Toespraak Commissaris Kuneva over consumentenbeleid en betaalbare producten (en) - Hoofdinhoud

European Economic and Social Committee Forum on Consumption and Poverty

Brussels, 16 November 2009

President Sepi, Ladies and Gentlemen,

It is a great pleasure for me to have the opportunity to attend today's Forum on consumption and poverty, here at the European Economic and Social Committee.

I would like to thank President Sepi and his colleagues for organising this event, one of the first to take place in the context of next year's European Year for Combating Poverty and Social Exclusion .

I made a speech in the end of April this year on the topic "Consumers in recession" where I advocated for the need of access to goods and services for all consumers in Europe. The main conclusions were related to the need of clear and relevant information, without misleading practices.

Today, I would like to give you my view on the subject "Affordable basic services" and what principles should guide policy to make sure that everybody is on board .

Particularly in difficult economic times, it is important to focus on the problems faced by the most vulnerable in society - from the single mother struggling to pay her energy bill to the unemployed neighbour who is being swindled by money lenders.

We are in a position of responsibility to protect the most vulnerable in society - this done not only mean the financially disadvantaged, but also socially or physically disadvantaged.

Basic services such as energy, water, transport, financial services, postal services and telecommunications should not only be accessible to all but also affordable to all .

Yet some people are still denied proper access to these essential services. This is unacceptable.

Economic crisis

Many Europeans are in a precarious financial situation. A recent survey shows that 80 million Europeans live in poverty. But the economic crisis has not only put pressure on low-income households, but also middle-income groups.

A study shows that after having paid for necessary services and products such as housing, electricity and food, someone on a middle income in France would have only €300 left each month for other expenses such as clothing and savings and holidays.

The study also shows that in France, 50% of the middle class do not have Internet at home and 40% do not have savings.

And conditions are even worse in other Member States. The country that I know best has been hit particularly hard with rising levels of unemployment, that have not yet reached the peak.

On the eve of his re-election in September, President Barroso set out his Political Guidelines for the next Commission. "These are exceptional times", he said, "We need a new, much stronger focus on the social dimension in Europe. We have to remember the needs of the most vulnerable in our society".

Against this background, I believe it is time to step up our efforts to make sure that no consumer is left behind .

Of course, consumer policy has its limits. It cannot be a substitute to social policy. At European level, we cannot, for example, offer direct financial support to those in need. This is the responsibility of the Member States. But what we can do is help low income households overcome some of the barriers they face when they engage with markets.

So how can we do this?

One way is to improve information provided to consumers, which would make it easier for them to compare offers and to switch providers .

Another way is to ensure that existing legislation is properly enforced . Enforcement not only makes the benefits for consumers more tangible , but it also gives them the confidence they need to shop cross-border more frequently, thereby helping to strengthen the Single Market.

Our first task is to put together the necessary facts and figures to identify the areas where, using the words of President Barroso, we need to 'fill in the gaps' in the internal market, particularly for the benefit of low-income households.

Identifying where the markets are not delivering

Well-functioning , open and well-regulated markets can provide the best possible mechanism to deliver the best value and choice to consumers.

I believe that free markets with sound regulation do deliver the best results for consumers. Low-cost phones and low-cost travel are testament to how we can reap real benefits from liberalised markets.

But the benefits are more tangible in the case of products than in the case of services .

Basic services

This was made evident in the Consumer Markets Scoreboard -one of my first initiatives on becoming Commissioner. This Scoreboard helps to monitor just how well markets work for consumers.

Thanks to the Scoreboard we are now aware of the considerable variation in the price of services between Member States. We also know that consumer satisfaction is lower for services than for goods . Furthermore, it showed that many consumers feel that basic services are too expensive.

This evidence should not to be ignored. Services are essential to our economy. They account for 70% of EU GDP and around 80% of jobs.

Services of particular concern appear to be energy and financial services . This is why we have decided to dig deeper into these areas.

As a follow-up to the second Consumer Markets Scoreboard, we are carrying out an in-depth study of the retail electricity market in Europe. The study will look into the functioning of retail electricity from the consumer's viewpoint. We already know that, in some countries, consumers are:

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  Hardly able to compare offers from different providers;
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  Combined, they lose millions because they are not on the cheapest tariff;
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  Some consumers find it difficult to pay their electricity bills; and
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  Some have been the victims of aggressive sales practices.

In fact, in certain cases, the poorest were given the most expensive tariffs!

The study will look deeper into these and other issues and will suggest what action can be taken to improve the rights and protection of consumers.

Despite the many statistics produced, at national and at European Level, we still do not know enough about why consumers experience problems and with which services .

While the current Scoreboard is a very useful first step, we need to go even further.

This year, some 20 sectors have already been monitored and we aim to monitor over 50 in total. However, we still do not have reliable data at European level on how much consumers actually spend on services each year.

Monitoring access and affordability at European level is challenging since every Member State is different . Income and consumption needs vary. But this information is important if we are to make the right policy response. Our ambition is therefore to develop a common European approach . Let me tell you about our first initiative to help achieve this.

Complaints

A key indicator to identify the problematic sectors is the number of complaints . That is why we are developing a harmonised European approach to collecting and reporting complaints addressed to third party complaint bodies.

This will be a voluntary measure and we hope for full collaboration from the many complaint handling bodies in the EU.

The EU-wide data will be a powerful tool to help us compare and assess which markets are not working well for consumers and it will enable us to react .

A flood of similar complaints can show us that a particular market is not working for consumers. Our initiative will make sure that the voice of dissatisfied consumers is heard loud and clear, not only in their capitals but also in Brussels.

Information, comparison and switching

Our measures will also help consumers get the offer that is best to their needs.

Energy

Let me give you the example of the energy sector. We know for a fact that energy takes up a substantial part of household budgets (almost 6%) and disconnection can have serious consequences, especially for the elderly and for those with disabilities.

For those with serious health problems, disconnection can even prove fatal.

In electricity markets, legislation clearly calls for prices to be reasonable and Member States are required to take targeted action to protect vulnerable consumers.

We, at the European Commission, need to make sure that the liberalisation of network industries, and in particular the new energy regulatory framework, is implemented correctly , in a timely way, to the benefit of consumers.

We will closely follow the implementation of the newly adopted Third Energy Package , which aims to improve energy markets and thereby ensure a fair deal for consumers.

Commission services including DG SANCO, will prepare guidelines in order for the Member States to be able to define vulnerable consumers.

As a result, the most vulnerable in society could be better protected, for example, through specific pricing policies. We will make every effort to make sure that consumers' rights do not only exist on paper but also in practice.

One way we have been putting words into action is through our recent work on developing clear and understandable energy bills. Together with industry, regulators and consumers through the Energy citizens forum we have developed recommendations on how to make energy bills transparent , comparable and user-friendly .

For most consumers, the bill is the only medium for them to understand how much they consume and how much they pay for their energy.

Once we understand our bills, switching to the cheapest energy provider will hopefully become easier, thereby increasing competition and reducing our bills.

Sustainable consumption

Even though climate change is one of the major priorities on the agenda, the most vulnerable consumer is more likely to consider the cost of their purchases over and above the cost to the environment .

Nevertheless, we cannot ignore the key role the individual consumer plays to create a more environmentally sustainable future through their own consumption.

Producers and retailers are exploring ways to factor in the environment both in their marketing and in their production processes.

At the same time, individuals have become sensitive to the issue, but their actual response at the time of purchase is less straightforward.

More than 80% of Europeans are concerned about climate change yet only around 10% of them translate their concerns into concrete actions.

Affordability is probably one of the reasons why. It is therefore important that any policy on sustainable consumption also caters for the needs of less well-off consumers . In this context, I read with great interest a recent interview from President Sepi in which he stressed that "particular solutions must be devised for people with low incomes" in order for the "green revolution" to succeed. And I would like to express my support to that statement.

Financial services

As well as the energy sector financial services is also an area of concern. For instance, recent data show that in some Member States as much as half of the population does not even have a bank account. The Commission wants to ensure that no-one is denied access to a basic bank account.

Financial products are often complex products with high monetary value . Vulnerable consumers are often taking a considerable risk when purchasing financial products. Even well-informed consumers have problems understanding the consequences of signing up to loans or investments.

Therefore, we have to make sure that consumers are able to choose the product that best suits their individual circumstances.

In our recently published report on retail financial services we discovered that some of the main problems consumers face when dealing with financial services were: opaque bank fees, unsuitable advice, difficulties in switching providers and inadequate pre-contractual information.

Bank accounts are essential for consumers to manage their financial affairs. Yet, as our report indicates, the unclear structure of bank fees hinders consumers from comparing different offers and shopping around.

Even our experts had difficulty figuring out these bank fees. So imagine what the average consumer has to go through!

This is why I stress the need for more efficient enforcement of existing legislation which should oblige banks to provide better information.

We have responded to these challenges by few measures:

The Commission has recently conducted a public consultation and a Hearing on responsible lending and borrowing, which puts a strong emphasis on mortgage credit. It mainly focuses on advice standards, the creditworthiness check, the suitability of credit products and the role of credit intermediaries.

We are now examining some of these issues, in order to tackle them with specific measures in the near future. The new Consumer credit directive will enter into force next year in all Member States - it requires banks to present pre contractual information about credit products in a standardised, comparable format, in clear and simple language . The Commission is working on similar formats in the area of investments and mortgage credit . Standardised, and therefore comparable, pre-contractual information for financial products allows consumers to compare offers and gives them a chance to make informed decisions when signing up to their investments, pensions and loans.

This is particularly important for low-income households.

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  The Bank Account Switching Code of the European Banking Industry Committee entered into force at the beginning of this month. This will facilitate consumers who wish to switch bank accounts. It represents a first step which we will closely follow up with monitoring and evaluation to check on its progress.

Telecommunication

With the rapid rise of modern technology and the digital marketplace, telephony and broadband Internet are increasingly important services which should be available to all consumers.

Mobile telephones and Internet access have become essential in our lives. People use it to search for jobs, pay their bills, or to simply to keep in contact with family and friends.

However, 25% of Europeans find mobile telephony too expensive. In the past two years, one out of four consumers who switched Internet providers found switching to be difficult and one in ten even gave up because it was too difficult.

Furthermore, one in ten who managed to change their Internet provider felt that they actually lost out as they ended up with an even more expensive provider!

With the help of the recently agreed Telecoms Package information to consumers will be improved:

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  Operators will be obliged to publish information on prices so that consumers can more easily compare the different offers on the market; Operators will also be obliged to make it easier for consumers to switch internet service provider, allowing them to take advantage of better prices and conditions.
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  Member States must also improve access to telecoms services for those with disabilities.

Enforcement

European consumer legislation protects the rights and interests of the most vulnerable consumers in particular. Yet rights are only effective if they are properly enforced . Enforcement has been my main priority as Commissioner for Consumers.

This is evident in the concrete actions we have been taking to tighten up enforcement. For example:

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  We have established a powerful network linking national enforcement authorities to address cross-border infringements of EU consumer laws.
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  The Commission has also put forward a Communication aimed at making enforcement more effective , efficient and consistent throughout the EU . The Commission is committed to ensuring that the recommendations will be carried out in practice.
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  And we are examining the important issue of collective redress . Collective redress mechanisms can provide an alternative when taking action individually is too costly. I am convinced that bundling several claims in a single redress procedure will lead to simplification and lower costs.

I must stress that it has never been our aim to create a "claims culture" in Europe. The existing European legal culture should be maintained, and the existing experiences of Member States should be taken into account.

Mechanisms with adequate safeguards against abuses and minimal costs for all involved should be at the centre of our activities.

Conclusion

Ladies and Gentlemen,

I believe the key ingredients for an inclusive European consumer policy are:

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  No discrimination against consumers; [just because they may not generate large profits]
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  Clear and accurate information so that consumers can choose the services they need at a reasonable price; and finally
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  Proper enforcement because, without it, consumer rights are deemed ineffective.

These principles must govern all markets and be reflected in all sectors - from energy and financial services to telecoms.

We must make sure that the markets for basic services are fair and accessible to everyone - regardless of where they live or how much they earn.

Thank you very much.