EU rules must not dilute consumer protection
18 September 2012
In a speech to the BBA EU Regulation Update Seminar, Consumer Panel Working Group Chair Mike Dailly has raised concerns about possible dilutions to consumer protection by EU legislation currently being considered by EU Parliament.
The Panel believes that many of the changes proposed in the EU’s Consumer Package2 are positive. However, while welcoming plans to require all insurance sales to be undertaken “honestly, fairly and professionally in the best interests of customers”3 the Panel remains concerned about possible dilutions to the work of the Financial Ombudsman Service (FOS) in publishing complaints data, and its ability to make binding decisions. The Panel is also concerned about the potential for a revised MiFID Directive to undermine the Retail Distribution Review’s ban on commission in the UK.
Mike Dailly, Consumer Panel Working Group Chair commented:
“There is much to be pleased about in the current consumer package. The establishment of the principle that insurance sales must be undertaken “honestly, fair and professionally in the interests of consumers” goes further than the protections in the Financial Services Bill.
However, changes in the Consumer Package must not undermine the authority of the FOS to make binding decisions and to publish information such as complaints data.
Furthermore, as we approach the much anticipated implementation of the RDR in January 2013 we need to ensure that there is no dilution of the ban on commission. The removal of commission is key to ensuring that providers of financial products act as the true agents of their customers.”
- Mike Dailly’s speech can be found here.
- The Consumer Package is the collective name for proposals on Packaged Retail Investment Products (PRIPs), a revision of the Insurance Mediation Directive, and changes to the UCITS Directive. These proposals were published on 3rd July. It is set to be debated again in the EU Parliament in early October 2012.
- Article 24 of IMD2
- The Consumer Panel is a statutory body under the Financial Services and Markets Act 2000 and was initially established by the Financial Services Authority in December 1998. The Panel advises the FSA on the interests and concerns of consumers and reports on the FSA's performance in meeting its objectives.
- The Panel’s membership is drawn from a broad range of backgrounds with expertise including market research, law, financial services industry, financial inclusion, European Regulation, financial regulation, consumer advice, campaigning, communications, compliance and later-life issues.
- 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 our website.
- Panel members are appointed to serve a maximum of two terms of three years.