The study finds that the reasons for financial institutions engaging in cross-selling practices are commercial strategy, risk reduction and cost efficiency. Consumers are seen as having no choice but to purchase products tied to conditional access.The Commission wants to avoid this happening.
Building on the work undertaken by the Commission as part of the sector inquiry into retail banking and the results of the public consultation on the Green Paper on the Retail Financial Services in which tying was identified by financial services users as a key barrier to the integration of EU retail financial services markets, the Commission announced its intention to study tying and other potentially unfair practices in the field of retail financial services to measure their impact and to understand why they are used. Against this background, the Commission had commissioned an external study on Tying and other potentially unfair commercial practices in the retail financial services sector.
This consultation seeks to collect stakeholders’ reactions to the results of the study as well as to the questions raised in the consultation document, such as the need to address the issue of tying and other identified potentially unfair practices on the EU level.
According to the study, the main reasons for financial institutions to engage in cross-selling practices are commercial strategy, risk reduction and cost efficiency. The main reason for financial institutions to engage in conditional sales practices is risk reduction. Consumers are seen as having no choice but to purchase products that are tied or subject to conditional access. Concerning other cross-selling and conditional sales practices, consumers cite convenience as well as financial and other advantages as reasons to accept these practices.
The results of the test developed by the contractor to assess whether the observed practices are likely to prove anti-competitive or unfair to consumers and SMEs suggest cases of tying practices that are anti-competitive as well as harmful to consumers and SMEs as they reduce customer mobility, price transparency and the comparability of providers on the market, increase switching costs and negatively affect consumer confidence. The test points at certain product combinations that emerge more frequently in a number of Member States. It also finds that mixed bundling often has a similar negative effect on consumers as tying, as consumers are often put in a situation where they have to trust the advice of their counterparts and find it costly to shop around for alternatives. Amongst the other potentially unfair practices, some are unlikely to provide efficiencies to customers, and are construed as being almost per se unfair.
In terms of legislation, the study found that national legal systems are fragmented with only twelve Member States having adopted specific solutions. Some of these Member States have enacted far-reaching prohibitions. However, even in those Member States where tying is officially banned, bundling replaces it with practically the same effects.
The study suggests that while existing EU acquis (namely the Unfair Commercial Practices Directive6) can be considered as covering some of the practices, the current legal uncertainty surrounding its interpretation prevents effectively addressing the issue at stake.
Deadline for comments is on 14 April 2010.
© European Commission
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