The latest regulation in financial matters does not come from the Ministry of Economy, but from the Ministry of Consumption. Alberto Garzón’s portfolio has approved a law to protect vulnerable clients, from various sectors, including banking, due to Covid-19. Industry sources believe that it will open a new crack around the Mifid 2 directive to accommodate social and not just economic criteria: sex, age, origin, if you belong to an ethnic minority or if you are a migrant, among other factors . The bank will face new demands.
The anti-Covid social shield was designed from the beginning with the moratoriums on loans and mortgages –that have been extended until March– as well as with the ban on rental evictions until the end of the state of alarm on May 9. But the Ministry of Consumer Affairs goes one step further.
In his defense of the royal decree law before Congress, Garzón pointed out that the new norm “protects consumers who live in rural areas without access to financial entities.” The decree it was validated on February 4 in Parliament, although it will also be processed as a bill through the emergency procedure.
This norm will be the key vault to elaborate a more profuse regulation that allows the development of the “protection regulations” when filing claims or the information that must be provided on certain products against Covid-19, among other issues.
The standard is the first step of future developments in the financial area
The regulation points the finger at the European Commission and its consumer agenda of November 13 last year. The text notes that among the impacts of the coronavirus epidemic on consumers, “the exploitation of financial vulnerabilities that existed since before the pandemic have become more pressing.”
And here, “vulnerable” consumers are defined as natural persons who, individually or collectively, due to their characteristics, needs or personal, economic, educational or social circumstances, are (…) in a special situation of subordination, defenselessness or lack of protection.
“Thus, the concept of a situation of vulnerability is broadened by alluding now to the social character”, they point out in finReg 360. From the regulatory advice boutique they add in a note that “it is striking that the legislator understands that sex [mencionado explícitamente] it continues to be a cause of vulnerability in Spain and, if true, it would be sad news ”.
In practice, a new type of retail customer is created for the financial sector
Financial sources indicate that this new regulation will represent a new thread in the regulatory web that Mifid 2 has created. The classification of clients, until now segmented into three types – retailers, professionals and eligible counterparties – will be fragmented again, with the new group of vulnerable retailers.
The regulation postpones future developments. “This is in line with the consideration of essential services, as we have seen since the first regulatory frameworks of the pandemic. We will have to be attentive to these possible developments “, they say in finReg 360.
The regulation of basic accounts in Spain dates from the end of 2017. This rule, which involves the transposition of a 2014 directive, has the mission of not leaving anyone out of a service that in practice is needed to live. Consumption regulations will raise the bar, according to the sources consulted, by being able to influence the financial products that the bank can offer based on the convenience tests, or suitability in case of advice.
- Retouch to Mifid 2. The European Parliament not only approved on Wednesday the new EU recovery brochure to increase capital by express route through a document of only 30 pages in order to reduce the bureaucratic burden of companies that want to strengthen themselves by the pandemic. This formula will be available until the end of next year, as published yesterday CincoDías. In addition, the Mifid 2 directive was modified in order to help recover from the pandemic and protect investors.
- One of the big changes It is in the suitability test, the one that, from the start, any entity requires its customers to offer them products that it considers appropriate. Banks will need to assess the level of indebtedness of retail investors, in particular due to Covid-19. There is already a Spanish regulation focused on cards revolving, which obliges entities to inform the Bank of Spain of customers with loans for 1,000 euros, when before the threshold was 9,000 euros.