Consultation response
Europe cannot tackle poverty without tackling the financial barriers that push people into hardship. Access to essential financial services and protection from overindebtedness are key to giving every household a fair chance.
Access to essential financial services
Affordable financial services are as crucial as access to healthcare, education or housing. Without these services, people, especially the vulnerable, face severe financial strain.
- Basic bank accounts are vital for everyday activities, like receiving a salary or paying rent. Yet research shows that many EU countries still have significant barriers to accessing basic bank accounts, including high fees that disproportionately affect low-income households. EU rules, such as the Payment Accounts Directive, must guarantee that everyone can access affordable accounts.
- Insurance is another critical service. Without essential coverage, people can face financial ruin after events such as accidents, job loss, or damage to their homes.
- The use of new technologies, such as AI in retail finance, can lead to exclusion. Biased systems can deny access to services while personalized risk assessments may make insurance unaffordable or inaccessible. To prevent these outcomes and protect everyone, EU rules on high-risk AI should apply to all essential financial services.
Overindebtedness and poverty
Debt is a major driver of poverty because it diverts income from essential needs such as food, housing, healthcare and education. In the EU and the UK, over-indebtedness affects more than 18 million households, hitting low-income and vulnerable households hardest.
Strong debt advice networks help, but availability varies widely between Member States. Rising mortgage costs and inadequate debt relief measures increase pressure, highlighting the need for improved rules, better consumer protection, and more support for borrowers.
Recommendations for the EU Anti-Poverty Strategy
- Refine EU rules to remove barriers and reduce costs, providing inclusive access to bank accounts, insurance, and other essential financial services. Ensure AI and other technologies in finance are regulated to prevent exclusion or unfair treatment.
- Strengthen debt advice services across Member States and ensure they are widely accessible. Revise mortgage rules to prevent financial strain and protect households from excessive debt burdens.
- Introduce a harmonised EU personal insolvency framework that allows households a real fresh start.
