Speech by Commissioner McGuinness at the online Financial Services User Group meeting

Thank you for the warm welcome, I’m delighted to be with you.

And good afternoon to colleagues who are online.

I mean the reason why it’s good to be with you is that you represent the financial services users, the consumers, the retail investors and SMEs.

And as you know, and I hope you’ve realised, the user or customer, of financial services is really something that I’m very attentive to.

Because financial services should, above all else, serve the people who need them.

And so the advice you give, your letters, your opinions, are very much part of and important to the work we do.

So I want to talk a little this afternoon about what we’ve done in this mandate, whether its financial literacy or consumer-focused regulation.

And maybe look ahead as to the next mandate.

And again, I look forward to the questions from colleagues.

So I did always underline at the very outset of my mandate the importance of financial awareness.

I sometimes use the term, I like people to be ‘financially savvy’ and I think it’s really important not just for the financial side of our lives, but for society generally.

Education is not a competence of the Commission but it’s been really interesting to see how finance ministers are very aware of this now being important.

And they’re also communicating with ministers across social areas, where if you are aware of your finances and take control of them, it has a wider impact both on the individual, on family well-being and indeed on societal wellbeing.

And I do think if we can tackle this effectively, simple things which we might understand in this gathering around budgeting, saving, investing, but they’re not so simple actually and many people don’t have access to information at a time when they might need it.

And what I worry more about is that many of us don’t have the confidence to ask the right questions and I think that is key for a strong retail investor culture, which we’re trying very hard to invigorate in the European Union.

I don’t want us to become experts. I think you cannot be an expert in everything, and you cannot be an expert in every area of the financial system.

But we shouldn’t be so reluctant or so worried sometimes about when we’re going in for our first mortgage, or borrowing for a car, we should know what our options are, what to ask about.

So I think it’s about empowerment, I think empowerment is really key and Member States and the industry and all of us have a part to play here.

It won’t happen overnight. So that’s where the conversation around this needs to be, I think it’s a constant, we need to say and talk about at every occasion.

But we’ve started the conversation and I do think it’s much strengthened as well with our work on the OECD side. We also have these frameworks, they’re available for Member States and stakeholders and already they are being used so that’s really important.

I do want to mention one conference which really gladdened my heart and you know, we do so many conferences, that I have to thank the Belgian Financial Services and Markets Authority for the high level conference on financial literacy and inclusion.

It really brought together a whole range of stakeholders from beyond the European Union, clearly from Member States.

And there was great participation, people remained till the end, a good sign of any conference.

And it was really good because it helped what followed which was a big discussion on financial literacy at ECOFIN.

So finance ministers taking ownership and literally giving some direction around this and I think that was really significant.

All of these things may seem small, but in the overall, they’re not.

Because we will soon see Council conclusions adopted which will underline the commitment of ministers to this topic of financial literacy.

So I’m really happy about that. I don’t expect a miracle, I don’t expect it overnight, but I do think it’s now embedded in the culture of our conversations.

So it isn’t the only piece of this complicated puzzle.

Financial literacy matters but there are other things we want to look at and review.

And if I take for example the Retail Investment Strategy, I’m sure you’re all well-interested in this topic.

This was based on an assessment of a wide range of legislation relating to investment.

The aim of the strategy, basically, quite simply is to ensure that people are empowered to make the right decisions for them, so what meets their needs and do they have all the information.

Also, that consumers, citizens are treated fairly in the process, that they are duly and properly protected when engaging on capital markets.

And the goal, for me, is to have retail investors that trust capital markets, and think the trust word matters in finance, full-stop.

It particularly matters in areas where it seems opaque or we’re not clear about what we’re buying or what are the costs, etcetera.

Getting a fair return on their investment is important, in order to allow for preparation for long-term futures, so long-term investments leading to retirement, for example.

So I think over the medium term, we want to increase retail investment in capital markets.

I know that you have been working on these topics and provided two important and supportive opinions.

So again, huge appreciation for that work.

While the report voted in ECON, as you know, in late March did considerably amend our proposal, we’re not at the end of the process just yet.

But as you know it’s been quite a heated discussion before and indeed during.

Just to recall that last July I put together a roundtable bringing the industry figures, consumer stakeholders together, to reflect on new ways, additional ways to improve trust in capital markets, going beyond the regulatory piece.

So this is an entirely industry-led process, separate from as I say the legislative files.

The second roundtable took place this morning, so it’s really timely that we’re having this conversation and the industry presented a discussion paper.

Look you can read my speech, it’s been published, it’s quite crisp, I made it very clear – in essence my message was that it is good to have this forum, and I suppose that’s a positive.

What was really nice to hear this morning was that there is an appreciation for the value of getting people together.

But the report produced is not enough to change the status quo around retail investment and investors’ needs and therefore I suppose it has not gone far enough and it needs to be re-looked at.

I want to reiterate that, if we want to achieve our goal of increasing trust of retail investors and increasing retail participation, we need to be much more ambitious in our approach.

I am ambitious on this topic and I’m urging and appealing to other that they also be ambitious.

Because it’s important that the issue does not go away, and I think you have an important role to play to maintain the focus on this topic.

So you need patience, resilience and to keep focus.

Because retail investors need a system they can trust, and I’ve used that word repeatedly, and that they feel delivers value to them.

Again if I’ve looked at what’s happened during this mandate, we have also adopted other pieces of legislations or proposed legislation that will benefit consumers.

So I think the clearest is the Instant Payments Regulation.

It entered into force earlier this week.

Instant payments are the new normal, and they are provided now at the same cost as ‘slow’ credit transfers.

And this is an important mechanism because in the past we had money lying somewhere, nothing was instant.

What I would add, we’re also looking at consumer protection against fraud in the work we’ve done in this proposal or this legislation, like checking that the IBAN and the name on the account match.

We made proposals on payment services that are currently under negotiation with the co-legislators.

And they will bring payments into the digital age, improve consumer protection and competition in electronic payments.

A word around the Digital Euro proposal. Again it’s with the Parliament and the Member States.

It’s about giving people and businesses an extra choice – the digital euro – allowing them to pay digitally with a widely accepted, cheap, secure, resilient form of public money in the euro area.

The digital euro will foster digital and financial inclusion by allowing people without bank accounts to make or receive digital payments, and to access basic features free of charge.

Now it’s really important that the second piece of this package is discussed because we complemented the digital euro proposal very deliberating with strengthening the legal tender status of euro cash.

And this was to ensure the continued acceptance and availability of cash – I think this is an important issue for consumers.

So cash and the digital euro complement one another.

And the digital euro would not replace cash, but again complement it.

And there are lots of discussions in many Member States about the role of cash in transactions.

The role for some members and groups in society around budgeting.

So I think you are all very aware of them.

One piece of legislation – it seems so long ago since we talked about it – is the Markets in Crypto Assets, so the MiCA proposal or legislation. First significant global piece of legislation on crypto-assets.

Crypto markets up until this were very unchecked, uncregulated.

Lots of people would have found themselves out of pocket because of crypto’s volatility and indeed many scams in the area as well.

So to use the old Western analogy, the sheriff has arrived in the land of crypto, this Wild West.

And I think it’s something that will constantly evolve over time as that area, as this sector evolves.

So what about enforcement? Because it’s one thing to talk about proposals and legislation.

But of course financial regulation is about putting the right rules in place.

But again making sure that they don’t just sit on a shelf, but they’re actually effectively enforced.

This is the responsibility of Member States, to apply EU law.

But we in the Commission monitor closely this both timely and correct transposition and application of EU law.

If it’s necessary, we start informal dialogues with the Member States or indeed launch infringement procedures.

And this includes situations, where as a result of incorrect or untimely application, consumers are deprived of the benefits or protection stemming from EU law.

But we in the Commission can also take other initiatives as well, and where necessary we start informal dialogues or even infringement procedures as a last resort.

And one example which I suppose I’m passionate about because it came to my attention while I was still a Member of the European Parliament.

And that is the reality that the SEPA regulation prohibits IBAN discrimination.

However, in reality, IBAN discrimination continues to exist.

And we have taken a number of measures to address this – we are working with the Member States that have problems and we are raising it directly with companies and public administrations to really alert them to the facts of the situation.

Which is this law has been in place for a number of years and it has to be applied.

We’re also looking at the other side, the user of financial services. And we’re launching information campaigns.

So just in March, a new social media campaign targeted at specific groups that are more likely to encounter IBAN discrimination, so Erasmus students, expats, international researchers, basically telling them their rights, that they can use their euro EU bank accounts anywhere in the single market.

And that’s an achievement of the single market that we shouldn’t even be discussing.

But rest assured that I’m hoping that before I end my days and months perhaps in this role, that this will be a thing of the past.

And we can focus on other topics.

So if I look ahead.

Obviously the Commission mandate is coming to an end, but there’s still lots of work to do, so there’s nobody going home early from the office.

We are not at the end of this journey when it comes to users of financial services.

I mentioned the ongoing legislative negotiations on the Retail Investment and Payment Services and this needs to be finalised.

The financial literacy piece will continue.

And the big challenges lie ahead, including engaging private investment like capital markets in financing the digital and sustainable transition.

You know the figure that Mario Draghi speaks of, €500 billion, to have this transition.

We have the targets. We perhaps have the pathway. But the funding is something that needs to be secured.

And also the world we live in is evolving, not always in a good way, and financial regulation needs to continue to evolve and to adapt.

Again your input into policy making from the consumer perspective is crucial and that will continue.

It is heard loud and clear by the Commission and beyond.

And I’m really just glad that we have this engagement with you, if only to reassure.

Because there is sometimes a view that only certain stakeholders are listened to.

I hope that you appreciate certainly from my side, perhaps coming from Parliament and realising there are other voices, that you are heard.

And I think we have managed to do some good work in this mandate.

I would not be applauding myself on this or clapping myself on the back.

I think an awful lot more needs to be done.

But if we have put a sign in the right direction, I’m very happy about that.

So those are some opening remarks, and happy now to hear questions and indeed comments.


Mairead McGuinness – COMMISSIONERFinancial services, financial stability and Capital Markets Union

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