Friday, 30 July 2010

Financial Services User Group

The European Commision has decided to set up a Financial Services User Group. Its main task will be to advise the EC on issues affecting users of financial services e.g. retail banking, mortgage credit and insurances. It will also provide insight, opinion and advice on the practical implementation of relevant policy initiatives. The group will be composed of 20 members, who will be individually appointed to represent the interests of consumers, retail investors and micro-enterprises, and invididual experts with expertise in financial services from the perspective of the financial services user. The EC aims to strengthen the representation of consumers, retail investors and other users of financial services at EU level by creating this group. A call for expression of interest has been launched - deadline for application: 30 September 2010. You may apply here.

Monday, 26 July 2010

Why would you decide to shop online? EC thinks: you might want to shave your legs at the same time.

The DG Sanco have collaborated on creating a video clip on online shopping some time ago. The European Commission would like to hear the opinion of the consumers on this video clip, in order to be able to improve the way in which they communicate their consumer policy. The survey is available in English, French, German, Dutch, Swedish and Danish. The English survey may be filled in on this website.

I watched the video and I have to say it's quite funny and creative. However, I'm not entirely sure what is supposed to be the message behind this video clip. It seems to show the trivial benefits of concluding transactions online rather than offline. I don't know why they would want the consumers to go take a look at the website they are trying to promote, since the video clip itself does not present any potential problems with the online transactions. So if the message of the DG Sanco was: 'consumers, conclude more contracts online!' - I think they managed to convey it. If it was, however, supposed to sound: 'consumers, online transactions are more convenient if you know your rights online, so please check your rights on our website' - then they should give some more thought to broadcasting this video clip.

Sunday, 25 July 2010

The influence of European consumer law on national legal systems - conference in Katowice 23-24.09.2010

The Faculty of Law and Administration of the University of Silesia in Katowice, Poland organizes a conference 23-24 September 2010 on 'The influence of European consumer law on national legal systems'. Registration for the conference is possible until 10 September 2010.

The aim of the conference is to discuss the most recent developments in European Private Law, and additionally the impact of European consumer legislation on the indigenous legal systems of Member States, with a focus on the Polish example. This conference takes place in light of the ongoing harmonisation of private law in the EU, and EU consumer law in particular, as well as the current drafting of the new Civil Code for Poland, which is likely to be heavily influenced by European consumer law.
The guests invited for the first day of the conference include representatives of the European Parliament, the European Commission and international experts involved in the process of drafting the Common Frame of Reference. They will present new EU ideas concerning the future of private law harmonisation and the ‘optional instrument’. Discussing these issues is particularly interesting in the context of the recent developments in the area of private law at the European level, i.e. the commencement of work of the Expert Group established by the European Commission and the publication of Communication of the Commission on the future of private law in the EU, as well as the upcoming Polish Presidency in 2011.
The second day of the conference will focus on the impact of EU consumer law on national legal systems, taking the example of drafting the new Polish Civil Code. During this session, members and academics who work for the Polish Civil Law Codification Commission will analyse the problems arising from the implementation of EU consumer legislation into a system of private law based on a civil code. The speakers will concentrate on the problems relating to the differences between the structure and systematics of a national legal system based on a civil code, and European consumer law based on directives. They will also discuss the possibility of using legal instruments such as the DCFR as a source of inspiration in overcoming the difficulties.

Friday, 23 July 2010

Less jargon, more protection - the OECD's practical guide to policy making

Yesterday, the OECD presented its new Consumer Policy Toolkit (which we referred to in an earlier post on behavioural studies). The toolkit is meant to advise consumer authorities on 'how to assess areas where markets may be failing consumers and how best to address the problems consumers may face'. More information is available on the OECD's website.

Thursday, 22 July 2010

Consumer Protection in Financial Services: two sides of the same coin

On 2nd and 3rd July the European Coalition for Responsible Credit held its international stakeholder conference ‘Financial Services Providers and Consumer Protection - Two Worlds?’ at Hamburg. The symposium, gathered consumer organisations, financial service providers, policy makers, academics and politicians to discuss current issues in retail markets for financial services in Europe and elsewhere. Issues that were discussed include national reports on consumer credit and banking, a comparison of bankruptcy laws, bank reporting on responsible lending, financial literacy, and consumer information overload.

Whenever you as an academic researcher get the chance to attend this type of events straightforward you get the flavor of the progressive nature of consumer credit law in various European legal systems. Which basically have increasingly developed into a combination of private and public regulation, attributable to the fact, that, through mandatory law it combines economic (transparent, competitive market) and social concerns (such as social consequences of over-indebtedness) in a private law setting. Hence, a balancing act between stimulating financial services and safeguarding economic interests of consumers.

The panel on ‘information overload at the point of sale‘ conformed by Sarah Linch(European Commission), Prof. Geraint Howells(Uni. Manchester), Dr. Bernhard Dychhoff (VW Financial Services) explored quite interesting topics through their presentations. The lectures in this panel touched upon the provision of ‘adequate explanations’ related to credit. This duty encapsulated in article 5(6) European Consumer Credit Directive apparently aims at enhancing contractual fairness between contracting parties. At the same moment, the article may provide an opportunity to empower consumers in their contracting position. Since has been introduced as flexible element in the Directive it will provide a range of possible options for a Member States regarding implementation.

The panelists agreed with the need of consumer testing as regards of ‘Standard European Consumer Credit Information’ (Annex II of the Directive), which also regulates the form in which specific information must be conveyed to consumers in the pre-contractual stage. Such standardisation of information apparently aims at avoiding information overload and at maintaining or allowing the comparability of different offers. As a result the suggestion to focus on duties to disclose a summary or short-form contract in plain language, highlighting rather than hiding key terms seems less meddlesome than one might suspect.

Nevertheless, standardization may not necessarily help consumers directly nor level the playing field for them; for example, if they fail to use or understand the information provided. The ideal of transparency, though laudable, may lead to an increase in information, yet not necessarily facilitate accessibility and simplicity. At the bottom line, in striving for simplicity it must be borne in mind that borrowers are heterogeneous in their preferences and concerns.

Friday, 16 July 2010

Are you representing a European consumer organization in need of funds? - EAHC call for proposals 2010

Executive Agency for Health and Consumers opened the call for proposals 2010 for financial contribution. Deadline for submission is 27 September 2010.

There are following categories in which you can apply:
  • financial contribution for the functioning of European consumer organizations;
  • financial contribution to the operation of European consumer organizations representing consumer interests in the development of standards for products and services at European Union level;
  • financial contribution to the European Consumer Centres Network;
  • specific joint actions;
  • specific joint surveillance actions;
  • exchange of officials in the area of consumer protection cooperation;
  • exchange of officials in the area of consumer product safety (deadline for this one: 19 July 2010).

Sunday, 11 July 2010

Consumer behaviour: the road to effective policy-making - brochure by DG SANCO

Recently DG Sanco published a brochure on 'Consumer behaviour: the road to effective policy-making'.

In the past few years the European Commission (and other European institutions have realized that consumer behaviour science might give them valuable insights as to how the European consumer law should develop. In order to research that link and find out exactly how to apply consumer behaviour findings to law, or how to shape consumer behaviour, more and more funds are spent on researching consumer behaviour.

The brochure that has just been published at the DG SANCO's website introducers the reader to the science of consumer behaviour. The purpose of the brochure is to present some of the principles of the consumer behaviour and to gain an understanding of the importance of their application in DG SANCO. Firstly, consumer behaviour is being defined and e.g. certain factors influencing decision-making process are being presented. Secondly, the reasons for exploring consumer behaviour are mentioned in the brochure.

"Understanding motivations and the main determinants behind consumer- and healthrelated behaviour is essential for policy-making because it allows us to better define the most effective tools for influencing behaviours and implementing the most effective policies."

Further, the brochure discussed practical applications of consumer behaviour as well as various tools for shaping consumer behaviour. Finally, it is specified for which areas of DG SANCO consumer behaviour is applicable.

The brochure presents rather basic findings and does not introduce any 'surprise' material. However, it is good to know that DG SANCO intends to continue its work with/on consumer behaviour. In the goals defined for DG SANCO for the coming years you may find a commitment to follow consumer trends on a regular basis and to put the consumer at the centre of all policies. One way of doing that, defined by DG SANCO itself, is to improve cooperation between academics and policy makers and to introduce scientific findings into policy decisions. I heartily approve the course set out by DG SANCO in this brochure.

The text of the brochure may be found here.

Tuesday, 6 July 2010

Pénzügyi Lízing (C-137/08): the follow-up to Pannon

Today the Opinion of Advocate General Trstenjak in the Pénzügyi Lízing-case has been published. The case is a follow-up to the Pannon-case (2009), dealing with the obligation of the national court to examine on its own motion the unfairness of a term when applying the Unfair Terms Directive (93/13/EEC).

After the ECJ made clear in the Océano-case that national courts are allowed to examine the unfairness of contract terms, Mostaza Claro and Cofidis went a step further, arguing that national courts have the obligation to do so. This was repeated in Pannon, but in that case the ECJ added that the obligation exists ‘where [the national court] has available to it the legal and factual elements necessary for that task’. With this judgment it was still not entirely clear under what circumstances the obligation exists. Advocate General Trstenjak concretizes this in her Opinion in Pénzügyi Lízing.

The Member States’ governments who have submitted their opinions regarding this case to the ECJ express opposition against far-reaching European influence in their civil procedures. They are also somewhat anxious for their courts being required to examine the fairness of contract terms in each and every case brought before them (see paras. 43-54).

Trstenjak makes clear that there is no general obligation for courts to examine the unfairness of terms on their own motion. For cases in which a contract term is possibly unfair, the national court is held to examine the fairness of the term only if, in the words of Pannon, ‘the national court has available to it the legal and factual elements necessary’. Trstenjak makes clear that this is only the case if there are indications for the existence of a possibly unfair term from the arguments of the parties or from other circumstances (para. 107-109). With reference to the principle of party autonomy in the civil procedures of the Member States, Trstenjak stresses that national courts are not required to determine the legal and factual circumstances needed to conduct this examination (para .110-111, with reference to the Van Schijndel-case).
Trstenjak concludes that the national court, if confronted with a possibly unfair term, is not held to start an investigation on its own motion in order to determine the relevant factual and legal circumstances, if national procedural law only allows such an investigation if ordered by one of the parties, and if none of the parties did.

In this sense, the Opinion is a recognition of party autonomy and of the governments who fear that the courts will not be able to deal with the workload as a consequence of the obligation to examine contract terms on their own motion.

However, the degree to which national courts have to examine contract terms on their own motion is to an important extent decided by another question, i.e. what should be understood as ‘legal and factual elements necessary’. Advocate General Trstenjak does address this question along the way. While arguing that a far-reaching duty for national courts to determine the legal and factual circumstances is not necessary, she argues that national courts will often already have the ‘legal and factual elements necessary’, because they will usually have received a copy of the contract (para. 113). Hence, there is still a general obligation for the courts to examine the fairness of terms on their own motion if they have the information needed to do so (e.g. based on parties’ arguments or on the contract). But the obligation does not extend to determining the legal and factual circumstances needed for the examination.

Click here for the full Opinion (not yet available in English).

Friday, 2 July 2010

The Commission's Green Paper on European Contract Law is there!

This morning the European Commission presented its Green Paper on policy options for progress towards a European Contract Law for consumers and businesses. Options under consideration include:
- model contract rules;
- a 'toolbox' for EU lawmakers;
- a Contract Law Recommendation (in the style of the US Uniform Commercial Code);
- an optional instrument for European Contract Law ('28th regime');
- harmonisation of national contract laws by means of a Directive;
- full harmonisation of national contract laws by means of a Regulation; and...
- a full-fledged European Civil Code.

A public consultation on this strategic policy paper will run till 31 January 2011.

For more information see the press release of the Commission. Contributions to the public consultation can be posted through the Commission's website.

Thursday, 1 July 2010

Changing mobile phone operators while keeping same number: ECJ in C-99/09 Polska Telefonia Cyfrowa (PTC)

1 July 2010: ECJ case C-99/09 Polska Telefonia Cyfrowa (PTC)

This judgment concerned interpretation of Article 30(2) of Directive 2002/22/EC - Universal Service Directive. Pursuant to this Article:

"[NRAs - National Regulatory Authorities] shall ensure that pricing for interconnection related to the provision of number portability is cost oriented and that direct charges to subscribers, if any, do not act as a disincentive for the use of these facilities."

First of all, to all the laymen between us - what does porting numbers/number portability mean? The concept of number portability covers the facility available to a telephone subscriber to retain the same number when changing operators. (Par. 15) Most of us, at one point or another, were not happy with our (mobile) phone providers and considered making a switch. One of the factors that effectively stopped us from making that step was the fact that we did not want to go through the trouble of changing our phone number and having to let everyone we have ever met know what our new number is. Anyone who has ever lost their phone knows what a bother it is. EU authorities were aware of that and realized that consumers not being able to keep their old number (or having to pay for the switch of the number) was an obstacle to consumers' freedom of choice and effective competition. (Par. 17) That is why the Universal Service Directive required the phone providers to facilitate number portability and obligated the national authorities to ensure that the price for that service will not dissuade the consumers from making the switch. The operators may charge the consumers since they have to make certain costs to facilitate that service, but that price has to be not only compatible with the costs they made but also not dissuade the consumers from switching. (Par. 19)

In the given case a Polish company - Polska Telefonia Cyfrowa (PTC) - requested a one time fee from its subscribers for porting their number to another operator. The amount of the fee (ca. 30 Euro) was deemed to be too high by the Polish authority enforcing the Universal Service Directive: Urzad Komunikacji Elektronicznej (UKE). PTC claimed that they set the amount of the fee based on the costs they had made and therefore the fee was reasonable. UKE considered the fee to be too high for the Polish consumers.

The ECJ confirmed the view of PTC that the amount of the fee should depend on the costs encumbered by the phone providers, however, it could not be a decisive factor in estimating its height. Namely, the national authorities have a right to establish the maximum height of the fee up front, taking into account what prices dissuade the consumers from switching between operators. (Par. 21)

The ECJ decided further that: (Par. 25-26)

"(...) the NRA has the task, using an objective and reliable method, of determining both the costs incurred by operators in providing the number portability service and the level of the direct charge beyond which subscribers are liable not to use that service. Following that examination, the NRA must oppose, if necessary, the application of a direct charge which, although in line with those costs, would, in light of all the information at the disposal of the NRA, be a disincentive to the consumer."

The decision of the ECJ in this case is very clear and consumer-friendly. Even though it might seem that the PTC got the confirmation it wanted, the ECJ managed to turn the question around and put a limitation on the interpretation of Article 30(2) of the Universal Service Directive.

From a bit personal perspective (coming from Poland)... it was about time someone stood up to the Polish phone operators and limited their powers.