AFM and AMF call for improvements in cross-border supervision

 Key points

• Easier access to European markets should not lead to diminished consumer protection
• Many high-risk products are offered on a cross-border basis
• The current division of supervisory responsibilities has limitations
• AFM and AMF call for strengthening the role for national competent authorities 

Easier access to European markets should not lead to diminished consumer protection

Digitalization combined with European harmonization of rules have made it easier for many European consumers to use financial products and services across borders. This is a positive development as it gives consumers access to a wider and more competitive range of products and services. However, it is important to ensure the cross-border provision of financial services does not lead to diminished consumer protection.

Many high-risk products are offered on a cross-border basis 

Consumers in, amongst others, France and the Netherlands are increasingly targeted by financial firms from other EU Member States using a European passport.  Many firms selling high-risk products use this method to provide their services. The AFM and AMF receive a high number of complaints from consumers about these firms and their practices. It has proved to be difficult for national competent authorities to effectively supervise the conduct of these firms.

The current division of supervisory responsibilities has limitations

In the current supervisory system, the main responsibility for conduct supervision lies with the home competent authority in the country where the firm is based. However, the supervisory authority in the host country where the financial products or services are offered is often in a better position to identify harmful practices. The current division of responsibilities can therefore be exploited by firms engaging in harmful behaviour, to the detriment of consumer protection in the EU. 

AFM and AMF call for a strengthening of the role of national competent authorities 

The AFM and AMF believe the national competent authorities of the Member State whose clients are being targeted, should have more responsibility and enhanced supervisory competencies. In addition, competent authorities should have access to more information on products and services offered in their country. This would allow them to protect consumers and investors more effectively. The AFM and AMF provide concrete suggestions for this in their joint position paper. 

Journalist can contact Yolanda Bieckmann, spokesperson for the AFM, on 00316 - 3177 7686 or Yolanda.Bieckmann@afm.nl

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