BIIA European Institutional Monitoring 150SUMMARY

Yet again FinTech is hitting the headlines in Brussels with the Committee of Economic and Monetary Affairs (ECON) holding a public hearing on the subject. We have also seen further opinions coming to the surface on creditworthiness assessment and the role credit bureau take. Some of the comments made in the European Parliaments resolution on the Green Paper on Retail Financial Services are somewhat worrying and whilst they are not necessarily acted upon by the Commission need to be carefully watched. Which is what we will be doing.

For information there will be one last update before the year end (on 19th) with the next one after that being on 9th January.

KEY AREAS OF ACTIVITY

*         EUROPEAN PARLIAMENT RESOLUTION ON THE GREEN PAPER ON RETAIL FINANCIAL SERVICES GREEN PAPER

On 22 November 2016, the European Parliament adopted a resolution on the Green Paper on Retail Financial Services. The resolution outlines the European Parliament’s position and demands to the European Commission on policy measures that the Commission should propose in its Action Plan on Retail Financial Services, expected to be published in Q1 2017. Importantly for BIIA, the European Parliament calls for a closer scrutiny and possible regulation of creditworthiness assessment and of activities of credit bureaux.

In particular, paragraph 52 of the resolution states that the European Parliament: ” Calls on the Commission to analyse what data are necessary to enable lenders to assess the credit-worthiness of their customers and, on the basis of this analysis, to introduce proposals for regulating this assessment process; calls on the Commission to investigate further the current practices of credit bureaux in relation to the collection, processing and marketing of consumer data with a view to ensuring that they are adequate and not detrimental to consumers’ rights; calls on the Commission to consider taking action in this area if necessary”

The full text of the Resolution is available here<http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P8-TA-2016-0434&language=EN&ring=A8-2016-0294>.

*         EUROPEAN PARLIAMENT’S ECON COMMITTEE HEARING ON FINTECH – 29 NOVEMBER 2016

On 29 November 2016 the Committee of Economic and Monetary Affairs of the European Parliament (ECON) held a public hearing on FinTech in preparation of the drafting of an own-initiative report on these technologies and how they will impact the financial sector. No information on the expected timeline for the report has been provided, however during the event the speakers discussed main concerns around the development of Fintech, including:

?  Security and safety often used as excuses, creating obstacles to innovation
?  Excessive regulation that could halt innovation
?  Risk of “Know-Your-Customer” requirements becoming too burdensome for companies
?  Fragmented regulation across Member States (scepticism on the benefit of directives as a tool to harmonise rules in the EU)?  Possible adoption of a one-size-fits-all approach will not work well
?  Digital illiterate people could be subject to higher costs of financial services in the future
?  Automated advice: if inaccurate could lead to negative outcomes for consumers
?  Big Data: it poses serious data protection concerns (BEUC raised the example of how data on literacy of someone’s friends on Facebook could affect decisions on creditworthiness)
?  Distributed ledger technologies: requires close monitoring and could pose threats to the stability of the financial system

BIIA will keep monitoring the developments on the own-initiative report and will keep you informed.

Regards
Neil

Neil Munroe
Director
CRS Insights Ltd
e: neilm@crsinsights.com<mailto:neilm@crsinsights.com>
m: +44 (0) 7710 844518
p: +44 (0) 1923 284604
Skype: neilmcrs

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