Financial Services: European Commission Sets Up Specialist Groups To Take Stock Of Action Plan And Look To The Future

The European Commission, with the help of four new expert groups of market practitioners, is to launch an in-depth assessment of the state of integration of European financial markets. The assessment process begins as the five-year legislative phase of the Financial Services Action Plan (FSAP) draws to a close. The assessment will be wide-ranging, transparent and open. The formation of the expert groups, made up of high-calibre specialists in the fields of banking, insurance, asset management, and securities trading, is the first step in the process. The groups will help the Commission to map out key issues for discussion during the ensuing open consultation.

Internal Market Commissioner Frits Bolkestein said: "We can see on the horizon the destination we fixed for ourselves in 1999: an integrated EU capital market. We have consulted markets and investors all the way and we are going to continue doing so. The groups I am setting up today will help pinpoint exactly how far down the road we are. On the basis of their advice we will consult the markets as a whole, along with investors and consumer groups, to make sure we stay on course during the final leg of the journey."

As the legislative phase for the FSAP draws to a close, the Commission believes it opportune to undertake a systematic assessment of the state of integration of European financial markets. This assessment will draw lessons from the experience of the last five years and serve as a comprehensive basis for debate on future priorities for European financial policy. In keeping with its commitment to transparency and wide-ranging consultation, the Commission wants to involve all stakeholders in this evaluation. The expert groups it is setting up today will prepare the ground for a wider strategic debate in 2004.

The process is not the prelude to a comprehensive new legislative programme along the lines of the FSAP. The results of the consultation process may serve as the basis for further debate on specific areas where carefully targeted legislation is necessary. It may also identify areas where further EU-level legislative action is not necessary or productive.

The main milestones in the process will be:

• November 2003: the four sectoral groups will convene for the first time to assist the Commission in mapping out the state of integration for the key types of financial institutions and products (banking, insurance, asset management, investment intermediation)
• November 2003: the Commission will present its 9th progress report on the Financial Services Action Plan
• Spring 2004: publication of the Commission report on "tracking financial integration" which will provide some empirical data to set the scene for the policy discussions
• Summer 2004: publication of the reports from the sectoral groups, followed by a high-level conference and an open consultation exercise
• Autumn 2004: publication of a document of the Commission services synthesising the views and analysis put forward during the consultation process.

Composition of the sectoral groups

Lists of the members of each group are annexed, along with their nationality and organisations (these details can also be down-loaded from the Commission's web site at http://europa.eu.int/comm/internal_market/en/finances/actionplan/index.htm.

Members have been selected in the light of their personal expertise. Membership of the groups has been carefully considered in order to cover all main business areas, to ensure geographical balance - including knowledge of the new Member State markets - and to get input from both service providers and investors/market-users.

The sectoral groups' mandates

The mandate for the sectoral groups is to assist the Commission in assessing progress made under the FSAP in removing regulatory/legal barriers to the provision of services, to the performance of financial transactions and to the organisation of business on a cross-border basis. Detailed terms of reference for the different groups can be found at http://europa.eu.int/comm/internal_market/en/finances/actionplan/index.htm.

The groups will advise the Commission on:

• the extent to which recent (or pending) legislative initiatives at Community level have helped (will help) to overcome or reduce regulatory, supervisory, administrative or other public policy impediments to undertaking or organising different aspects financial business on a pan-European basis
• any additional regulatory or public policy barriers which play a determining role in preventing the re-organisation of financial segments or business functions on a pan-European basis
• any elements relevant to the nature or magnitude of likely costs and benefits of steps to remove such barriers
• situations where there is no compelling case for further EU legislative action.

The groups are scheduled to complete their work by early April 2004. The reports, recording the broadest possible consensus within the group, will be published for open consultation as soon as possible after completion.

Background

The Financial Services Action Plan has been a top EU policy priority since its launch in 1999. The FSAP set itself the target of putting integrated, efficient, deep and liquid financial markets at the service of European issuers, investors and financial service providers. The European Parliament, Member States, market participants and national supervisory authorities have invested enormously in achieving the objectives of the FSAP.

Thirty-six of the 42 measures foreseen in the FSAP have now been adopted - with good prospects for adoption of at least some of those outstanding. Specific elements of individual proposals recently, for example, the Prospectuses Directive adopted in July 2003 (IP/03/1018) and the proposed Investment Services Directive, where debate is continuing (see IP/03/1352 and MEMO/03/193) - have often been the subject of fierce controversy. However, in most cases issues have been resolved on a basis largely satisfactory to most stakeholders. From a macro-perspective, the project has laid the legislative foundations for an effectively integrated market for many segments of European finance.

A recent study estimated that the integration of Europe's corporate bond and equity markets would reduce the cost of capital, boost EU GDP by 1.1% over the next decade, and increase employment by 0.5 per cent, with benefits accruing in all Member States (see IP/02/1649). This study measured only one source of static efficiency benefit from integration of EU capital markets the narrowing of bid-offer or credit risk spreads due to greater liquidity in integrated financial markets. It is therefore an estimate of only part of the overall benefits of financial integration.

FSAP Stock-taking: Composition of 4 Expert groups

Note to reader: The following tables present the names and parent organisations of the participants in each of the 4 expert groups who have agreed to publication of their names and parent organisations. A small number of group participants have requested that their identity not be disclosed for the purposes of this press release.

Please click here to view tables of expert groups.