The increasing digitisation of financial services continues to raise questions about if and how legislation should change to ensure consumers remain adequately protected. A recent Opinion from the EBA, for example, highlighted the need to amend the disclosure requirements in the current 2002 “Distance Marketing of Consumer Financial Services” directive to recognise and address the consumer detriment that have arisen from the “ever increasing use of digital marketing channels, such as the internet and mobile devices”.

The channels, including digital and mobile devices, to market financial services and products to consumers have changed radically from 2002, so a review of the current regulatory framework is quite clearly needed. In its Opinion, the EBA makes a number of suggestions about what should change, including detailed proposals in relation to timing, format, and accessibility of information provided to customers through digital devices. It also suggests that FS providers should use behavioural insights to set out relevant product and services information, and should include communications to consumers as an integral part of their products design and testing processes.

Overall, these suggestions align closely with best practices that, in our experience, digital leaders in the market have already adopted, or would at least be aware of. The key question for the EU Commission will be whether to take a more ambitious approach and attempt to address future changes in the marketing of Financial Services – such as through shared digital platforms - that are already appearing on the horizon.

Open Banking, AI, and platform-based financial services hold the promise of a tailored and frictionless customer service. But these innovations also have the potential to create a much more complex financial ecosystem, underpinned by multiple terms and conditions from various players, that may be challenging for consumers to understand and navigate. Clear, fair and effective communication and disclosures to consumers will therefore be essential. But as always legislators will need to balance the need to protect the consumer against the danger of hindering innovation by regulating too early.

Nevertheless, the EBA’s Opinion already gives firms a clear indication that, when it comes to digital customer journeys, regulators will increasingly look closely at the balance of responsibilities between financial services providers and consumers, and the safeguards that FS firms are putting in place to ensure that the latter are adequately protected and fairly treated.

Morgane Fouché and Valeria Gallo