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Brussels, 3 May 2005

EU Financial services policy for the next five years

A new European Commission Green Paper launches ideas to further integrate EU financial markets. It focuses primarily on implementing existing rules agreed under the Financial Services Action Plan (FSAP) and on cooperation, rather than proposing new laws. It explores ways of improving cross-border access to retail financial services and asset management. The Green Paper is open for public consultation until 1 August 2005. The final financial services policy programme will be presented in November 2005.

Internal Market Commissioner Charlie McCreevy said: "Sequels to even the best originals tend to exhaust people’s enthusiasm, so there will be no FSAP 2. The key message is to consolidate the progress towards European financial integration over the next 5 years. Financial services integration has to produce real, tangible benefits for the citizens of Europe. People should be able to see lower costs for their financial needs, better pensions, and cheaper, safer retail financial products. So that is why I want to examine the retail and asset management areas very carefully, subjecting any new ideas to the rigorous “better regulation” agenda."

Building on the FSAP

Driving forward the integration of EU financial market is crucial for ratcheting up Europe’s economic growth and jobs potential. The FSAP has over the last six years aimed to put integrated, efficient, deep and liquid financial markets at the service of European issuers, investors and financial service providers. Almost all of the measures in the FSAP have been agreed and EU decision making and regulatory structures have become more efficient.

A short term need is to complete unfinished business and finalise legislation currently under negotiation in Parliament and Council. Furthermore, existing legislation must be implemented effectively, in three phases: effective transposition of EU rules into national law; more rigorous enforcement by supervisory authorities; continuous ex-post evaluation. At all stages of any future regulatory process, the Commission will apply the rigorous “better regulation” approach, with thorough impact assessment and extensive consultation.

In a few areas, new initiatives may be proposed. A separate Green Paper on asset management will be published in July 2005. The investment fund industry currently manages almost 5 trillion euro and a small improvement in efficiency has huge immediate beneficial economic effects.

EU’s market in retail financial services remains fragmented. The Commission will look, for example, at ways to make cross-border use of bank accounts more consumer friendly and to break down barriers so that customers can shop around all over Europe for the best savings plans, mortgages, insurance and pensions, with clear information so that products can be compared. The Commission will propose legislation only if there are clear economic benefits.

Other issues covered in the Green Paper include ensuring that supervisory practices and standards converge across Europe, encouraging cross-border investment and taking advantage of Europe’s strategic opportunity to influence the regulatory parameters of the emerging global financial market. Financial relations with the US, Japan, China have become and will remain more important.

The full Green Paper text is at:

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