is still new, and competition is needed for it to function fully: I particularly agree with Parliament on this. But I am confident it is working as well as we could expect at this point.
The area where there seems to be disagreement - as mentioned earlier - is the request to the Commission to issue guidelines on Multilateral Interchange Fees (MIFs). I have to be honest with you and say that I am not convinced that creating guidelines would be the right move at this stage and, based on our experience in this matter, I shall try to explain why.
The call for guidelines and 'clarity' from the Commission - and I understand the question of the rapporteur and his team - is a predictable follow-on from our MasterCard case. However, that decision - the MasterCard decision - was based solely on the specific facts of that case. With only one case to base such guidelines on, we would risk making bad guidelines that undermine our efforts to help consumers (that is again something we have in common: we - Parliament and the Commission - want to help consumers). One case is not the basis of a magic solution.
Other reasons guidelines might not work are because there are payment card systems in the EU that operate with a MIF, and others without a MIF. Decisions about a card scheme's business model and financing mechanisms should be taken by the schemes themselves. Obviously, the Commission cannot prescribe specific business models. The assessment of the MIF of a developed system like MasterCard and the assessment of a MIF which new entrants in the market may wish to apply in order to start competing are not necessarily the same. At this stage the Commission has only assessed the MIF in systems like Visa and MasterCard. In the new framework laid down by Regulation (EC) No 1/2003, it is the responsibility of the parties to assess the legality of their behaviour under EC competition rules.
A non-confidential version of the MasterCard decision is published on our website, so we are transparent and we are clear. The Commission's assessment of the MasterCard MIF can be used by other payment card systems as guidance, even if the assessment in the decision relates to MasterCard's MIF and not to all possible MIFs. But there is a suggestion I make to assist the market as this issue develops - that is a gesture from my side. My services stand ready to further discuss with market participants and all stakeholders, and indeed they are already in close contact with the payment industry on this matter.
But allow me conclude in a positive way. The Commission very much welcomes Parliament's clear support for the need for measures to improve the level of efficiency and functioning of the retail banking sector, which remains fragmented along national lines.
I am committed to working with you to address the issue of the MIFs. I hope that we can just conclude that the future is ours.
Charlie McCreevy
Member of the Commission. - Mr President, let me congratulate the Committee on Economic and Monetary Affairs and the Committee on the Internal Market and Consumer Protection, and in particular Mr Karas and Mr Schmidt, for their excellent work in producing a thorough and consistent report.
I wholeheartedly welcome your broad support for our strategy on retail financial services, as well as the significant contribution you have made towards deliberations on a wide range of issues. It is not possible in the time allotted to provide our views on all of the issues covered in this extensive report. I would therefore like to focus on two issues of particular importance in the retail area, our consideration of the framework for retail investment products, and our work on bank account mobility.
Turning first to retail investment products. I am grateful for your support for our ongoing work to ensure that the regulatory framework for the sale of retail investment products delivers a consistently high level of investor protection. I am convinced that competition between retail investment products can deliver real benefits for consumers. However, we need to be confident that the sale of all investment products is accompanied by a high level of product disclosure and a point-of-sale discipline. Only this will ensure that consumers are treated fairly and can take decisions on an informed basis.
I welcome the clear position you have taken in your report on these issues. However, as you well know, I am not one to make decisions without first being fully convinced of the need for change. Harmonisation or streamlining of disclosure and distribution rules would be a costly and disruptive process. There may be objective reasons why some differentiation is needed between product types or distribution channels.
For these reasons, I believe it is far too early to conclude that there are deficiencies in existing investor protection regimes which call for new cross-cutting legislation. Later this year I will come forward with a communication consolidating the evidence gathered in our research. We will identify areas for further work, to examine, and address clearly, evidenced shortcomings in existing regulatory protections.
Turning now to bank account mobility. Creating a competitive and efficient market for bank accounts is a core element in our retail financial services strategy. Many consumers regularly face obstacles in trying to switch from one provider to another. This situation cannot be allowed to continue and we are therefore pleased to receive your support on this point.
I welcome your call for the financial services industry to work towards the aims of the Green Paper by self-regulation and thus reduce the need for binding legal acts. This reflects our commitment reiterated in the single market review to use, where appropriate or where they can deliver the desired outcome, self-regulatory measures rather than resort to legislation.
In this context, in November last year we invited the European banking industry to develop a European Code of Conduct by mid-2008. This code should contain a fully-fledged domestic switching service which should be made available to customers when they switch bank. The banking industry does not need to start from scratch. Rather, they should draw on existing best practices in some Member States.
Finally, delivery of a high quality code of conduct by the banking industry will be decisive in proving the merits of self-regulation. Let me be clear today. Should the code fail to meet the Commission's expectations, alternatives, such as a legislative proposal, would have to be considered.
Zuzana Roithová
on behalf of the PPE-DE Group. - (CS) Mr President, I welcome the report by my colleague Mr Karas, which deals with a very important subject, namely easy access to banking services for all citizens and businesses in the European Union. This will help to open up, or rather complete, our internal market. However, I would like to draw your attention to the very serious problem of high banking fees in many Member States. In some of these countries - and my own country, the Czech Republic, is one of the biggest culprits - these banking fees can be ridiculously high. This really calls for foreign competition. Only Poland fares worse than the Czech Republic. On the other hand, banking is cheaper in the Netherlands or in Austria, for example.
The instruments that can rapidly change this situation (and this also relates to the incredibly high fees for issuing credit cards) are in the hands of the Commission and Parliament. The elimination of obstacles to cross-border electronic banking would improve the situation for consumers and business customers, who would benefit from sound economic competition. Apart from the need to reduce banking fees and make them more transparent, it will also be necessary to concentrate on enhancing the quality of banking services and improving the financial knowledge of consumers as well as small and medium-sized businesses. Last but not least, the European Union will have to pay attention to the regulation of the so-called microcredit, which can give a significant boost to electronic (through not only electronic) trading. Ladies and gentlemen, it is in our hands.
Antolín Sánchez Presedo
Mr President, Commissioner Kroes, Commissioner McCreevy, ladies and gentlemen, retail banking plays an essential role in the daily lives of families and of the vast majority of European businesses. It is of great economic importance, generates around 2% of the Community GDP, provides more than 3 million jobs and constitutes the largest banking sector, with gross revenue of more than 50% of the EU total.
In order to grasp its importance we can consider that one of its characteristic services, mortgages, constitutes the main financial risk taken on by European citizens, with outstanding balances of around 50% of the EU GDP, and that the volume of investment funds in the Member States is between 4 and 24% of domestic economies.
Despite the progress in the regulation of the sector and the improvements brought about by the introduction of the euro, the integration of the Community financial services markets and the promotion of competition in the sector do not appear to have achieved their full potential.
Only 1% of consumers in the European Union purchase cross-border financial services; there are considerable variations in prices between entities; the opportunities for choice are limited; there are still structural barriers that make it difficult to provide services and for those services to operate properly between different countries. The levels of profitability of retail banking vary widely, and establishments in the Nordic countries, Spain and Ireland are above average.
All of these issues are tackled in the reports in a reasonably balanced way. I congratulate the rapporteurs, Mr Pittella and Mr Karas, and I would like to express my satisfaction at the ultimate inclusion of aspects such as the recognition of the role of retail banking in properly passing on monetary policy conditions to the market, the value that the plurality and diversity of models for trade with banks, cooperatives and savings banks brings to European retail banking, the existence of an environment of cooperation promoting competition between independent entities, the need for an appropriate framework for financial intermediaries and more comparability between financial products.
Improving the functioning of this banking sector will provide more efficiency, will help to develop the potential inherent in all the European regions and will facilitate access to financial services, along with greater compliance with the coverage terms for our citizens.
Margarita Starkevičiūtė
The main point of today's debate is the question of what is to be done to ensure that EU citizens are able to make full use of the advantages offered by the single market in the financial sector, the latter being exceedingly fragmented. How can we tackle this problem? There are three possible ways. Firstly, by encouraging consumer mobility. How can this be achieved? Firstly, information on all available products should be standardised and transparency in relation to the cost of these retail financial products ensured, thus enabling the consumer to choose by employing certain methods - perhaps, as Mr Pittella suggested, an Internet search engine. We are not prepared to agree on the necessity of standardising all the products, as they should reflect social and cultural differences in the various countries. Therefore, standardisation should be clearly defined. In addition, we would enable consumers to open accounts in other countries. Now we have the Schengen area, which allows everyone to move from country to country without any problems, data registering is no longer an issue. However, banks have a problem with opening accounts for citizens of other countries. I believe this is unacceptable in the age of modern technology. I do not think these problems could be resolved simply through self-coordination, given the number of retail banks and the difficulties they encounter in coordinating their activities. Can the Commission suggest any initiative in this direction?
Another way would be to encourage the mobility of suppliers, enabling them to render their services via the Internet or by means of text messages. At any rate, financial governance must be sorted out beforehand, clearly defining who is responsible for what in case something goes wrong. I would like to finish by saying to Commissioner Kroes that we expect transparency from the Commission. As regards payment card costs, new costs are currently being introduced, preceding your suggestion. Consumers in the shops might not even be aware of increased costs, as the banks are in the process of adapting to new requirements. Perhaps information on payment card costs should be publicised on a wider scale and more often, enabling consumers to compare them and be more empowered in dealing with the banks.
Roberto Fiore
(IT) Mr President, ladies and gentlemen, there is certainly a will within Parliament to harmonise the European banking world. I think, however, that families and small and medium-sized enterprises are particularly concerned, especially in my country, Italy, about certain practices which at the moment are undergoing tough and comprehensive scrutiny by the public.
I am talking, for example, about maximum overdraft fees and compound interest, which is interest on interest. These are practices which have entered into conflict with the constitutional court and the court of cassation. I do not understand, therefore, how people can talk of fee transparency or of clarity in the way in which fees are paid, when in a country such as Italy there are still such serious conflicts between banks and legal authorities.
The same goes for the flexibility of loans. At the moment there is particular concern about the fact that thousands or hundreds of thousands of families are facing serious problems regarding loan flexibility. I therefore think that Parliament ought above all to place the national banking world in line concerning fairer criteria.
Harald Ettl
(DE) Mr President, both the Karas report and the Pittella report demonstrate that there is still a great deal to do for consumers in the sector of retail financial services such as bank accounts, loans and insurance. Banks, whose market volumes are influenced by retail business by up to 50%, are no longer interested in customer mobility and unfortunately only to a limited extent in transparent benchmarking. Even this essentially good, but often wrongly interpreted relationship of trust between banks and their customers has less of a link and contributes less to customer mobility and the promotion of competition.
Competition can itself therefore be adjusted primarily by enlightened and well-informed customers. In the end we have also included an EU budget line on financial market expertise in consumer and SME organisations. I simply wish to remind you of this.
In addition, consumer protection levels should not be impaired by the dismantling of barriers. Moreover, the demand for collective legal aid in cross-border lawsuits relating to financial products agreed in the Committee on the Internal Market and Consumer Protection is the appropriate endorsement for fair market conditions. In general, however, new financial products have to be introduced objectively and correctly.
The Commission is being asked to anchor regulatory requirements with regard to information, marketing and the organisation of comparable products for private customers in all the legal provisions of the financial market. The principles of the MiFID Directive on best advice should also be made to apply particularly, for example, to unit-linked life insurance and other long-term savings products. Helping the consumer, the customer, and thereby creating a flourishing market must be the principle by which we act.
Wolf Klinz
(DE) Mr President, ladies and gentlemen, I would first of all like to express my thanks to Mr Pitella and Mr Karas for their reports. I share their conclusion permeating the entire report that every citizen in the European Union should have access to banking services. Nevertheless, please allow me three comments.
Firstly, with regard to customer mobility, yes, it is our aim in a growing, fully functioning internal market to make sure that every customer also has cross-border access to banking services. However, responsibilities are also bound up with this right. I am therefore somewhat cautious when the demand is made here that in the event that a customer informs his bank that he wishes to switch to another we leave the risk, if he does not have his new bank account details in time, with the present bank. This is not right! Customers should assume responsibility for their own actions and must also assume this responsibility personally with the rights they have assumed. We should not be toying with those who bail customers out whenever they are to blame for ending up in this dilemma.
Secondly, customer information. I can but agree here with the previous speaker, Mr Ettl. We still have to do this many times over in the case of comparable products in competition with each that do not have the same transparency because they are subject to different obligations to provide information. This is not right! I am very much in favour of customers obtaining information but it is also true here that we should not be throwing the baby out with the bath water and not inundating customers with too much information. Customers need the necessary information to make responsible decisions themselves, but quality takes priority over quantity here.
Finally, back to the banking structures. I agree with Mr Karas that we do in fact have different, historically developed banking structures in the individual Member States. In one country there are only private banks, in others there are also savings banks, credit unions, state banks and more of the same. It is not our job to reorganise the banking community. The Member States should be doing this - if they are not already doing so. Nor is it our job, however, to be carrying on traditions. I think the market should decide whether the structures remain as they are or whether they should be changed. Services, product ranges, services that individual market operators offer their customers - they should decide; we should not be making decisions centrally.
Mairead McGuinness
Mr President, I just wish to comment briefly on some of the debate.
The issue about educating the consumer is very important. We need consumers to understand financial services, and we need in particular to target young people who use credit cards like they were going out of fashion.
But let me just say that those of us who thought they were educated have been prone to the odd financial accident. I mean, hands up those of us who fell for endowment mortgages? I should put both hands up in that regard. Therefore, even with education and knowledge, mistakes are made and wrong products are sold to the consumer.
I am not sure how long the Commission is going to test out the codes of conduct before it legislates. I am not a fan of legislation where none is required, but sometimes we need better legislation that is effective from a consumer point of view. We have a credit crunch now and, where in the Irish banking system they were handing out money and 100% mortgages were the norm, we now have quite the opposite with the curtailment of finance. This is an issue that affects all of us and I hope that this debate contributes to better financial services for the European consumer.
Neelie Kroes
Member of the Commission. - Mr President, I should like to thank the honourable Members once again for their work on this issue. The point has been made that we need transparency and a clear overview of what is entailed for the consumer. Quality is more important than quantity, but sometimes you need a bit of quantity to get the quality.
The Commission very much welcomes your clear support for the need for measures. We are aware that we have to improve the level of efficiency, and that we have to improve the functioning of the retail banking sector, which remains fragmented along national lines. That is not in line with the single market that we all believe in. Therefore, the retail banking sector - which is an open door - is of key importance to all of us, to all the consumers and to the economy as a whole. Parliament's report reflects the importance which you too attach to this area.
Mrs Roithová talked about the situation in her country but mentioned that it was not only in her country that the high fees are often the result of a fragmented market with only a few players. The situation we found in the sector inquiry report, which I have already touched upon, is quite clear.
We think, and we expect, that the introduction of SEPA will provide an answer to many of the problems, because it will facilitate cross-border competition, and that is what is needed. It is a pro-market approach and it should work. We are, therefore, very much behind this initiative and are working with the industry to help SEPA reach its goals. Mr Sánchez Presedo rightly said that promoting competition is key to this whole approach, because if there is no competition then we are all aware that the banks are trying to pull our legs.
On the actual cost of payment cards, which Mrs Starkevičiūtasked about, we share the honourable Member's wish for more transparency in the market. Pro-competition means that we should be aware of what is going on in the market, and the fact that it was not clear why consumers benefited from this was one of the reasons for prohibiting MasterCard's interchange fees - that was clear-cut. Our aim is to see fees which have clear and verifiable benefits to consumers.
Mr Klinz rightly talked about rights, and these are always combined with responsibilities: not only of the customers but also of all of us - the banks and all the players in the game. We need more transparency, we need to be clear what we are picking out. The changes to the market are hopefully leading in that direction.
Charlie McCreevy
Member of the Commission. - Mr President, as I remarked earlier, the reports are excellent pieces of work. They are thorough and consistent and will provide a significant contribution to our ongoing work on retail and financial services.
I appreciate that some people might wish us to move faster on some of the initiatives, but speed does not always equate to equality. We are committed to our better regulation principles, including thorough impact assessments. Some of our initiatives, such as bank accounts, have been underway for several years and should bear fruit this year. Others, such as our work on retail investment projects, are a little newer and will require more research before we can reach any firm conclusions.
Mrs Roithová referred to bank changes and my colleague Neelie Kroes has dealt with that issue. I would just like to point out that we cannot regulate charges as such, but what we really need is real competition and the ability of consumers to easily switch from providers with which they are dissatisfied. Of course we want to make it easier for them to switch and to have a variety of players in the marketplace. That in itself will bring down prices. Mrs Margarita Starkevičiūtraised a number of issues. I have noted all her suggestions and we will act on them as far as possible. Mr Ettl spoke about the retail banks. The Green Paper that we published precisely addresses some of these real concerns.
I usually agree with my friend Mr Wolf Klinz but, unless I misunderstood, I detected that he was not so anxious about the switching of bank accounts. What we are trying to do is allow consumers to switch bank accounts easily within Member States. I would just point out that it not rocket science. Other Member States have embarked upon codes of conduct and have done it quite easily. We have given the banking industry an opportunity to self-regulate in this particular area. I have met some of them. Some come up with all kinds of wonderful and wondrous excuses about why it cannot be done, but I can assure them that it is not astrophysics that we are dealing with. It is quite simple to operate and is an opportunity for them to prove that self-regulation is the better way. But, as I said in my earlier remarks, if we do not do this, there are other alternatives available to us.
However, I do agree with Mr Klinz's second point about the bank structures in various Member States. These are entirely for each Member State to organise, and there are different banking structures in all of the Member States. A Member State itself can organise its structures in any way it wishes, but if it enters into the free market area, it must abide by the rules of the Treaty, and this could sometimes lead to conflict. However, the organisation of the banking structure in a Member State is solely a matter for the Member State concerned.
I agree with Mrs McGuinness regarding the operation of codes of conduct. She referred to the great phase of endowment mortgages. I was a little reluctant ever to go down that road myself and resisted it for years, but at one time, with another person, I allowed myself to avail of one of those. I was one of the lucky ones. I turned out at the end of the period of time with a profit, which was a surprise to me and to everybody else, given my earlier reluctance in that area.
However, I do not think that anybody could be blamed for the way endowment mortgages went. It was the fashion of the time. Everybody believed in doing it this particular way, and there was a fair amount of aggressive selling. But I think that, as long as the consumer is aware of many of the pitfalls, that is what codes of conduct or any type of consumer protection should do. I always say to people in business, whether they be in big or small businesses - and we should be aware as consumers - if a thing looks too good, it is too good.
Gianni Pittella
Mr President, ladies and gentlemen, I would quickly like to thank all the Members who have spoken, and thanks once again to the Commissioners and to Mr Karas.
I would like to say a swift word on interchange fees. My proposal for guidelines is based on the conviction - and of course here we may disagree, Mrs Kroes - that the interchange fee is useful for the development and the efficiency of the payment instrument. Also, in the absence of interchange fees there is a risk that the costs would be borne by consumers.
Moving on to the issue of what is the best approach on the regulation of financial markets, I believe - and I have often said so to Commissioner McCreevy - that under-regulated and poorly regulated financial markets and the frequently ineffectual self-regulation carried out by the banking industry are elements whose negatives effects have been clearly demonstrated by the current financial crisis.
I therefore believe that it would be wrong to think that the proper integration of the retail financial sector can be completed solely by means of self-regulation by the industry. The retail products financial market will only be able to call itself properly integrated once that degree of full harmonisation that the consumer protection rules aim to bring about has been achieved and guaranteed. This can best be done through a legislative initiative by the Commission.
Othmar Karas
rapporteur. - (DE) Mr President, ladies and gentlemen, I should like to reiterate the thanks I expressed at the outset to all those involved, and to ask the Commission to include Parliament's proposals in full in its legislative deliberations.
The second point is a tip. I should like to point out to my fellow Members that the report on consumer education - we have spoken a great deal about this today - in the financial services sector is being debated in the House and will be discussed in plenary in the autumn.
Another point is that we should not forget that the different tax systems of the Member States are a major obstacle to the provision of cross-border financial services and that this also creates low interoperability, particularly where financial products are promoted for tax purposes. I also wish to appeal to the industry and the banks to carry out self-regulation in order to do the preliminary work for the objective of this Green Paper. On the issue of standardisation and product diversity, we also have to say yes to standardisation as long as it does not jeopardise product diversity. As regards bank charges, which Mrs Roithová has addressed, the Commission has already referred to SEPA.
However, we also have many other obstacles, namely the obstacle that rights earned in one country often cannot be transferred to another country and the obstacle that an account can be opened if the domicile is given. Then there is the missing definition of e-commerce: cross-border money transfers are working, but there are barriers when opening an account and to other rights, which we must remove. We have enough work to do to get proposals onto the table. We should be seeing results and continuing to work consistently.
President
The debate is closed.
The vote will take place tomorrow.
Written statements (Rule 142)
Zita Pleštinská  
in writing. - (SK) A well-functioning integrated financial market is a necessary precondition for the realisation of the Lisbon agenda. Banks play an essential role in passing on monetary policy conditions, particularly to small and medium-sized enterprises and consumers. Although many clients would be interested in using cross-border financial services, opening an account in a Member State bank is accompanied by so much bureaucracy that clients often get discouraged.
The European banking industry should improve and simplify its account closing procedures. Statements of account are still very complicated and many consumers do not understand them. The complexity of financial products makes it difficult for consumers to make informed decisions. Consumers are also burdened with disproportionately high banking fees for services and for the issue of credit cards.
I think that rather than regulating banking fees, the EU should ensure that the banking sector is competitive. Informed consumers are an essential component of economic competition among banks.
I believe that consumer organisations play an important role because they are able to define which information they deem to be necessary to enable consumers to make appropriate choices when it comes to banking products. They can coordinate financial education programmes aimed at increasing the awareness of consumers as regards their money management options. They also help very vulnerable consumers.
I believe that the time will come in the EU when consumer organisations will not be fighting for their survival. Once they become responsible for consumer policy, they will understand how important finances are.
Katrin Saks  
in writing. - The Commission offers three strategies in the Green Paper on retail financial services to promote integration of the retail markets in financial services - lower prices and more choice, empowering consumers and enhancing consumer protection.
Firstly, I would like to focus on consumer empowerment and I would like to highlight the need to raise the level of financial literacy. At the recent consumer financial education hearing we saw a number of practical examples of consumer financial education programmes. Further efforts could be made to share best practices in this area across the Member States, bearing in mind the new Member States in particular.
Regarding consumer choice, it is clear that consumers who wish to change financial services providers must be able to do so with a minimum of costs and legal barriers.
As regards information given to the consumer, it is not enough to provide consumers with as much information as possible. Overloading the consumer with information will have the opposite effect. Nonetheless, sufficient information which helps the consumer to make informed choices has to be provided.
Silvia-Adriana Ţicău  
Pursuant to the Pittella report, the sector audit analysed the competition situation regarding payment systems, including card systems, credit offices, cooperation between banks and price and bank settlement policies. The audit shows that there are significant differences between the commission paid for bank cards. Thus, it was detected that the majority of national debit cards networks settle inter-bank commissions on a significantly lower level than the international networks, and that, in most of the Member States, the majority of banks permit the grant of mortgage credits, of personal credits and of loans to SMEs with the opening of a current account.
Usually, the client does not have the same negotiation power when initiating the contractual relation with the bank where he becomes a client. The client signs a contract that he does not always read and even if he does, he would like to suggest changes, which is not possible. From this viewpoint, I consider that the competent regulation authorities should supervise the form of the contracts offered by the banks so as to protect the interests of both the clients and the bank. I consider that it is compulsory that a client who opens an account to previously receive a brief presentation of the applicable costs for the entire period of its utilization.
