The retail banking sector inquiry began in 2005. Since then DG COMP has paid attention because of: the highly fragmented market; concentrations harming consumers in certain areas; and self-regulation generally not fulfilling its potential.
Kroes discusses some of the Commission’s competition work over the last five years, with particular focus on sector inquiries.
When talking about the retail banking sector inquiry, she said the following facts should be borne in mind:
· The crisis showed us that the whole financial sector was not functioning as it should.
· DG COMP sector inquiry into retail banking - which the Commission began in 2005 - gave us hints about the banking situation. A fragmented market; concentrations harming consumers in certain areas and self-regulation generally not fulfilling its potential. Those hints, combined with the early learning we received from the cases of Northern Rock and the German Landesbanken, are two of the key reasons why DG COMP were able to respond so effectively from September 2008 and the financial crisis unleashed its full force.
· Credit rating agencies have been investigated. Kroes was shocked to learn, for example, that in 2008 these agencies gave triple AAA ratings to a mere twelve companies worldwide; at the same time they gave AAA rating to 64,000 financial products. It’s clear now that their sector wasn’t working as it should have.
· Many banks are realising they need a greater focus on retail banking, and we have a better understanding of how to help them move in that direction. DG COMP has continued to apply our new knowledge for the benefit of consumers. In particular, she mentioned the work to reduce Multilateral Interchange Fees (MIFs) needs to be spelt out, and the support for strengthening the Single European Payments Area.
· The crisis also underlined the social importance of financial institutions. It is essential to avoid creating a banking divide between citizens; the Commission must make sure that each citizen in Europe has access to basic banking services.
© European Commission
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