EU Financial Regulation, Contract Law and Sustainable Consumer Finance

Abstract

The post-crisis era presents major new challenges for the EU legislator in terms of effectively safeguarding the public and private interests in the realm of consumer finance in an increasingly digital environment. New and innovative ways of addressing tensions and contradictions between the common good and individual preferences of market actors in the retail financial markets are needed in order to be able to close the gap between consumer finance and society. However, at present, the efforts to develop workable solutions are seriously hampered by the existence of another gap – the gap between financial regulation and contract law in the current European policy discourse and legal scholarship. In the context of EU law-making, this gap manifests itself, in particular, in a contradictory policy agenda for the retail financial markets, insufficient attention to contract practice, and a lack of a coherent and effective enforcement strategy. While the effectiveness of EU financial regulation in the prudential and conduct of business domains depends on a broader legal framework that often reaches far beyond its regulatory ambit, the post-crisis legal matrix for consumer finance is developing in a piecemeal fashion without a clear and coherent vision of consumer financial contracts for the current millennium. In order to reduce the gap between financial regulation and contract law in the EU policy discourse, this chapter has suggested to better integrate the ‘contract law’ dimension of consumer finance into the assessment of existing and new regulatory measures in this area on the basis of a novel concept of sustainable consumer financial contracts. Such an approach fits into the EU's Better Regulation agenda and its sustainable development strategy, which provide an opportunity to critically rethink the role of contract law in the current regulatory landscape, both in relation to standard-setting and enforcement.