Brussels, 3rd December 2001
Financial services: Commission urges Member States and the European Parliament to deliver on time
The case for an integrated European financial sector is greater than ever underlines the European Commission in its latest progress report on the Financial Services Action Plan. The launch of euro notes and coins, the economic slowdown, turmoil in financial markets in the aftermath of the tragic events of 11 September and the fight against terrorism require urgent measures to shield financial markets against instability, boost consumer confidence and stimulate growth. The report reviews progress in meeting the targets set out by the European Councils in Lisbon and Stockholm for the integration of EU financial markets by 2005 and of securities markets by 2003. It notes important progress both on the legislative and non-legislative front. The adoption of the anti-money laundering Directive, agreement on the cross-border payments Regulation, adoption of the European Company Statute, political agreement on the distance marketing Directive and the establishment of the committees for securities proposed in the Lamfalussy Wise Men's report are some of the breakthroughs achieved in the last semester. However, meeting the Action Plan deadlines remains a concern. The proposals on pension funds, prospectuses, financial conglomerates and International Accounting Standards, and a new proposal on Takeover Bids following the European Parliament setback in July, are key measures that should be adopted by end 2002 if they are to be implemented by the agreed deadlines.
Internal Market Commissioner Frits Bolkestein commented "Progress so far has been broadly satisfactory, but is not sufficient in itself to guarantee the integration of financial markets in the near future. After the 11 September attack we responded very rapidly with the adoption of the anti-money laundering Directive and the Regulation on cross-border bank transfers was agreed in record time. We need the same resolve to tackle all the remaining issues. An integrated European financial sector will be a motor for economic growth and jobs and a shield against financial instability. It will enable EU citizens and businesses to reap the full benefits of euro. The European Parliament and the Council must deliver on time."
Financial Services Action Plan
Twice a year, the European Commission reports to the Council on progress on the implementation of the Financial Services Action Plan. The Action Plan adopted in May 1999 by the European Commission, spells out the EU´s overall policy for achieving integrated financial markets. The European Councils in Lisbon and Stockholm endorsed the Action Plan, setting 2005 as the deadline for the integration of the financial markets and 2003 as target date for integration of the securities markets.
Of the forty-two measures in the Action Plan, twenty-five will have been completed by mid-December 2001. Nine of these are legislative acts adopted by the Council and the European Parliament. The remaining sixteen are Decisions, Communications, Recommendations or reports. The Commission will table eight further Action Plan measures. Six of these are legislative proposals, including updating the Capital Framework for banks and investment firms, a revision to the Investment Services Directive, the Regular Reporting Directive, amendments to the 10th and the 4th and 7th Company Law Directives, and a 14th Company Law Directive.
The political agreement reached on the proposed Regulation on cross-border payments was a major breakthrough (see IP/01/1668). It will enable our citizens to make payments to other EU Member States just as easily and cheaply as national payments.
The political agreement in the Internal Market Council on 27 September on the distance marketing Directive (see IP/01/1325), aimed at strengthening consumer protection as regards financial services traded on the internet and by phone was a breakthrough in developing an integrated financial market for consumers. The distance marketing Directive, together with the Commission's Communication on E-Commerce and Financial Services (see IP/01/185) will be a cornerstone of the policy for retail financial services in the future.
The Fraud Prevention Action Plan (see IP/01/231) will similarly help in increasing public confidence in cross-border payment systems and help the development of electronic commerce. There is a growing problem of fraud and counterfeiting of cards and other non-cash means of payment used for cross-border transactions. The Plan aims to improve the security of payments, the exchange of information, training of all parties concerned.
But further policy efforts are needed to establish a Single Market for all. Consumer protection must be enhanced and cross-border trade simplified. The EU Finance Ministers have endorsed the Commission's strategy for cross-border electronic financial services. And a new roadmap for a single retail financial market is being developed by the Commission in close co-operation with the Member States.
Combating money laundering and the financing of terrorist activities is a top priority for the Union. The adoption of the proposal to update the anti-Money Laundering Directive represented important progress in this field (see IP/01/1608). The rapid adoption of the market abuse Directive (see IP/01/758) and MEMO/01/203) will provide another cornerstone in the fight against illicit use of financial systems. The EU will continue to play a leading role in the Financial Action Task Force, the global organisation to counter money laundering.
Reflections are underway to look at cross-border transport of cash, and to consider easing bank secrecy laws so that the financial trails left by terrorists can be followed much more efficiently than today.
The Regulation on a Statute for a European Company, adopted on 8 October (see IP/01/1376), will offer an optional legal structure for companies to organise their operations on a European legal basis. The adoption of the Directives on investment funds (UCITS see IP/00/567) and on the Insurance Solvency Margin I (see IP/00/1233) is imminent. Agreement on the proposed Insurance Intermediaries Directive at the Internal Market Council on 26 November opens the way for its rapid adoption (see MEMO/01/388).
But some concerns remain
Meeting the Action Plan deadlines agreed by the Council of Finance Ministers and the European Council remains a source of concern. The failure of the European Parliament to agree the takeover bids Directive was a major setback. The measure was aimed above at protecting minority shareholders in the event of a hostile takeover bid. The Commission will table a revised proposal early next year (see IP/01/1237). A second concern is the absence of decisive progress in the Council on the proposed pension funds Directive. The proposal was tabled by the Commission in October last year (see IP/00/1141), and is scheduled for adoption in the Action Plan by 2002. The Parliament completed its first reading in July. A third concern relates to three key financial services priorities identified by the European Council: the proposed Directives on prospectuses (see IP/01/759 and MEMO/01/204) and financial conglomerates (see IP/01/609) and the proposed Regulation on International Accounting Standards (see IP/01/200 and MEMO/01/40).
Political declarations from the Council of Finance Ministers and the European Council must now be translated into hard agreements and real progress. The EU will suffer the political and economic consequences unless politically and technically viable solutions can be found within the set timeframe. By the end of next year, ten more legislative proposals must be adopted to meet the Action Plan deadlines.
The Commission will initiate a Mid-Term Review in February 2002 as the basis for renewed high level political commitment to the Action Plan and its deadlines prior to the Barcelona European Council in March. The Review will assess progress, reaffirm the key importance of an integrated financial sector for European competitiveness and growth; confirm a commitment at the highest level by all institutions concerned to achieve the Action Plan's objectives and set out the concrete priorities and commitments necessary to deliver key Action Plan proposals by agreed deadlines.
Detailed and regularly updated progress on the Action Plan measures is available on the Internet at: