European Consumers' Organization’s (BEUC) suggestions for responding to the financial crisis
- Supervision and regulation must be enhanced
- More powerful and independent national supervisors are needed everywhere in the EU.
- These supervisory bodies should pay particular attention to monitoring advertising, the content of financial information, unfair practices and take charge of so-called early warning systems directed at consumers.
- Sector-specific supervisory authorities charged with monitoring banking, insurance and investment products need to be merged in response to integration in the way financial institutions operate and offer combinations of products to consumers. Cooperation between national supervisors and regulators must be strengthened.
- There is also a need for a supervision authority in charge of control of financial institutions operating at cross-border level. Regulations on deposit guarantees must be harmonised and valid even when deposits are offered to citizens of other countries.
- Binding rules at EU level are necessary, as recommendations and self-regulation have shown their limits especially in the case of financial services – regulatory gaps must be closed.
- Quality of information must be improved
- Consumers must be provided with information well in time before the contractual decision and the information needs to be short, understandable, structured and relevant.
- A risk indicator must be created for investment products to convey key characteristics such as whether the invested capital is guaranteed.
- Financial services should be more standardised to facilitate comparisons of key features between products.
- Stricter rules on marketing and advertising for investment products must be introduced.
- Financial advice must be increased
- Consumers need independent advice, which is not directly related to the context of selling financial services. At present, consumers tend to get advice mainly from banks and other businesses selling financial services. There is a lack of organisations offering independent advice everywhere in Europe.
- Consumers must be provided information on the reliability of both investors and those offering advisory services.
- Greater focus on responsible lending
- Risks associated with variable interest rate loans need to be alleviated, e.g. by capping variable interest rates, prohibiting promotional rates used initially to attract customers and striving for improvement in the quality of information on loans in general.
- The creditor should be liable for the consequences of irresponsible credit decisions, as in e.g. Belgian legislation, rather than having the consumer bear the costs.
- Crediting activities that seriously endanger the solvency of consumers (foreign currency credit, credit secured with mutual funds and credit card products) must be regulated from the viewpoint of consumer protection.
- The implementation of the Consumer Credit Directive must be evaluated with a focus on the level of consumer protection.
- Legislation on financial intermediaries must be harmonised
- Payment services must be made simpler and easier
- Monitor the implementation of the Payment Services Directive to ensure that its objectives are reached – domestic and cross-border payments should be practical, reasonably priced and secure.