During its July plenary session, the European Economic and Social Committee (EESC) adopted two opinions to reinforce consumers’ rights against unfair and opaque financial and mortgage-related practices. New financial products and a fragmented market have created a confusing situation for consumers. The EESC is determined to put an end to it.
The financial products offered to consumers are undergoing a period of great change, and the mortgage market has dramatically affected thousands of borrowers in the EU. The EESC wants to create a new framework whereby consumers and borrowers are aware of which products they engage in and their rights and remain fully protected. Two new pieces of legislation should help to harmonise the EU mortgage market and explain to consumers their rights concerning new financial products.
EU mortgage market needs a single market approach
“Different rules apply in different countries. Following the subprime crisis, citizens want a fair market and to be protected by the law. We should definitely rise to the occasion and provide them with the necessary tools for it”, expressed Reine-Claude Mader (Various Interests’ Group, France), rapporteur of the EESC Opinion on Credit agreements – residential property.
The EESC supports the Commission’s objective of restoring consumer confidence and financial stability through an efficient and competitive single market. However, the proposal submitted does not go far enough to achieve that goal. According to the EESC opinion, a high level of consumer protection should be achieved, borrowers should be adequately informed about possible risks concerning their operations and all financial institutions should stick to their corporate responsibility. Finally, measures aimed at ensuring responsible lending are finally not enough in themselves to improve market conditions and help to prevent over-indebtedness.
Financial education policies, at the forefront of consumers’ protective measures
“Aggressive and opaque financial products have put consumers in a tricky situation. The increasing complexity of the financial market makes it of utmost importance to prepare citizens. The better consumers are informed, the better use of financial services they will have” said Carlos Trias Pintó (Various Interests’ Group, Spain), rapporteur of the EESC Opinion on Financial education and responsible consumption of financial products.
The EESC is decided that financial awareness should be improved through education, which should especially be reinforced in school curricula. Given the fragile position of the retail consumer, the complex financial instruments and the occasional misbehaving of the financial sector, supporting the needs of financial-product users should be the mainstream approach. It is the responsibility of decision-makers and stakeholders to inform and educate consumers properly on financial products.