Deputy Chairman of FECIF
How Vox Populi in Europe is (sometimes) being portrayed
Two weeks ago, my home city of Prague hosted an important event: the Joint ESAs’ Consumer Protection Day. This is an event that forms an important part of the regulation agenda and according to its organisers should “discuss issues related to consumer and investor protection and financial innovation”. Well, interesting proposals definitely could have been heard, no doubt about that.
I shall not go into detail over the speeches made by MEP Sven Giegold and other representatives of the heavy anti-industry and pro-regulation European establishment. Comrade Giegold and his fellow hardliners are, at least, clearly distinguished as an extreme even among regulation-friendly EU politicians. What made me more worried, however, was the presentation of Mrs. Monique Goyens, director general of BEUC – one of the most powerful European consumer associations. In short, her speech was focusing on how markets fail and more regulation is needed, culminating in demand for a new Consumer protection bureau (sic) at the EU level. No surprise here, but my attention was instantly caught by examples of poor practices among individual member states, which formed the bulk of Mrs. Goyens argument.
Amongst many comments, two statements in particular prompted me to immediately start a Google search. First, according to my notes, Mrs. Goyens claimed that “in Slovakia, many consumers have over 30 credits” (e.g. loans). Secondly, in Latvia allegedly “50 % of the life insurance premium goes to the salesperson”. Particularly the first one sounded incredible (“many”), as I am quite often in contact with our Slovak friends, with whom we shared a common state for almost ninety years. I know there is credit madness all around following zero interest rate, but this extreme? That seemed unlikely. So what did I find? According to the OECD as of 2015, the overall household debt in Slovakia is the fifth lowest among the 28 EU member states, in terms of disposable income ratio. And the problem in Latvia? I did some quick research on the FKTK (Latvian supervisor) statistics website. It turned out that acquisition costs account for an astonishingly low 0.6 % of the total gross written life premium (commissions take 0.1 % and the whole net operating expenses 9.2 %). Bam. Of course, there might be different angles to this problem or a deteriorating trend, but this is what we call the reality check.
Now, we might wonder, whether such “inaccuracies” in this very serious topic are made by intent or mistake. Mistake, made by multi-head apparatus of an organisation with a budget many, many times exceeding that of most business associations? Well, the worst scenario would be that these twisted arguments are used intentionally, in order to condition the Vox Populi for European stakeholders, media and policymakers. These extremes, however disturbing by themselves, yet from the total perspective insignificant, are intentionally brought up to paint a distorted picture of the EU market. People love stories and it is far more efficient to supply them with “stories”, instead of hardly digestible data. But is it responsible, when such an approach is used to affect the lives of millions? I do not dare to confirm this hypothesis, but circumstances are prompting…
What is the conclusion of the above for us at FECIF? The message is clear: we have to quickly build and expand our own expertise, our own ability to provide unique data and surveys to support our position and to correct false claims presented by other parties to support their profitable regulatory business. The first – and major - step is already completed, our White Book and pilot online survey. The next will follow shortly and further plans are being laid down for the mid-term future. We need to make the point clear that the proposals of hardliners are not only endangering businesses across Europe, and the jobs they provide, but are also, in the end, threating the consumers themselves. In this, we need to function as the true consumer advocate, through arguments that are sophisticated, data-driven and – most importantly - not misleading. At the market level, a good financial adviser is the consumer´s best friend – the one who provides the right information at the right time, not least as he has a vested interest to remain his friend! We have strong and persistent opponents seemingly against us, but failure is not an option.