EU is making life easier for firms at the expense of customers says Financial Services Consumer Panel

30 July

The Financial Services Consumer Panel today is calling on the EU to simplify the system for consumers buying financial services across the EU, by allowing them to claim for redress through their home regulatory system.

The Panel claims the current system is fundamentally flawed, as all the Commission's focus so far has been to make cross border trade easier for firms rather than consumers. At the moment, if consumers buy financial services across borders, they will only get redress for any problems through the regulatory system where the seller was based – there are currently 27 different regulatory regimes and systems of redress in the EU. The whole structure of home/host regulation and redress will make life easier for firms but with huge complications for consumers.

The Panel is calling on the EU to develop arrangements whereby consumers do not need to understand the regulations in a firm's home State before buying a financial product across borders. We would like to see the EU require that firms can only sell cross border if they subscribe to the consumer's home redress scheme. This would mean consumers could get effective redress through their home ADR (Alternative Dispute Resolution) scheme.

John Howard, Chairman of the Financial Services Consumer Panel said:

"Financial services firms must be made to provide easily accessible systems of redress to their customers in other EU countries if they want to sell across borders. We believe the simplest and best way would be for consumers to use their home systems to obtain compensation or redress."

 

Notes to editors

1. The details of the Consumer Panel's proposals are contained in its response to the Commission's Green Paper on Retail Financial Services in the Single Market.
   

2. The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives. The Consumer Panel has statutory status.
   

3. The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. More information about the Panel's work is available on this website.
   

4. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.
   

5. There are currently twelve members of the Panel as listed below.

   John Howard (Chairman)
   Adam Phillips (Vice Chairman)
   Kay Blair
   Michael Chapman
   Stephen Crampton
   Caroline Gardner

   Jenny Hamilton
   Tony Hetherington
   Nick Lord
   David Metz
   Lindsey Rogerson
   Carol Stewart