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ECRC and cooperation with BEUC – Judging from the renewed impetus given to protecting European consumers and the new strategies outlined by BEUC, we hope that our coalition’s international discussions over responsible credit will continue with them in a fruitful and sustainable fashion going forward.
BEUC has 42 Members: Of which a third (14 organisations) are ECRC partners

There is therefore a good reason for us to ask these partners that they voice their demands within this umbrella organisation so that the management understands that:

1) BEUC should make an active commitment to cooperate in organising conferences on the issues of financial services for consumers and more vulnerable sections of society
2) BEUC should always attend these conferences in a speaking capacity to show it believes and stands behind the efforts stakeholders are doing
3) BEUC will help its members to attend these conferences once a year as it is in all their interest that they meet these stakeholders whom often decide on the market for financial services they are faced with.

Below are extracts from recent announcements by BEUC

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BEUC WORK PROGRAMME FOR 2009

Intentions/promises which are in this document include:

Page 6:
“We support the Commission’s approach to evidence-based policy making, though we highlight that the collecting of data/evidence can be too expensive for consumer organisations, and that ethical, social, and evidence based on experience/practice is also essential. In the area of health, safety and environment, evidence may not be available, and the precautionary principle needs to be taken into account. We support the aim to integrate consumer issues throughout EU legislation, and that the Strategy recognises the need to protect vulnerable groups.”

Page 7:
“other areas of importance are the ongoing implementation of our alternative funding strategy, the opening up of BEUC to new members, to partners and to alliances with stakeholders having parallel interests to ours. This chapter will also deal with our overall communication strategy and the enhanced cooperation system we intend to implement with our members.”

Page 9:
“BEUC has recently engaged into a more proactive policy aimed at applying more systematically a cross cutting analysis of the impact of EU measures/BEUC initiatives on sustainability: this concept refers not only to environmental and global social challenges, but also to those related to the specific needs and weaknesses of the more vulnerable groups of consumers, such as the poor, the less literate, children, elderly, disabled, pregnant women, rural consumer groups. This enhanced proactivity is even more necessary as those groups become more and more a target group for some professionals, or, to the contrary, get excluded from access to goods and services by others. We will develop guidelines on what we understand by ‘sustainability’ and reflect this approach wherever possible and relevant in our various priorities.”

Page 11:
“BEUC has numerous relationships with many stakeholders, be they institutional or private, representing similar or other interest groups. It is a reflection of our success at EU level, that we are often sought out for joint campaigning. While many organisations seek to define formal or informal alliances with us, which is possible since the recently amended BEUC statutes allow for partnership agreements, we have to ensure our objectives benefit from such alliances. In our daily contacts, we are confronted with many other lobbyists, be they NGO’s, consultants, trade associations or individual companies. It is interesting to note that the latter appear sometimes to be more open to BEUC arguments and demands rather than the associations, which show less flexibility. In the current context of less regulation, REFLECTION TIME SHOULD BE DEVOTED TO THE POSSIBILITY OF ENTERING INTO STRATEGIC ALLIANCES WITH KEY NGO’S, OR COMPANIES AND TO CRITERIA ON THE CONDITIONS AND LIMITS OF SUCH ALLIANCES.”

“A more open BEUC: As a follow up of the CSIL and Gplus audits, BEUC has engaged these last years into a reflection on the opening up of our organisation to new types of memberships and to other forms of cooperation. This has led, in 2008, to a modification of our statutes, which now allow for temporary membership, as well as for the conclusion of partnership agreements with organisations on specific issues. In 2009, we expect this new policy to be implemented by the acceptance of temporary members as well as by the conclusion of several partnership agreements with organisations that share our views on specific topics. More generally however, we will, in the implementation of our headline strategies, engage into more proactive contacts with other stakeholders in order to search for alliances and coordinated action, with a view to mutual reinforcement of our statements and impact. In this context, we will also deepen our co-operation with our sister organisations ANEC, CI, TACD and ICRT to mutually reinforce our impact on the common priorities.
This new policy will lead, in November 2009, to the organisation of a large conference on the state of discussions/progress – from the consumer point of view – related to the revision of the consumer acquis, one of our major headlines. This conference would be combined with our General Assembly. It would be open to other stakeholders and EU representatives and would be self-financed. Its aim would be to foster discussion around one of our major campaigns for 2009. It is also intended to demonstrate the new BEUC approach towards dialogue with other stakeholders and the sharing of information.”

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Extracts from BEUC’s 8 PRIORITIES for the Swedish Presidency

We call on the Swedish Presidency to support the proposals for the establishment of an
EU-level supervisor to cover all financial services and all financial institutions
(banking and non-banking). Such a supervisor should ensure the appropriate national
authorities fulfill the following functions: participate in control of advertising, check
provision of financial information, regulate unfair practices (bundled and tied products),
check the distribution of financial products (for example in the area of consumer
credit), and manage an early warning system (inform consumers about the risks/risk
category of various financial products on the basis of continuous enquiries).
…..

Objective Financial Services

A dynamic Internal Market for retail financial services

The current financial crisis has clearly demonstrated that consumer rights have been
systematically violated or simply not been taken into account. Financial service
providers have been focusing on enormous profits rather than providing services
tailored to individual consumer needs. Consumers have lost confidence in deposit,
credit and investment service providers, which weakens the basis of the Single Market
and prevents cross-border shopping for financial services. The new rules on deposit
guarantee schemes take no account of the Internal Market dimension of the issue. This
could discourage consumers from cross-border shopping for financial services. The
financial sector does not operate in a competitive EU market, far from it.
The current financial crisis has generated an atmosphere of general mistrust. One of
the main objectives should now be to restore consumer confidence by guaranteeing an
appropriate level of protection. That means that consumer interests should be taken into
account within all initiatives that are being discussed to solve the crisis and to avoid a new
one.

I ENHANCE FINANCIAL SUPERVISION AND REGULATION

National supervising authorities have not been capable of correctly detecting risks and
imposing the necessary safety measures. Host state supervisors 2have little to no influence
over the regulation of passporting firms3. If national supervisors are not doing their job
properly consumers are at risk. Cooperation between national supervisors with regard to
the largest banking groups is supposedly already taking place, but smaller banks such as
Landsbanki and Kaupthing bank seem to have slipped through the net. A number of
outrageous financial swindles have been in the news recently (for example the Madoff
scandal) which have obviously not been detected on time.

Action to be taken:
More powerful and independent national supervisors are needed everywhere in
the EU.
In order to provide better protection to consumers, national supervisory bodies
should fulfill the following functions: participate in advertising control, control of
financial information, control of unfair practices (bundled and tied products),
control the distribution of financial products (for example in the area of
consumer credit), and take charge of an early warning system (inform
consumers about the risks/risk category of various financial products on the
basis of continuous enquiries).
Since the development of financial services has led to the emergence of
universal actors providing a wide range of financial services (for instance,
together with their traditional role, banks offer more and more insurance
services, investment products, etc.) it is not necessary to have a large number
of supervisory authorities. A unique supervisor is needed to cover all financial
services and all financial institutions (banking and non-banking). Therefore,
there is a need to merge existing national supervisory authorities (bank/non
bank credit, insurances, securities/pensions funds).
Strengthen the cooperation between national supervisors and regulators: create
a binding network between them (see for instance the Regulation on consumer
protection cooperation).
As financial systems and markets are becoming more and more integrated, it is
necessary to create a financial supervision authority in charge of control of
financial institutions operating at cross-border level, whatever there size is (for
example Icelandic banks).
Adopt binding rules at EU level so that all Member States are obliged to comply
with them. Soft law has shown its limits especially in case of financial services.
The regulatory gaps must be closed.

II PRECONTRACTUAL INFORMATION ON FINANCIAL PRODUCTS AND SERVICES

The crisis had make it even more visible that the information offered to consumers is not
adequate. Consumers have access to information which is often very long and not
consumer-friendly (consumer-oriented); it does not help them to compare products and to
make the right choice.

Action to be taken:
Provide information to consumers well in time before the contractual decision.
Make information shorter (no more than 2 pages) but understandable,
structured, and with comparable relevant information on all the key features.
Create a single risk indicator for investment products. Such an indicator should
include the following information:
o Whether or not the invested capital is guaranteed.
o Investment volatility.
o Information on suggested retention period for the expected return to
compensate for the volatility risk.
Introduce stricter rules on marketing and advertising practices especially for
investment products.
Develop the concept of simplifying and standardising financial services, with
features that can be easily recognised and compared.

III. FINANCIAL ADVICE

Financial products are more and more complex. The current crisis has unveiled the
problems consumers have to face: even enlightened consumers have not been able to
understand the financial products offered to them (see Madoff’s clients). Moreover,
everywhere in the EU there is a lack of independent advice that consumer can rely on.
Advice is in general only given by financial service providers and is often not targeted
to consumers’ needs and expectations but is rather linked to the bank’s commercial
interests. This creates a situation which is to the detriment of consumers.

Action to be taken:
• Independent advice is necessary to prevent consumers from taking unwise
decisions, especially in case of major financial decisions.
o Funding for independent advisors: should be provided partly by public
authorities and partly by consumers; in any case, independent advice
should be provided at affordable rates.
o Advice could be provided by consumer organisations or other
independent bodies.
• Responsibility of advisors (service providers and independent advisors):
o Set up a MiFID profile (Markets in Financial Instruments Directive) for
each investor. If the product does not match the profile, consumers
should receive a warning.
o Ensure information given to consumers is reliable.
o Effective documentation of the advice should be given to the investor.
o Make it easier for consumers to claim compensation (the burden of proof
should lie with the advisor).

1) CREDIT - RESPONSIBLE LENDING

Irresponsible lending is one of the main causes of the current financial crisis. As a
consequence, more attention should be paid to this issue. Lenders should be obliged to
assess the financial capacity of consumers asking for a credit and check their
creditworthiness.

Actions to be taken:
Regulate variable interest rates to protect consumer from a potentially increasing
interest burden:
o Cap variable interest rates to limit interest rate variations.
o Improve information on variable rates.
o Prohibit promotional rates, i. e. attractive (or fixed) interest rates that switch
to higher (or variable) interest rates after a certain period of time.
Foster consumer protection and responsible behaviour of credit institutions with
legislation on mortgage credit: if the bank’s decision is based on a poor quality
assessment of the consumer’s financial situation the costs of irresponsible lending
should be taken on only by lenders and not by consumers (see Belgian law on
responsible lending).
Regulate crediting activities that seriously endanger the solvency of consumers
(foreign currency credit, credit secured with mutual funds, Lombard credit, revolving
credit…) as well as usury rates and excessive costs.
Accompany and evaluate the implementation of the Consumer Credit Directive with
a specific focus on the level of consumer protection (including the regulation of
credit distributors), a responsible credit business and necessary adjustments in the
future and monitor specifically the transposition and implementation of Article 8
(lender’s obligation to assess the creditworthiness of the consumer).

2) DEPOSIT GUARANTEE SCHEMES

At the moment, deposit guarantee schemes work extremely inadequately at cross-border
level, especially in the case of banks which have the European passport4 in their home country,
but conduct 99% of their business cross-border. No lessons have been learned
from the current crisis: the new rules do not take into account the Internal Market
dimension of the issue. This could discourage consumers from cross-border shopping for
financial services.

Actions to be taken:
Make deposit guarantee schemes work cross-border:
o Consumers’ deposits should be equally guaranteed across Europe, whatever the service provider’s location.
o Payout procedure should be as easy as at national level, especially in terms of delay.
Ensure maximum harmonisation of deposit guarantee schemes with complete coverage of deposits all over the EU,
in order to avoid an uneven competition among schemes.

IV HARMONISATION OF LEGISLATION ON FINANCIAL INTERMEDIARIES

Many financial intermediaries sell complex financial products without having any
qualifications, and are not accountable in case of failure of the product.

Actions to be taken:
Introduce rules to limit initial commissions.
Ensure harmonisation of rules for intermediaries, regardless of what they are
selling.
Introduce rules on registration, qualification, transparency, liability and insurance.

V IMPOSE ACCESS TO A MINIMUM SERVICE FOR ALL CONSUMERS

Financial exclusion is a problem for many European consumers, principally in the
newer Member States. The result is that they do not have access to any basic financial
services (current account, savings accounts, insurance). This often leads to social
exclusion. There is also a European cross-border dimension: as a citizen who wishes to
settle abroad must often overcome a real banking headache. In order to be able to
open a bank account in a Member State, they must reside there; but in order to obtain
housing, or rent it, a bank guarantee must be provided.

Action to be taken:
Recognising the right of citizens to have access to basic banking services with a
European scope.

VI FACILITATE PAYMENT SERVICES

From lack of information to banks that try to dodge their obligations in the event of
card theft, to excessive fees on cross-border transfers, we have all faced a problem
with our payment services provider. Payment methods such as certain debit/credit
cards or direct debits can still not be used everywhere in Europe in the same manner
as at national level (no interlinking).

Actions to be taken:
Ensure the correct transposition and implementation of the Directive on
Payment Services, which aims to make
• Domestic and cross-border payments reasonably inexpensive but
also secure and practical;
• Cross-border payments as efficient as domestic payments.

Ensure that the Single Euro Payment Area (SEPA) provides concrete
advantages to consumers.
Ensure the implementation of the Regulation on cross-border payments in
Euros and extend the principle of equality of charges on cross-border and
corresponding domestic payments to cover direct debits.


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BEUC HIGHLIGHTS CONSUMER AGENDA WITH EUROPEAN COMMISSION PRESIDENT

With the financial crisis, the need to promote consumer health and safety and to give consumers
more effective access to justice, BEUC, the European Consumers’ Organisation, met with President
Barroso, on Tuesday 2 June, to call on the Commission to continue playing a key role in improving
consumer affairs. The BEUC delegation was led by President Paolo Martinello (Altroconsumo, Italy),
and included Monique Goyens, BEUC Director-General, and Willemien Bax, Deputy Director-
General.

At the meeting, BEUC presented its Consumer Pact, that outlines the main areas of consumer
relevance that MEPs should take into account once elected. To date, 270 candidate MEPs have
signed up, from 20 Member States. The Pact can be consulted at www.consumerpact.eu
“The Commission will soon undergo changes but its role in promoting the consumer interest will
remain and must remain one of its key goals. We call on the present and future European
Commission to ensure consumer interests are as much valued as all stakeholders’ interests in the
EU policy making process. More than ever, the European Commission has a duty to European
citizens to help them through this difficult time."

“We were pleased that President Barroso agreed that consumer concerns must be a priority for all
Commissioners, particularly those dealing with services, medicines, food, health, competition, data
protection or consumer policy” stated Paolo Martinello, BEUC President.


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ID: 43057
Author(s): iff
Publication date: 08/06/09
   
URL(s):

www.beuc.eu

www.consumerpact.eu
 

Created: 11/06/09. Last changed: 11/06/09.
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