Introduction and background

• Author: Consumers, Health, Agriculture and Food Executive Agency (European Commission), Deloitte consortium, IPSOS, London Economics
• Pages: 14-25

1.Introduction and background

1.1Objectives and scope of the study

The European Union (EU) has placed strong emphasis on consumer protection since the

early 1970s. In the field of consumer policy, there are currently two main strategies in

place to ensure a correct functioning of the markets from a consumer perspective: the

‘European Consumer Agenda’ and the ‘Consumer Programme 2014-2020’. The

former is set to be an action plan for the next years and is aligned to both the Europe 2020

goals and the growth strategy of the EU. It responds to four main objectives: (1) improving

consumer safety; (2) enhancing knowledge; (3) improving implementation; and (4)

stepping up enforcement and securing redress as well as aligning rights and key policies

to economic and societal challenges1. The latter is the financial instrument that backs the

implementation of the current consumer agenda2. The Consumers, Health, Agriculture and

Food Executive Agency (Chafea) is in charge of implementing the Consumer Programme.

In this regard, the Agency helps to improve the consumer conditions across the EU3 and

collaborates closely with the relevant Directorate Generals (DGs) of the European

Commission (EC).

In thiscontext of consumer protection, the EC periodically monitors the functioning of

consumer markets to ensure that consumers are treated fair and are protected.

Specifically, the real estate market has consistently displayed symptoms of mal

functioning regarding consumer protection. In their latest ‘Consumer Market

Scoreboard 2016edition’4, the Commission observed that the market for real estate

servicesshowed theworst performance of the 42 markets surveyed. Moreover, an analysis

by country showed a 19-point difference in the Market Performance Indicator (MPI)

between the country where the real estate market performedbest (Malta) and the one

where it performed worst (Croatia). The sector scored relatively better in Western and

Northern Europe, while it scores less than average in the Southern and Eastern European

countries. The worst performance was noted in the composite indicator that includes

aspects such as consumer trust, consumer problems, choice and comparability of offers

and the extent to which consumers’ expectations are met. It is also worth noting that the

2013 edition displayed a comparable situation5.

In addition, the market also seems to be highly complex, as evidenced by different studies

undertaken at EU level. Complexity is caused by numerous factors, for example:

•Several professionals are usually involved in real estate transactions;

•Different steps are included in the process of buying, selling, renting or letting a

property;

•Information asymmetries are observed in the market;

•Controversy arises on the way more or less regulation, as well as different types of

regulation, may affect levels of consumer protection.

Additionally, different legal traditions and national regulations may be found in the 30

countries inscope: this is reflected in variations across the countries in terms of market

functioning and regulation of real estate professions. Hence, to understand why the

consumer is experiencing problems and is being dissatisfied with the market, an analysis

of the national frameworks is required. This will allow to understand which practices across

1European Commission, (2012). “A European Consumer Agenda - Boosting confidence and growth”. SWD (2012)

132 final. Available at: http://ec.europa.eu/consumers/archive/strategy/docs/consumer_agenda_2012_en.pdf

2European Parliament, (2015). “Consumer Protection in the EU: A policy overview”. In-depth analysis. Available

at: http://www.europarl.europa.eu/RegData/etudes/IDAN/2015/565904/EPRS_IDA(2015)565904_EN.pdf

3European Commission, (2016). “About CHAFEA”. Available at: http://ec.europa.eu/chafea/about/about.html

4European Commission, (2016). “Consumer Markets Scoreboard. Making markets work for consumers”. Available

at: http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/12_edition/docs/consumer

_markets_scoreboard_2016_en.pdf

5 Idem