Volume: 11 Issue: 4
The European Commission (‘EC’) published on 23 March 2017 its Consumer Financial Services Action Plan (‘Plan’), which aims to increase access and choice for EU consumers in the area of financial services, and which features a significant focus on technology.
“The national legislators and regulators tend to focus on their territory of competence which is why there are still so many country-specific rules in financial services law. The Plan may help to focus more on the big picture on the way to a real harmonisation of the rules,” explains Lutz Auffenberg, Attorney-at-Law at Winheller.
Noting that presently only 7% of consumers in the EU buy financial services from another Member State, the Plan identifies three strands of work towards the realisation of the EU Single Market for financial services, namely clearing legal and regulatory obstacles facing businesses looking to operate cross-border, developing innovations in the digital space to remove barriers - such as through business’ use of electronic identification and trust services to identify customers - and increasing consumer trust and empowerment, for instance through making cross-border non-euro transactions cheaper. “With a view to improving customer experience, the pressure on incumbents will remain high or even increase,” said Dr Carsten Lösing, Partner at White & Case LLP. “This is for example expressed in the EC’s requests for lower charges on non-euro transactions, more transparency in currency conversion, increased consumer protection rules, easier product switching, digital identity checks, better creditworthiness assessments and support for new competitors such as FinTechs.”
The EC highlights that the 4th Anti-Money Laundering Directive allows for the use of electronic identification means under the EU Regulation for the electronic identification and trust services for electronic transactions (‘eIDAS Regulation’) as tools to meet customer due diligence requirements. The EC explains that it is, inter alia, working on testing the ability of banks to identify customers cross-border using e-ID means, through its Connecting Europe Facility. Dr Lösing believes that the Plan’s exploration of how the eIDAS Regulation could be utilised by banks to engage with customers at a distance “addresses the increased need for a widespread use of distance/electronic identification and contracting. Cross-border use of electronic identification and the use of electronic identity schemes, as set out in the eIDAS Regulation, would make it possible to open a bank account online while meeting the strong requirements for customer identity proofing and verification for know-your-customer or customer due diligence purposes.” “The most important point is the stronger promotion of the use of electronic identities and signatures,” adds Auffenberg. “Regulators as well as firms are currently still used to paper-based identity/signature-proofs. Firms and regulators must be encouraged to develop electronic alternatives in digital times.”