Does Jonathan Hill hate car hire companies?

Since he took office a year ago as the EU’s financial services commissioner, Jonathan Hill has become renowned for his low key, calm approach – except when it comes to how he feels about car hire companies.

The details remain sketchy, but the demons of some previous holiday trauma seem to haunt this otherwise affable politician. Last week, he used the medium of Twitter to call on people to “Let us know your worst holiday car hire experience.”

A hearing he held last year with a committee of the UK House of Lords (of which he is also a member) become dominated by the issue of insuring rented cars, as peers took turns to let off steam about their encounters with unscrupulous rust bucket purveyors.

What, you may ask, has this got to do with Hill’s remit as the grandly titled European commissioner for financial stability, financial services and capital markets union?

The answer is: quite a lot, and this became clearer when the Commission published a policy paper on tackling the day-to-day financial irritants that people encounter when crossing borders, be it a lack of transparency on the fees you are charged when you transfer money abroad, an inability to take your health insurance policy with you when you move to another country or, yes, frustrations with ludicrously high insurance premiums on hire cars.

This may sounds like small beer compared to, say, the massive regulatory overhaul of core banking standards that the EU carried out in response to Europe’s financial crisis. But these are practical matters which, when bundled together, underscore a big, stubborn problem that critics have complained about for years: at the basic consumer level, the EU single market for financial services isn’t working.

According to the policy paper, cross-border loans to households in the eurozone account for less than 1 per cent of retail lending. For insurers, the picture is little better: about 3 per cent of premiums in 2011 and 2012 were for customers based in other EU nations.

In short, people aren’t shopping around.

Another sign that things are amiss are the wildly different fees charged for financial products in different countries. According to commission data, annual fees charged for a credit card can vary from €9.10 in Romania to almost €114 in Slovakia. Monthly premiums for a 25-year life insurance policy can be as little as €10 per month in Slovakia and as much as £65 per month in Britain.

“In the case of motor insurance, for example, quotes vary even for the same car model,” the Commission paper says.

Other problem areas identified by the Commission include the “complex and prohibitively high fees” people pay when they get foreign currency, and the difficulty of getting a mortgage to buy a house in another EU nation.

The current situation is so restrictive, according to the Commission, that “consumers can rarely access any financial services from other member states. In most cases they find that they are not eligible for services if they do not reside in the provider’s country.”

Hill is crowdsourcing further examples. Last week he launched a web page inviting people to send in video clips in which they get their grievances off their chests, or to Tweet them to #MyMoneyEU. The new policy paper is intended to kickstart a consultation process on what should be done.

There are all kinds of reasons why insurance premiums can vary across borders – differences in tax treatment, regulation, life expectancy, pricing structures – but officials believe this doesn’t tell the whole story. The challenge for the Commission is to work out how far these price distortions are linked to genuine market barriers that prevent free competition.

These problems are nothing new, and the EU already has a raft of legislation underpinning the idea of a free competition on the single market. Enforcing these principles in practice has proved to be stubbornly difficult.

More legislation is always an option, but Hill has made clear that he is someone who sees regulation as a last rather than a first option for solving problems.

The Commission hopes that this time technology companies, and the potential of new online services more generally, can come to the rescue and shake up traditional markets – as is already happening, for example, with currency-exchange websites.

“Digitalisation should in principle foster cross-border activity, with requiring that forms establish themselves in other member states,” the Commission says.

The push fits into a broader theme of the current Commission, which is already pursuing Disneyland Paris for discriminatory pricing and taking measures to tackle geo-blocking.

In addition to the appeal for public comment, the Commission is also organizing a conference in spring next year to “discuss priority areas.” It’s likely to be a cathartic exercise for all involved. Particularly disgruntled rental car drivers.