AMI was broadly pleased with the objectives of the paper, but has raised concerns over consumer appetite for cross-border lending, lack of credit information and other natural barriers to cross-border advice.
AMI also highlighted the critical role of the intermediary in the UK market, as a competitive force for consumer benefit driving innovation, and the distribution channel this provides for new cross-border market entrants.
AMI highlighted two main reasons for the absence of cross-border providers – lack of consumer demand and lack of credit information available cross border. However, AMI also observes that currency-risk, language, taxation and social welfare differences all impact on potential cross-border lending.
Chris Cummings, director-general of the AMI, said: “The UK has the most developed financial services market in Europe. This is an opportunity for Europe to learn from the successes of the UK market, in particular the value of advice and crucial role of the intermediary.
“Whilst we are uncertain that there is real consumer appetite for cross-border lending at present, in order for lenders and intermediaries to be able to make clear assessments of risk access to credit data is critical. Improved cross-border access to credit information would benefit this.
“However, natural barriers such as currency risk should not be overlooked, nor factors relating to taxation and variations in social welfare and of course language.”
Key points raised by the AMI:
- The intermediary market in the UK is the most advanced in Europe and demonstrates the importance and value of advice
- The current lack of credit data is the single largest factor stopping lenders and intermediaries accurately assessing risk for cross-border consumers, although AMI remain to be convinced by the consumer appetite for cross-border lending
- The Commission should not underestimate the financial cost of fraud and potential impact on consumer confidence if credit data isn’t securely managed, and must ensure all credit bureaus to operate at the highest standard
- Europe must demonstrate the need for regulation by independent cost/benefit analysis prior to introducing new Directives
- Evaluation needed of consumers desire to use cross border financial services
- The existence of a strong and highly visible Ombudsman does enhance consumer confidence– all member states should be obliged to ensure an effective system is in place.
