Full Harmonisation of Retail Financial Services Contract Law in Europe: A Success or a Failure?

Abstract

During the last decade, the EU has adopted three major sector-specific directives in the area of retail financial services – the Payment Services Directive, the Consumer Credit Directive, and the Markets in Financial Instruments Directive. All three directives are based on the idea of 'full,' or 'maximum,' harmonisation of the contract-related rules for the provision of financial services. Seen in the context of the aims pursued thereby in the area of retail financial services – putting an end to legal fragmentation and thereby promoting a single market in financial services – the regulatory concept of 'full' harmonisation carries with it a high degree of uniformity. If 'full' harmonisation in this area is a success, legal fragmentation hindering the operation of the internal market in financial services should belong to the past. Does 'full' harmonisation, however, really lead to less fragmented contract law in the area of retail financial services and, if so, to what degree? In other words, how full is 'full' harmonisation of retail financial services contract law in the EU? In this contribution, attempt is made to address this legal issue within the context of each type of financial service currently regulated by the EU – retail payment services, consumer credit, and retail investment services – and to draw the lessons from these three stories of 'full' harmonisation for the future European harmonisation projects in the field of financial services and beyond.