Monday 12 July 2010: European Commission proposes package to boost consumer confidence in financial services

The news:

As part of its response to the crisis, the European Commission will adopt a package on 12 July to boost consumer confidence in financial services by improving protection for insurance policy holders, bank account holders and investors in the EU. It will include:

• A proposal to improve deposit-guarantees in European banks: Deposit guarantee schemes ensure that bank account holders get their savings back in case of bank failure. Currently, there are 40 such schemes operational in the 27 EU countries. Sometimes, schemes are different even within the same country. The Commission is now coming forward with proposals to ensure that all banks throughout the EU will provide a uniform level of protection to depositors. Furthermore, the Commission's proposal will ensure faster payouts in case of bank failure, better information to account holders and sound financing of the schemes.
• A proposal to enhance EU investor compensation schemes: Investor compensation schemes aim to protect investors against the risk of losses in the event of an investment firm's inability to repay money or return assets held on behalf of their clients. Currently there are 39 Investor Compensation Schemes in 27 Member States for investors with varying levels of protection. In order to ensure an adequate level of protection in the whole EU, the Commission will propose minimum rules on how these protection schemes should function. The aim is to bring more clarity to the current system faster payouts, a higher level of compensation and better information for investors.
• A White Paper on Insurance Guarantee Schemes: Insurance Guarantee Schemes (ISG) provide last-resort protection to consumers when insurers are unable to fulfil their contractual commitment, offering protection against the risk that claims will not be met in the event of a failure of an insurance company. Currently, with no common EU rules on ISG in place, only 12 of the 27 Member States operate one or more such schemes. The White Paper will set out ideas for a coherent framework in the EU on IGS in order to remedy existing loopholes and inequalities.

The background:

Recent market turbulence has confirmed the need to swiftly complete the reforms necessary to ensure the soundness and stability of the financial system at European and global levels. In its Communication of 2 June 2010, Regulating Financial Services for Sustainable Growth, the Commission committed itself to tabling the remaining proposals for financial reform in the next six to nine months. This package is part of that commitment.

The event:

Press conference with Internal Market and Services Commissioner Michel Barnier in the Berlaymont press room at 11.30, followed by a technical briefing immediately after the midday briefing.

The sources:

Web site for Internal Market and Services:

ec.europa.eu/internal_market/index_en.htm

Web site of Commissioner Michel Barnier:

ec.europa.eu/commission_2010-2014/barnier/index_en.htm

The contacts:

Chantal Hughes +32 2 296 44 50 chantal.hughes@ec.europa.eu

Carmel Dunne +32 2 299 88 94 carmel.dunne@ec.europa.eu