Through a Green Paper titled ‘Better products, more choice, and greater opportunities for consumers and businesses’, the European Commission has sought the views of industry and other stakeholders.
As a key action area within Capital Markets Union (CMU), it is important that the Commission looks at where improvements can be made. With the growing need for citizens to provide for their own financial security, it is particularly important that they better understand their needs for protection, investment and pension products.
Some early thinking in the Green Paper poses many fundamental questions on the functioning of the markets across Europe. Factors including competition, wealth, culture, fiscal policy and regulation have all shaped the markets across individual member states. In particular, choice and competition could be boosted by overcoming the current barriers to cross border retail financial services, especially in countries with a concentration of suppliers or underdeveloped markets.
Wholesale markets in Europe have flourished for some time operating across borders. However, the demand and supply dynamics in retail financial services are very different and need to be better understood.
In the response submitted by KPMG member firms, we focus on a number of key challenges that need to be better understood, namely understanding customer behavior and demand for services, addressing the role of regulation, building customer confidence and harnessing the potential of technology.
The Commission will publish an action plan later in 2016. We make a number of recommendations in our response, including the need to tackle cross border barriers to services, promote movement of savings into retail investments and leverage technology and digital.
A challenge for industry and policymakers alike is that after several years of intensive rule-making, many financial services firms in Europe are struggling under the weight of complex regulatory change programs. And, while much of the post crisis regulatory framework has focused on wholesale markets, the interconnectedness of business models means there are far-reaching implications on retail financial services, too.