On 21 June 2016, the European Banking Authority (EBA) published its annual Consumer Trends Report, which provides an overview of the trends observed in 2016, the issues that will or could have an impact on consumers and other market participants and the areas where the EBA may take any action, if needed.
The report covers all the products that fall into the EBA's consumer protection mandate, such as mortgages, personal loans, deposits, payment accounts, payment services and electronic money. It is primarily based on the consumer protection priorities identified by national supervisory authorities in the 28 EU Member States.
This year’s edition covers eight trends on which the EBA may focus its work in 2017:
- Indebtedness, including lending and related practice, household borrowing and arrears handling, as well as creditworthiness assessment. The data from the report shows that consumers in the EU gradually increased their level of debt. The EBA has confirmed that it, together with national authorities, will monitor potential consumer protection issues arising as a result.
- Banking fees and costs, including fees and charges on payment accounts and their comparability, as well as selected costs related to loans. The report states that fees and costs related to banking products tend to be one of the main reasons for consumer complaints. The EBA confirmed that further regulatory and supervisory actions to address issues related to fees and charges on payment accounts, and their comparability are expected to follow the implementation of the Payment Accounts Directive.
- Selling practices, including cross-selling and sales incentives. The report highlights the fact that unsuitable selling practices were one of the key drivers of the mortgage mis-selling in the years prior to the financial crisis in 2008/9. The EBA confirmed that it is currently assessing responses to its Consultation Paper on draft Guidelines on remuneration practices and policies of sales staff, with the aim to publish the Final Report, including the feedback statement and Final Guidelines in Q3 2016.
- Innovations in payments – this topic continues to raise concerns related to, for example, risks associated with the way consumer data is used, the lack of consumer awareness about new types of providers in the market and the risks and characteristics of new payment solutions, including the risk of fraud. The EBA confirms that it will continue to monitor innovations, such as blockchain technology and its impact on the products and services in the EBA’s scope of action, but has for now prioritised the implementation of the mandates conferred on the EBA in the revised Payment Services Directive (PSD2).
- Alternative financial services providers – crowdfunding has attracted significant attention. In its May 2016 report, the European Commission deemed crowdfunding as a largely local phenomenon so did not consider there to be a strong case for an EU level framework at this time. Nevertheless, given the potential for future cross border expansion, the Commission will continue to monitor its development.
- Virtual currencies - Amongst the concerns raised were the fact that virtual currencies remain unregulated, that consumers are unaware of the risks involved in dealing with virtual currencies, and the risk of virtual currencies being used for money laundering and terrorist financing purposes. The European Commission is due to propose measures related to virtual currencies in Q2 2016.
- Innovative uses of consumer data - the EBA issued a Discussion Paper in April 2016 on this topic and welcomes comments on the Discussion Paper until the end of July 2016, after which it will assess the responses, so as to decide what, if any, additional regulatory and/or supervisory action is required.
The EBA has confirmed that due to budget constraints, the EBA will not publish a Consumer Trends Report in 2017.