06 June 2006

Speech Kroes: Tougher competition in retail financial services

Speaking at the Eurofi Conference on Retail Financial Services in Brussels, Commissioner Kroes laid out the Commissions’ steps to strengthen competition in financial services markets.

Competition in the retail banking sector is lagging behind. This is why the Commission decided - in June 2005 - to launch a major sector inquiry into retail banking. That was one year ago and we have certainly been busy.

The Commission report on payment cards identified markets that are fragmented along national borders. It indicated weaknesses in competition and a range of market barriers.

Alongside payment cards, we are looking at the wider market for current accounts and related services - such as savings accounts and loans. Next month we will publish our preliminary report on current accounts and related services, for consultation.

Banking mergers, national authorities intervened in order to prevent the deal. In some Member States, the Commission considers that current banking legislation lacks procedural transparency and creates legal uncertainty. Therefore the Commission – led in this area by Charlie McCreevy – is taking action.

In the field of state aid the Commission seeks to strengthen competition in banking by ensuring a level playing field for all financial institutions.

In the insurance sector the highlight of our work here is the sector inquiry into business insurance. We decided to launch this inquiry to assess whether the high level of cooperation between market players is consistent with healthy competition.

In the field of securities trading, competition policy has a vital role in helping to build an integrated European financial market. And the potential prize is large. It is estimated that the current fragmentation of capital markets costs the EU economy at least 1% of GDP. The Commission believes that competition between trading platforms is both possible and desirable.

Full speech

© Graham Bishop