Thursday, November 11, 2021

Seminar Explores Consumer Financial Services

Sterling Law Building stonework detail

On Nov. 10, 2021, the Transatlantic Seminar Series on Consumer Law, Technology, and Inequality continued to analyze the intersections of digitalization and growing socioeconomic inequalities from U.S. and European perspectives. The second online event of the series focused on consumer financial services and inequality. Olha Cherednychenko (Professor of European Private Law and Comparative Law, University of Groningen), Juliane Kokott (Advocate General at the Court of Justice of the European Union), and Rory van Loo (Professor of Law, Boston University) explored current issues of consumer financial services in the EU and the U.S.

Moderated by Professor Bertram Lomfeld of Freie Universität Berlin, the panel discussed topics such as the scope of activities that already are or that should be considered as “consumer financial services,” and compared specific legal regimes in the U.S. and the EU aimed at regulating consumer financial services. It emerged that even in light of the increasing cross-border nature of both consumer transactions and financial services, regulatory convergence is limited. For example, participants observed that that while there is a close link between issues related to bankruptcy and consumer finance in the U.S. context, at the EU level there currently is widespread reluctance to intervene in the bankruptcy context at all, including through protection schemes for consumers. Similarly, the attitude of businesses towards customer complaints and their willingness to deviate from standard form contractual stipulations as a result of direct interactions with customers seem to differ considerably. 

The three panelists agreed that improving access to financing may require to find ways to differentiate among consumers but suggested differing approaches to attenuating the rigid “average consumer” perspective. Kokott stressed the need to reflect the special standing of some transactions also in their legal treatment, notably for financing related to housing. Van Loo suggested designing consumer laws primarily with low-income consumers in mind, even if not explicitly establishing separate legal regimes for different kinds of consumers. Cherednychenko stressed that the new asymmetries brought about by the digital age will require revisiting and reassessing the issue of differentiation. 

The panel also explored chances and risks of fin-tech (financial technology) and decentralized finance for improving access to financial services for consumers. Panelists unanimously agreed that while there is a need for regulation, this must be done with an eye to preventing the adverse effect of a flight into the unregulated grey market when overly strict regulation is implemented. Van Loo also highlighted some of the limitations for consumer law in regulating fin-tech, for example since interoperability and the portability of user data are at least also a matter of competition law. While there is thus agreement on both sides of the Atlantic that consumer financial services are in need of better regulation, uncertainties as to how this is to be done remain. 

The Transatlantic Seminar Series on Consumer Law, Technology, and Inequality is co-sponsored by the Yale Law School Center for Private Law, the Max Planck Institute for Comparative and International Private Law Hamburg, Jagiellonian University in Krakow, Freie Universität Berlin, and the European University Institute. Over the course of five sessions, the Seminar Series seeks to bring together scholars, policymakers and activists from Europe and the U.S. to interrogate the role that law plays, and could play, in increasing economic justice for consumers.