Out-Law News | 25 Nov 2016 | 3:05 pm | 2 min. read
The European Commission has confirmed that it intends to publish a new 'retail financial services action plan' in early 2017. The action plan will "consider ways to encourage remote ID recognition and signing of contracts in a safe and secure way", the Commission said.
In a new communication (15-page / 569KB PDF), the Commission also said that the action plan will be address other issues relevant to the digitisation of financial services.
"The objective of the action plan will be to help consumers get a fairer deal and enable consumers and providers to take greater advantage of the single market’s potential," the Commission said.
"The retail financial services action plan will, among other things, consider ways to: improve consumer protection when buying financial services cross-border and online. In particular, it will improve awareness of possibilities for settling cross-border disputes out of court; reduce the legal and regulatory obstacles that firms face when providing financial services abroad, including when taking advantage of the growing digitalisation of retail financial services; and make disclosure requirements fit for purpose in the digital world," it said.
Director of strategy and competition at the UK's Financial Conduct Authority (FCA), said in July that anti-money laundering and 'know your customer' regulations are not a barrier to the verification of the identity of customers via wholly digital processes.
In his Autumn Statement announcement earlier this week, UK chancellor Philip Hammond announced, though, that the Joint Money Laundering Steering Group (JMLSG) will "modernise their guidance on electronic ID verification to support the use of technology to access financial services".
That announcement was welcomed by financial services and technology expert Luke Scanlon of Pinsent Masons, the law firm behind Out-Law.com.
"The modernisation of the JMLSG guidance will be a major step forward in helping people and businesses make their financial lives more digital," Scanlon said. "SMEs and consumers are aware of how difficult it can be to open up a bank account and verify and authenticate that they are who they say they are. Digital-only banks and new payment service providers promise a future in which all financial aspects of a person or business’ life can take place online, but this can only occur if it becomes easier to establish relationships with financial providers in the first instance in a wholly digital context. Digital IDs are fundamental to this transition."
"The government is likely to back the FCA’s public statements which suggest that the JMLSG guidance will need to be updated in a way that enables bank accounts to be opened without relying on cumbersome offline paper-based processes. Fintech businesses are highly active in this area and there is increasing scope for biometric solutions to play a pivotal role here," he said.
In October, the FCA also said it intends to set out new guidance on "digital disclosures" in 2017. At the time, the regulator said that "a predominately paper-based disclosure may not meet today’s consumer information needs".
The Commission's plans to outline an action plan follow a review it conducted into the way financial services are regulated. The Commission previously asked industry and other stakeholders whether there are unnecessary regulatory burdens, gaps or inconsistencies in the rules, or laws that hinder economic growth in the EU's legal framework for financial services. It published responses it received to that consultation exercise in February.