EU making life easier for firms at the expense of customers

The Financial Services Consumer Panel today is calling on the EU to simplify the system for consumers buying financial services across the EU, by allowing them to claim for redress through their home regulatory system.

The Panel claims the current system is fundamentally flawed, as all the Commission's focus so far has been to make cross border trade easier for firms rather than consumers. At the moment, if consumers buy financial services across borders, they will only get redress for any problems through the regulatory system where the seller was based – there are currently 27 different regulatory regimes and systems of redress in the EU. The whole structure of home/host regulation and redress will make life easier for firms but with huge complications for consumers.

The Panel is calling on the EU to develop arrangements whereby consumers do not need to understand the regulations in a firm's home State before buying a financial product across borders. We would like to see the EU require that firms can only sell cross border if they subscribe to the consumer's home redress scheme. This would mean consumers could get effective redress through their home ADR (Alternative Dispute Resolution) scheme.

John Howard, Chairman of the Financial Services Consumer Panel said: "Financial services firms must be made to provide easily accessible systems of redress to their customers in other EU countries if they want to sell across borders. We believe the simplest and best way would be for consumers to use their home systems to obtain compensation or redress."