Consumer rules sovereignty row threatens financial services deal

Date: 08/03/01

A BATTLE over consumer protection is threatening a deal on new rules to govern the electronic marketing of financial services across the EU.

Insiders say some member states want the right to impose national restrictions on foreign firms involved in such 'distance selling' while others argue there should be a high level of harmonisation with few domestic checks. The European Commission unveiled proposals two years ago calling for EU-wide rules on the marketing of products such as bank accounts offered to foreign customers.

But France, Belgium, Italy, Spain and Portugal will argue at a meeting of single market ministers on Monday (12 March) that national consumer rules should take precedence.

"The Swedish Presidency are going for an agreement but my view is that there won't be one," predicted one diplomat involved in negotiations on the issue, adding that a deal was now unlikely to emerge until June.

He said a key issue was the linkage between this draft directive and another law agreed last year on e-commerce. Those rules call for member states to allow foreign firms to market their products abroad provided they meet national rules and regulations.

Although the directive allowed member states to opt out of setting consumer protection measures, Internal Market Commissioner Frits Bolkestein issued a policy paper last month arguing that such differences from one country to another should be eradicated because they pose a barrier to trade.

Frédéric de Brouwer, e-commerce expert for the European Banking Federation, says full harmonisation is by far the best way to regulate the sector. Otherwise, he insists, member states would erect whatever rules they liked, firms would need to employ a legion of lawyers to sell their products across the Union and consumers would be forced to pick up the bill.

De Brouwer fears member states will eventually agree a compromise that falls short of the Commission's original proposal, with national governments given the right to impose extra rules in some circumstances.

"It would be a real pity because it is a mess at the moment," he said. "We need this directive - but consumers need it more than we do."

A battle over consumer protection is threatening a deal on new rules to govern the electronic marketing of financial services across the EU.