In what follow with present key statistics related to the Spanish population, age structure, gender distribution and income. Those statistics provide a clear picture of the demographic dynamics that impact the dynamics of financial markets, and
M. Guillen (&)J. M. Uribe
University of Barcelona, Barcelona, Spain e-mail: mguillen@ub.edu
©Springer Nature Singapore Pte Ltd. 2018
T.-J. Chen (ed.),An International Comparison of Financial Consumer Protection, https://doi.org/10.1007/978-981-10-8441-6_12
333
constitute the individual subject to regulation and protection byfinancial authorities in Spain and in the European Union. They also help to foresee future tendencies in both, financial markets and the legal status of thefinancial consumer, which cer- tainly will require considering changes in the age structure and the type offinancial services required (Fig.1).
The total population in Spain reached a peak in the years 2011–2012 and afterwards has started to decrease. The average yearly growth rate of 1.71 that featured the population dynamics from 2005 to 2008 was replaced by an annual growth of 0.44 between 2009 and 2012, and then by an annual reduction around
−0.25 from 2013 to 2015. This pattern is explained by the demographic transition, typical of high-income economies, during the later decades, which consists in a sustained reduction of fertility rates, accompanied by a reduction in mortality, both at early and late ages. The population-aging phenomenon that characterized the financial consumer in Spain is better shown in the next twofigures; which describe the age structure of the Spanish population (Figs.2,3).
As can be observed in the twofigures above, the age structure of the Spanish population has slightly changed during the last decade. In particular the share of population above 65 years has increased from 16.63% in 2015 to 18.80%, 10 years later. The population bellow 14 years has shown instead a rather stable participation in the total (14.32% in 2005 against 14.88% in 2015), while the working age population, between 15 and 64 years has decreased from being a 69.03% of the total in 2005, to a 66.3% in 2015. This tendency is expected to be reinforced in the future, while the phenomenon of population aging is still in place. In the pyramid plot may be seen that this dynamics implies a significant reduction of the Spanish labor supply and considerable increments in the size of old population for the year 2064, and even as soon as for 2029. The expected demographic changes in the near future are remarkable for both males and females.
The patterns described above explain a notable interest by academics and politicians in the issues related to population aging and longevity risk in Spain, an in European countries in general, during the last years. This interest is completely
Fig. 1 Total population in Spain, 2005–2015.Source National Statistics Institute of Spain
justified, given the fact that this phenomenon affects different products and con- tracts involving public and private sector agents alike in thefinancial markets. For instance, it has an impact on immediate and deferred annuities, enhanced and impaired annuities, guaranteed annuity options, lifetime mortgages and, more importantly, defined benefit pension schemes. Therefore it threatens current agreements infinancial markets and imposes huge challenges for regulators in the near future. Among these, the ones related to pension schemes are by far the most worrying ones. To foresee and restructure regulation is relevant not only for insurance companies or private employers, who promise a pension on retirement Fig. 2 Age structure of population in Spain, 2005–2015.SourceNational Statistics Institute of Spain
Fig. 3 Expected changes in the population structure, 2014–2064.SourcePress Bulletin October 24 2014, National Statistics Institute of Spain, Page 7
based on the employee’s final salary, but also for institutions within the public sector, which typically offer generousfinal salary benefits, albeit largely unfunded.
We turn now to statistics related to economic standards of the Spanish popu- lations, which bound thefinancial consumer investment opportunities in Spain by saving, or its debt capacity withfinancial institutions (Fig.4).
The analysis of the man indicators shows a remarkable reduction in the Spanish income from 2007 to 2013. The reduction, which accounts for above 8.9% in real terms, was the consequence of the global financial crisis that spanned the years 2007–2009, and the subsequent European debt crisis from 2010 to 2013. Both events affected greatly the Spanish economy and impacted the generation of income negatively, with important consequences for financial markets and therefore for financial consumers. Indeed, as we will be explore in the next sections, these two crises made evident the priority of addressing relevant issues of the European common regulation of banks and insurance companies, and the necessity of pro- gressing towards a more general and solid framework to resolve bankruptcies of multinationalfinancial institutions, while preserving the domesticfinancial stability of the countries within the Union.
Thefigure also shows a partial recovery of the national per capita income from 2013 to 2015. In the last year it reached levels similar to those in 2009, before the European debt crisis (around USD 3400). Yet it has not returned to the pre-crisis levels in 2006–2007. It must be noticed that the economic recovery of the European economies, among them Spain, has been considerably slower than in other coun- tries, including United States itself where the crises begun. This has warned politicians and financial authorities, which have recently started to acknowledge drawbacks in the monetary union implementation, and the necessity of more flexible and coordinatefiscal policy stances in the European Union.
In what follows we show the recent evolution of the securities and banking markets in Spain (Figs.5,6).
As can be observed in the twofigures above, the globalfinancial crises implied a remarkable reduction of Spanish stock market capitalization and banks credit to the
Fig. 4 GNI per capita in Spain, 2005–2015.Source National Statistics Institute of Spain
private sector. This was particularly notorious during the years 2007–2008 in the stock market, and 2012–2013 for the credit market.
2 Financial Consumer Protection Institutions (Hardware)
Regulation offinancial institutions in Spain, and therefore protection of thefinancial consumer are subject to the guidelines of the European Union (EU). Indeed, there exist since the decade of 80s, transnational regulatory committees around Europe, which oversee financial activities across the European Union members and other countries that have whished to align to the same principles. In Frankfurt one can find the European Insurance and Occupational Pensions Authority (EIOPA); in Paris the European Securities and Markets Authority (ESMA), and in London the European Baking Authority (EBA).
Fig. 5 Domestic credit provided by thefinancial sector (% of GDP).Source National Statistics Institute of Spain
Fig. 6 Market capitalization of listed domestic companies (current US $).Source National Statistics Institute of Spain
Moreover, very recently, in an attempt to foster coordination across its members especially for managing crises episodes, the European Union has established the European Systemic Risk Board (ESRB), which consists of the members of the European Central Bank’s (ECB) council, the chairpersons of the EIOPA, EBA and ESMA, and one member of the European Commission. There are also chairs of an Advisory Scientific Committee and an Advisory Technical Committee. In thefigure bellow we present the general organization of the supervisory authorities in the EU (Fig.7).
In Spain, the issues related to restructuring and resolution processes of credit institutions are in charged of the Fund for Orderly and Bank Restructuring (FROB) established in 2012. The issues related to the insurance market are under the supervision of the Directorate General for Insurance and Pension Funds andfinally, regarding the securities markets, there is the Spanish National Securities Market Commission and the Ministry of Economy. Above all of the former and in charge
Fig. 7 Supervision European regulatory framework.Source(Larosière2009, page 56)
of conducting macroprudential policy in the country is the Bank of Spain (BOE), which acts as a supervisor in the three markets.
3 Financial Consumer Protection System (Software)
In what follows we describe the general features of securities, banking and insur- ance markets regulation, and the principles that underliefinancial consumer pro- tection in each case.