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Brussels, 22nd February 2002

Financial Services Action Plan: Mid-Term Review emphasises need for swift progress

The importance of integrated capital markets for economic growth, job creation, financial stability, lower prices and for enabling consumers to reap the full benefits of the euro was underlined in Brussels today at the Mid-Term Review of the Financial Services Action Plan (FSAP), adopted in May 1999 (see IP/99/327). Participants included representatives of the Member States, Members of the European Parliament, and leading players from the financial services sector. They stressed the need for further rapid progress if the Action Plan is to be completed on target in 2005 and if the EU is to reach the goal set by the Lisbon European Council of becoming the most competitive economy in the world by 2010. They welcomed the progress already made (with legislation adopted in areas such as combating money laundering, cross-border payments and insurance solvency) and called for renewed efforts over pensions, prospectuses, financial conglomerates and takeovers. They hailed as a springboard for further progress the agreement between the European Institutions over implementing the recommendations of the Committee of Wise Men on the Regulation of European Securities Markets, chaired by Baron Alexander Lamfalussy (see IP/02/195). The Review also addressed the issue of consumer protection and stressed the need for clear information to the public on the long-term benefits of financial integration.

European Commission President Romano Prodi said: "Implementation of the Financial Services Action Plan must not be allowed to falter or fail. That would undermine our whole strategy for sustainable growth, competitiveness, stability, employment and innovation. Now, more than ever, political statements must be translated into hard commitments and firm agreements." (see SPEECH/02/82).

Closing the conference, Mr Bolkestein described the day's discussions as "most constructive and fruitful". He added: "To me, the most striking observation is the degree of consensus on the importance of the overall objectives, on how to get there and on how crucial it is to do so quickly."

The main conclusions of today's review were:

  • the Financial Services Action Plan contains the right measures to achieve an integrated European financial sector. These measures as a whole must be agreed and implemented on time, by 2005

  • the measures aimed specifically at putting in place an integrated securities and risk capital market need to be implemented by 2003

  • now that agreement has been reached with the European Parliament on the implementation of the Lamfalussy proposals, these should be put into practice quickly in specific legislative proposals. These proposals should be based on wide and continuous consultation of market participants and other interested parties, including consumer groups

  • there will need to be tight monitoring of the implementation of existing and future legislation on the ground, in order to ensure that it delivers what it sets out to deliver

  • political agreement should be sought in the Council by June 2002 on the proposed Directives on Financial Conglomerates, Prospectuses and Pension Funds, with their final adoption by December 2002. A particular priority should be providing citizens with better and more portable pensions and helping governments to address constructively the problem of funding pensions

  • in order to meet these deadlines the closest co-operation between EU institutions will be essential. The institutions should try to agree, whenever possible, on a single reading or accelerated second readings. In particular, the International Accounting Standards Regulation and the proposed Directives on Collateral, Market Abuse, Insurance Intermediaries and Distance Marketing should be adopted by June 2002

  • the world has changed since the publication of the FSAP in 1999. After the 11 September events, the collapse of Enron and the advent of euro notes and coins, there is a need to ensure that the EU's policy on financial services is in line with new realities, without neglecting the clear priorities and measures already in the FSAP. In the coming months the Commission would therefore further intensify its work on issues such as auditor independence and standards; corporate governance; clearing and settlement; financial stability; reinsurance; more advanced insurance solvency rules; money laundering; the integrity of the financial sector and the development of an integrated market for retail financial services

  • financial reform must secure the support of public opinion. This requires clear communication of the long-term benefits and appropriate consumer protection within a level regulatory playing field. Adequate prudential safeguards and effective competition policy are also key adjuncts to the FSAP measures

Mr Bolkestein promised that the Commission would present as soon as possible its remaining proposals under the Action Plan, including Takeover Bids, a revision of the Investment Services Directive, and a number of company law related Directives. The Commission would also bring forward proposals on capital requirements for banks. A consultative document would be issued as soon as work on a new Capital Accord in the Basel committee on banking supervision was sufficiently advanced (see IP/01/1862).

The Mid-Term Review is one of a series of steps in the approach to the March 2002 Barcelona Summit, where Heads of State and Government will discuss progress made in the EU economic reform process. Its conclusions will feed into the 14th meeting of the Financial Services Policy Group, comprising personal representatives of Finance Ministers, on 26 February. The Review will also contribute to discussions at Ministerial level in the run up to the summit.

The European Round Table on Financial Services (ERF) contributed to the review through the participation of its Chair Pehr Gyllenhammar. The ERF is an industry body representing many of Europe's largest financial institutions and has recently drawn up a report on the benefits of financial integration.

Full details of participants and the programme are available on the Europa website: details of the conclusions will be posted on the same page as soon as possible.

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