Financial services had quite a lot of such things regulated multiple years earlier under different EU directives, for example the Payment Services Directive that covers common payments, credit cards and direct debits; and introduced some nice rights for the consumers.
There are many specific things that don't make any sense for goods but rely on the particular nuances of specific financial products, so they are regulated separately, not within this directive.
Of course, that doesn't mean that the current financial services regulation is competely done and doesn't need further improvement for consumer rights, but it should be expected to be done separately, in domain-specific legislation.
If I, as a consumer from continental Europe, can't be subject to what is essentially a rippoff by UK online shops any more, then it is a win. It even makes it easier for UK online shops to be compliant with consumer protection laws within the rest of Europe.
Downsides are the same as always. The higher the regulation burden, the fewer new companies and products we will see. This is how we ended up relying on Americans for almost every service online, computers, phones...
Even with all the upside, I don't that's the right trade-off. But once you start piling up exemptions, and industry-specific rules, you forgo most of the benefit you could have achieved with uniform regulation.
This was the whole point behind letting EU set up the regulatory regime: to create a single EU-wide market. It's self-defeating to unify it across countries and then break up into hundreds of industries.
If a company that formerly would have existed will now not spring into existence because it breaks these new regulations, then I say good riddance. One less scam merchant looking to make a fast buck by ripping off their customers. That's an area we really don't need any more innovation in.
It's not about breaking this or that particular regulation. It's the sheer number you have to comply with. Even if every single regulation was positive on its own, in aggregate they could still stifle economic development and lead to perverse results.
Take web for example. Of course it would be better if every website followed standards, was available to impaired users, and over ssl. But if you started fining people who fail to live up, you would make it prohibitively expensive to run a private site outside of a handful of massive platforms established by large corporations who can afford developers and usability testing.
We understand that in this context. The advice to start with whatever works and iterate from there is common.
It's the same with running a company. The more requirements there are, even if each one is perfectly reasonable, the fewer people will be able to afford to start them, the less innovation we will see, the more we will rely on foreign products from countries with lesser regulation burden.
Makes you wonder why financial services are exempt. Do they simply have better lawyers and lobbyist or is there an actual good reason.
Yes, ordering from Ryanair is pretty complicated if you don't want to end up paying all sorts of fees, but financial services can be even harder to understand and have more long lasting consequences. If anything financial services should be the first to be targeted.
Great. Let's take all the downside of heavy regulation but give up most of the upside.