TACD Financial Services event: Regulatory responses to the global financial crisis in the EU and US

On 27 January 2016, the Transatlantic Consumer Dialogue (TACD) organised an event on the regulatory responses to the global financial crisis in the EU and US. The event titled “Regulatory responses to the global financial crisis in the EU and US: implementation and enforcement of retail financial services regulation” was organised under the auspices of Member of the European Parliament (MEP) Sorin Moisă from the Progressive Alliance of Socialists and Democrats and took place at the European Parliament. Debates centred on the implementation and enforcement of retail financial services regulation on both sides of the Atlantic to better protect consumers of financial services. The full recording of the event is available below.

The event hosted three interactive panel discussions which aimed to: review and assess the financial services consumer protection regulation adopted in response to the crisis; assess the activity of market surveillance authorities as well as public and private enforcement and identify what remains to be done to better protect consumers and ensure effective enforcement of financial regulation on both sides of the pond.

Lord Jonathan Hill, EU Commissioner for Financial Stability, Financial Services and Capital Markets Union opened the event. In his keynote, Commissioner Hill referred to measures taken at the European level to strengthen consumer protection, including the establishment of supervisory authorities to promote transparency and fairness and passing of new legislation to enable consumers to better understand financial products. He also talked about ongoing efforts to create a European single market for financial services, referring to the Consumer Financial Services Green Paper launched for consultation in December last year.

A general idea drawn from the panel discussions was that consumers of financial services need a high level of protection and proper information that would allow them to make educated decisions regarding the financial products they are buying and associated risks.

DSC_0683With regards to regulatory responses to the financial crisis emphasizing a consumer perspective, the discussions revealed there are major differences between the EU and U.S. in terms of priorities: in the U.S. the Consumer Financial Protection Bureau (CFPB)  – a supervisory, educational and investigative authority to deal with consumer protection- was created as part of a comprehensive reform of financial regulation in 2010, while in the EU, the focus has been on the implementation of the G20 agenda and consumer legislation was only adopted at a later stage.

It was general consensus that financial services regulation still needs a great deal of improvement on both sides of the Atlantic to fight against conflict of interests, regulate debt collector practices, regulate credit bureaus or, at European level, to better harmonize legislation.

The importance of proper enforcement was also highlighted. An important problem identified at European level was the lack of collective redress mechanisms. The U.S. collective redress, or class action system, on the other hand, despite being limited by the American failure to restrict unconscionable forced arbitration contract clauses, continues to work very well in helping consumers get appropriate redress and ensuring greater compliance with important consumer protection regulations. U.S. panelists noted, however, that the U.S. system is often wrongly disparaged by corporate lobbyists in the EU seeking to block establishment of a comparable regime.

Moving forward, it was suggested that the EU should play a stronger role in ensuring that minimum consumer protection standards apply all over Europe, especially since not all EU members have set up national authorities that properly protect consumers. On the issue of restoring confidence, several speakers pointed out the importance of consumer access to suitable financial services that meet their needs as well as to independent quality advice to enable them to make informed choices.

The final agenda for the event can be found here.