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The fragmentation of Europe’s financial services market, with different consumer protection laws in each country, is penalising the continent’s economic growth and preventing consolidation between banks, warned the European financial services round table in its report. Michel Pébereau, chairman of BNP Paribas, the French bank, and head of the EFR’s working group on consumer protection, said the fragmented market meant consumers overpaid for banking and insurance services in most countries.
The report calls for the EU to force countries to harmonise “essential” areas of consumer protection, such as rules on product information, cooling-off periods, investment advice, customer compensation and flexibility of innovation. “The fundamental reason why integration has not happened is the disparate nature of consumer protection rules in different European Union countries,” said Mr Pébereau.
Mr Pébereau said Europe had fallen behind the US in the consolidation of its banking sector and, as a result, lost ground in the size of its biggest financial groups. “The possibility of synergies between banks and insurers in Europe is nowhere near the level you find in the US,” he said. “The big European countries are blocking integration on the basis of protecting supposed differences of behaviour between national consumers. But there is no difference between consumers, at least in countries with the same standards of living.”
He said the “myth” of cultural differences between consumers was “the best form of protectionism” as it allowed governments to defend banking markets from foreign competition. The EFR’s members, including Barclays in the UK, Deutsche Bank in Germany, UniCredit in Italy, UBS in Switzerland, BBVA in Spain and ABN-Amro in Holland, would lobby their own national governments as well as pushing for change in Brussels.
By Martin Arnold