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Brussels, 11 January 2000

Financial services: infringement proceedings against Luxembourg and Portugal

The Commission has decided to take Luxembourg to the European Court of Justice for failure to transpose the Directive on investor-compensation schemes and has also decided to send Portugal a reasoned opinion (the second stage of infringement proceedings) for incomplete transposal of the Directive. Should a Member State which has received a reasoned opinion fail to give a satisfactory reply within two months, the Commission may refer the case to the Court of Justice.

The Directive on investor-compensation schemes was adopted in March 1997 (see IP/97/138) with a view to boosting confidence among small investors. It requires Member States to ensure that one or more schemes are in place to compensate investors (essentially smaller investors) in the case of failure of an investment firm (bank or non-bank), where the firm proves unable to repay or return to investors the money or securities entrusted to it. Losses incurred as a result of a fall in the market value of an investment are not covered. Member States may set a ceiling on the level of compensation but any such ceiling cannot be less than EUR 20 000.

Member States had to transpose the Directive into national law by 28 September 1998 at the latest (see IP/99/601), but Luxembourg has still not notified any national measures adopted to that end.

Portugal has for its part notified only some of the national measures necessary for transposing the Directive. The Decree-Law of 22 June 1999 establishing a compensation scheme refers on some important points to regulations which are to be adopted by the Securities Market Board and approved by the Finance Minister but which have not yet been notified to the Commission. The regulations in question should relate in particular to the eligibility for compensation of persons investing with branches of firms established in other Member States and the arrangements for financing the scheme, without which it would be ineffective.

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