On the EU’s Consumer Protection Day, Mairead McGuinness, the EU’s financial services commissioner, said Europe needs to "steer a new path" for its financial system, prioritising financial inclusion.
“We are currently assessing how well the Payment Accounts Directive has worked and we intend to publish a report on it soon,” said McGuinness, in a keynote address at the European supervisory authorities' (ESA) annual Consumer Protection Day (September 23).
The Payment Accounts Directive (PAD) was adopted by the EU in 2014 and was implemented in the trading bloc with the ambition of ensuring residents in the EU, including people with no fixed address and asylum seekers, have the right to access a basic bank account.
However, it has come up against de-risking measures that are taken by financial institutions to reduce their exposure to illicit finance or sanctions evasion, for example.
In March, the European Banking Authority, itself an ESA, called on financial institutions operating in the trading bloc to make sure that they were in compliance with the PAD, as refugees from Ukraine sought asylum in the EU.
The latest figures from the World Bank show the share of citizens in the EU with at least one bank account is quite high and has risen in recent years, McGuinness said. “But, we also see almost universal account ownership in some member states, but only around three-quarters of adults in others.”
This means that a quarter of the adult population in some countries cannot properly access the financial system, the Irish commissioner pointed out.
In addition, McGuinness, who came into the role in late 2020, said that the European Commission will "reflect" on the matter of access to cash.
Sources in Brussels have suggested that access to cash proposals may be introduced as part of the upcoming digital euro legislation, which is due to be published by the commission next year.
“Physical cash is often particularly important for more vulnerable groups, or those without an alternative way of accessing the financial system,” she acknowledged, noting that the number of bank branches and ATMs has been declining, which can make it harder to access cash.
Campaigners in the EU have so far been sceptical about whether EU-wide rules offer enough of a lifeline for cash and have called for better criteria to aid communities.
In its 2020 retail payments strategy, the European Commission had already indicated its commitment to cash, stating that “while promoting the emergence of digital payments to offer more options to consumers, the commission will continue to safeguard the legal tender of euro cash”.
The commission also said, at the time, that it may also decide to take appropriate action to protect the acceptance and availability of cash at the end of 2021, although this deadline has long come and gone.
Countries including Spain and Sweden have recently introduced access to cash rules, in light of its rapid decline, particularly after the COVID-19 pandemic hit.
The UK has also made access to cash a priority, with new Prime Minister Liz Truss having touched upon the issue during her leadership campaign.
Environmental, social and governance (ESG)
In light of the Consumer Protection Day, McGuinness also touched upon the EU’s ESG agenda, stating that she hopes new legislation that is being implemented will offer consumers “clear signposting”.
She mentioned the Sustainable Finance Disclosure Regulation, which has applied since March last year.
“It gives consumers information about their financial products, like investment funds or pension funds, and how their money is being invested in terms of sustainability impact and risks.”
McGuinness also mentioned the upcoming Corporate Sustainability Reporting Directive (CSRD), which will put sustainability reporting by companies on the same footing as their financial reporting, as a win for consumers.
“It's important for investors, but also for civil society and consumers, so that they can all know more about what a company is doing when it comes to sustainability,” she said. “Things like a company's business strategy on sustainability, or any sustainability targets and the progress made towards them.”
Following an agreement by the European Parliament and European Council on the CSRD in June, the directive will come into force in 2024.