ECRI: can bundled and tied financial products harm consumer welfare?
22 February 2010
The European Credit Research Institute newsletter includes an article on whether bundled and tied financial products can harm consumer welfare. It also contains news on regulatory affairs and recent developments in Europe and the US.
In the article, Sarah Cheliout, researcher at the Centre for European Policy Studies (CEPS), analyses the Commission consultation on tied financial products and says that:
First, it provides a two-fold perspective. The analysis focuses on both consumer protection and competition issues. Indeed, the study provides an anti-trust test on the one hand, reflecting the potential anti-competitive situations encountered in each member state, and, on the other hand, a consumer impact test, stressing critical cases of consumer harm.
Second, it provides us with the first stock-take and quantified analysis of tying, bundling, conditional and unfair practices encountered in retail financial services. For that matter, the study calls for a next round of similar data collection exercises, production of updated inventories of practices in the upcoming years. A comparison between present and future findings would reveal the emerging strategies undertaken by financial providers, and allow for a better understanding of directions taken in reaction to the financial and economic crisis. The examination of successive impacts of practices observed in retail markets through time can illustrate the mutations and optimal reactions adopted by the industry to survive the financial turmoil; and perhaps to enhance their position towards other providers or consolidate their relationships with consumers.
On Financial Education, ECRI presents its last conference and says that lawmakers of the European Union underlined the importance of efforts aimed to increase levels of financial literacy among EU citizens, depicting financial education as a ‘never-ending task’ that required the attention of public authorities, consumers and the industry alike.
“Financial education is in the interest of the EU consumers, the EU economy and the EU society as a whole”, said Gianni Pittella, Vice-President of the European Parliament and member of the Committee on the Internal Market and Consumer Protection, at a gathering of EU officials in the European Parliament on 27 January, sponsored by payment system provider Visa Europe. “It is crucial for consumers to understand the risks related to credit and other financial services”, he continued, “and the European Parliament is doing all it can to work with Member State authorities on common financial education principles”.
© ECRI
