Brussels, 3rd June 2002
Financial services: latest progress report highlights positive climate
The sixth and latest progress report on the Financial Services Action Plan (FSAP) reflects a significant and welcome change in the political climate and concludes that there has been "real and tangible progress". The longstanding political commitment to implement the FSAP on time is now being translated into firm agreements, with more and more measures being adopted or making encouraging progress. The Commission launched the FSAP in May 1999. At the Lisbon summit in March 2000, Heads of State and Government set a target date of 2005 for the plan to be completed. The target for the securities and risk capital markets is the end of 2003. The rhythm of recent successes needs to be maintained if these targets are to be met: in particular, swift results are needed on areas where agreement has so far proved problematic, such as prospectuses and take-over bids. The full text of the progress report, prepared by the Commission with the Financial Services Policy Group (FSPG), comprising personal representatives of EU finance ministers, is available http://europa.eu.int/cominternal_market/en/finances/actionplan/index.htm
Commission President Romano Prodi said: "The Financial Services Action Plan is about delivering an integrated financial market. That will build confidence and greatly strengthen the European Union. Everything that happens in the financial markets affects every single citizen of Europe, every single day. Integrating those markets will make them more competitive and efficient. That in turn will boost prosperity, create jobs and put downward pressure on prices. I am pleased at the progress we are making. Today I call on political leaders, on the European Parliament, on the Council, on market leaders, investors, consumers and regulators to keep working with us to complete the process."
Internal Market Commissioner Frits Bolkestein added: "Integrating EU financial markets will hugely improve prospects of the EU meeting its target of becoming the most dynamic and competitive economy in the world by 2010. At the half way stage in our timetable for implementing the Financial Services Action Plan, that prize is within reach. The pace of progress has increased significantly in the last few months. But this is a marathon not a sprint and there can be no let-up."
In the last few weeks alone, the Commission has issued a Recommendation on Auditor Independence (see IP/02/723 and MEMO/02/96), for modernising the Accounting Directives (see IP/02/799), and for amending the first Company Law Directive to make it easier for companies to disclose required information (see IP/02/798). It has also issued a consultative communication on Clearing and Settlement (see IP/02/797). It will shortly present proposals for a Fifth Motor Insurance Directive.
The Council is expected in the next few days to adopt the International Accounting Standards Regulation (see IP/01/200 and IP/02/417) at first reading and reach a first agreement on the pension funds directive on 4 June (see IP/00/1141). It recently reached a common position on the proposals related to the simplification of the Life Assurance directives and is in the process of doing so on the financial conglomerates (see IP/01/609) and market abuse proposals (see IP/01/758).
At its May plenary, the Parliament adopted the Collateral Directive (see IP/02/713) and approved at second reading the proposal for a Directive on distance marketing of Financial Services (see IP/02/707).
The report concludes that, taken together with earlier steps forward, these advances constitute "real and tangible progress", though "significant challenges" remain if the FSAP is to be completed on target. The FSPG has contributed significantly towards the progress made since the last progress report notably by identifying key political obstacles in a number of specific proposals where deadlines are under threat. But Member States must continue to demonstrate the necessary political will to compromise during the discussions themselves. The closest possible co-operation between the EU Institutions is also essential in order to obtain as many single reading agreements or accelerated second readings as possible.
The report warmly welcomes the agreement between the Commission and the European Parliament on implementing the new approach to securities legislation recommended by the Lamfalussy Committee. It notes that February's mid-term review of the FSAP by leading political, regulatory and industry players, the Barcelona European Council in March and the informal meeting of finance ministers in Oviedo in April have all stressed the benefits of financial integration for economic growth and job creation.
The Barcelona European Council set a clear deadline of the end of 2002 for final adoption of eight legislative proposals - on market abuse, collateral, distance marketing of financial services, insurance intermediaries, prospectuses, financial conglomerates, accounting and pension funds
The report identifies two areas of concern where progress is slow: Prospectuses, where discussions scheduled for the Ecofin Council of 4 June will hopefully give new impetus towards adoption and take-over bids, where, following the defeat of the previous proposal by a single vote in the European Parliament, the Commission will bring forward a new proposal this summer. This new proposal will benefit from wide consultation and from the recommendations of the High Level Group of Company Law Experts (see IP/02/24).
On policy issues related to Enron, the report refers to the paper submitted by the Commission to the informal meeting of Economics and Finance Ministers in Oviedo in April (see IP/02/584). Most of the regulatory issues highlighted by Enron are already being tackled by the FSAP. The mandate of the High Level Group of Company Law experts has been expanded so that it will recommend (by September 2002) best practices in corporate governance and auditing. The Commission is also assessing the need for further proposals on financial analysts and credit rating agencies.