A Brief Introduction to the Book ‘Protecting Financial Consumers in Europe. Comparative Perspectives and Policy Choices’

The question of how the law should approach the protection of financial consumers in their dealings with providers of financial products remains a key issue in European legal scholarship. The decades-old phenomenon of contracts relating to risky financial products, offered on a mass scale to unsophisticated consumers has shed light on two factors. First, these debatable contractual practices and their related litigation made it clear that general contract law has a specific role to play in disputes involving consumers in financial matters. Second, the wave of claims brought by consumers against financial services providers has demonstrated the current significance of out-of-court dispute resolution bodies for consumer financial services. Our book provides a comprehensive account of the current state of affairs in the field of contracts relating to selected financial services and the resolution of disputes arising out of such contracts by alternative dispute resolution (ADR) bodies in Europe. Further, the book makes a theoretically and empirically informed case for adopting policies that ensure a high level of consumer financial education.

The book is divided into four distinct parts, each of which is briefly presented in what follows.

Part 1: Consumer Protection Across Different Financial Products

The book’s first part surveys timely examples of how national private laws in Europe embraced challenges to ensure the protection of consumer clients in different types of contracts relating to financial services.

It opens with two chapters devoted to the question of consumer protection in insurance law, as exemplified by Polish (Tereszkiewicz and Połdudniak-Gierz) and Portuguese (Ataíde and Rocha) laws. The authors offer comprehensive evidence as to how insurance law absorbed the emergence of consumer contract law and market practices regulation (ie, the Unfair Commercial Practices Directive 2005/29/EU).

The third chapter in the part, by Menits, analyzes how Greek law responded to market practices from the Financial Crisis period that consisted in promoting risky products which were misleadingly labelled as ‘low-risk’ deposit-like contracts.

In the part’s final chapter, Omlor and Wilke advance a claim that while German courts have been cautious in policing the content of payment services contracts, the Supreme Court jurisprudence overstepped its authority in 2021, by declaring the established practice of amending payment services contracts unlawful and creating legal uncertainty.

Part 2: Foreign Currency Loans in Europe

The second part of the book provides a pioneering survey of how six national legal systems in Europe and the Court of Justice of the European Union (CJEU) case law have provided regulatory responses to the challenge of loan contracts indexed to foreign currency (mostly the Swiss Franc) that had been offered on a mass scale to mortgage borrowers from the early 2000s onwards.

In analyzing the Hungarian experience with foreign currency loans, Pomeisl demonstrates how fruitful cooperation between the jurisprudence and the legislature helped to yield relief for consumers. The second chapter of the part, by Mišćenić, surveys the parallel Croatian experience, including the analysis of collective redress proceedings. In the third chapter, having noted the lack of a legislative regime specifically addressing foreign-currency loans, Sladič discusses the rich case law of Slovenian courts. The fourth chapter in this part, by Lemmonier, brings attention to the jurisprudence of French courts on toxic financial products (‘Helvet Immo’). In the fifth chapter, Infantino elaborates on the multifaceted treatment of foreign currency loan contracts under Italian law, emphasizing the diverging positions of the Italian Banking and Financial Ombudsman on the one hand, and private law courts on the other. The part’s sixth chapter, by Rodríguez de las Heras Ballell, explores diverse legal doctrines applied by Spanish courts to assess foreign-currency loan contracts, which constitute yet another layer in the decades-long litigation concerning the unfair contract terms imposed on Spanish borrowers. Rounding off this part of the book, Tereszkiewicz surveys the rich CJEU case law on foreign currency loans under Unfair Terms Directive 93/13.

Part 3: Financial Ombudsman Bodies and Consumer Protection

The book’s third part innovatively gathers contributions on out-of-court redress schemes for consumers in financial matters, combining multiple research perspectives. The first chapter, by Amajuoyi and Fejős, draws on the example of the UK Financial Ombudsman Service’s decision-making, to propose an innovative framework on the relationship between legal rules and broader fairness and reasonableness principles in consumer ADR. The second chapter, by Kotásek, illustrates the Czech experience with the Office of Financial Arbitrator, which, compared to similar bodies in different legal systems, has substantial powers to bindingly resolve disputes between financial providers and their clients. In the part’s third chapter, Bichiri and Poncibò offer a comparative analysis of financial and banking ombudsman services in France, Germany and Italy as well as recent proposals to harmonize the EU regulatory landscape. In the part’s fourth chapter, Vardi undertakes a broad survey of collective redress tools for financial consumers in Europe, including ADR, settlement mechanisms, regulatory redress, and partie civil mechanisms. The two last chapters further develop some of the ideas expressed in the preceding ones. Golecki comparatively analyzes frameworks for resolving complaints by financial consumers in the UK, Ireland, and the Netherlands. The part’s ultimate chapter by Černič places different types of financial ombudsman bodies in the debate on access to remedy in the field of business and human rights.  

Part 4: Building Consumer Protection Through Financial Education

The volume’s final part brings out its strong interdisciplinary character. It advocates stronger convergence between research into consumer law and the study of financial education by presenting and debating the state of the art in the field. In the opening chapter, Mendecka submits that financial education is a precondition for modern and effective consumer protection in financial matters. While there is no obligation under international or EU law for states to provide financial education to their citizens, the author shows that a new international soft-law standard is emerging.

In a pioneering contribution on ‘A Comparative Analysis of National Financial Education Strategies among the Visegrad Group’, Borys analyzes the strategies for national financial education adopted in the Czech Republic, Hungary, Poland, and Slovakia. The part’s final contribution on ‘Household Approaches to New Technologies in Financial Education in Poland’ links the question of financial literacy and the growing use of new technologies in the financial sector: Iwanicz-Drozdowska, Cichowicz and Kurowski present the findings of a survey analyzing the relationship between the level of parents’ education and their engagement in managing household finances and the financial education of their children.

Piotr Tereszkiewicz is a professor at the Jagiellonian University in Krakow.

Mariusz J. Golecki is a professor at the University of Łódź and the former Financial Ombudsman in Poland (2019-2021).