Category Archives: Financial Services: General Framework

The integration of financial markets means that capital can be allocated more efficiently and makes for better long term economic performance. The European Union has established a legislative framework geared to strengthening the financial services sector, in particular in order to improve the performance of financial operators and boost liquidity, competition and financial stability.
European policy on financial services shares some concerns with that on the free movement of capital when it comes to facilitating, and improving the security of, financial activity. Such issues stem in particular from the cross border character of this activity, but also from the massive growth in services based on new technologies.
Financial services policy covers three main sectors: the banking system, insurance and securities. Apart from laying down rules for operators and investors (banks, insurance and securities), the Union also intends to give greater protection to consumers in specific areas such as retail financial services.

Internal Market

Internal Market

Internal Market Contents

  • Internal market: general framework
  • Living and working in the internal market: Free movement of people, asylum and immigration, free movement of workers
  • Single Market for Goods: Free movement of goods, technical harmonisation, product labelling and packaging, consumer safety, pharmaceutical and cosmetic products, chemical products, motor vehicles, construction, external dimension
  • Single market for services: Free movement of services, professional occupations, services of general interest, transport, Information Society, postal services, financial services, banks, insurance, securities markets
  • Single market for capital: Free movement of capital, economic and monetary union, economic and private stakeholders, fiscal aspects, combating fraud, external relations
  • Businesses in the internal market: Company law, public procurement, intellectual property

See also

Living and working in the internal market.
Overviews of European Union: Internal market.
Further information: the Internal Market and Services Directorate-General of the European Commission.

Financial education

Financial education

Outline of the Community (European Union) legislation about Financial education


These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: general framework

Financial education

Document or Iniciative

Communication from the Commission of 18 December 2007 – Financial education [COM(2007) 808 final – Not published in the Official Journal].


In view of the knowledge gap among consumers with regard to financial products and the increasing choice and complexity of these products, the Commission decided to promote the development of financial education within the European Union (EU).


This Communication is one element in the package of measures on retail financial services set out in the Commission’s report on ‘a Single Market for 21st Century Europe’ and it aims to assist stakeholders in the development of financial education programmes by:

  • raising awareness of the need to address low financial education;
  • providing high-quality financial education within the EU;
  • sharing best practices;
  • developing practical tools to facilitate better financial education teaching in schools.

Importance and economic and social benefits of financial education

Financial education benefits individuals (for example, by enabling them to make better financial provision for unforeseen situations), society (by reducing the risks of financial exclusion and encouraging consumers to plan and save some part of their incomes), and the economy as a whole (by encouraging informed behaviour and the provision of liquidity to financial markets).

Two recent studies funded by the European Commission point out, among other things, that financial education is provided by a large number of actors (supervisory authorities, social workers, public education, etc.) within the Member States and that the number of national initiatives in this area varies widely.

Baseline surveys undertaken at Member State level help to set out the priorities, and facilitate the monitoring of progress after a given period of time. In addition, several studies show the positive behavioural change that can result from participation in financial education programmes.

Framework for Community action

The field of education comes under the competence of the Member States. However, action can be taken by the Community in the framework of consumer information and education measures, and by implementing measures that support and supplement the policy pursued by the Member States.

Among the actions already undertaken, the Commission has set up an online educational tool, Dolceta, offering consumer education to adults, and the ‘Europa Diary’, an information booklet for students in secondary education.

The May 2007 Green Paper on Retail Financial Services pointed out that more could be done to encourage financial education. This was also confirmed by the replies to the Green Paper, in particular with regard to the Commission’s dissemination of best practices and the adoption of non-binding Community rules to aid financial education providers.

Basic principles for the provision of high-quality financial education programmes

The Commission has set out eight principles that could aid the stakeholders involved in disseminating financial education to devise and implement financial education programmes:

  • financial education should be available and actively promoted at all stages of life on a continuous basis;
  • financial education programmes should be carefully targeted to meet the specific needs of individuals and be timely and easily accessible;
  • consumers should be educated in economic and financial matters as early as possible, from school age and this education should, preferably, be included in the general school curriculum;
  • financial education programmes should include general tools to raise awareness of the need to improve understanding of financial issues and risks;
  • the financial education programmes provided by financial services providers should be fair, transparent and objective. They must always be in the consumer’s interest;
  • financial education trainers should be given appropriate training and the necessary resources;
  • national coordination between stakeholders should be promoted and international cooperation between financial education providers should be enhanced to facilitate the exchange of best practices;
  • financial education programmes should be regularly evaluated and, where necessary, updated.

Planned initiatives and practical assistance

Although financial education is indeed the responsibility of the Member States, the EU can provide considerable practical assistance. The Commission has, therefore, identified the following initiatives as a matter of priority:

  • setting up a group of experts in financial education, which will have the task, among others, of promoting and sharing best practices, and advising the Commission on the development of its financial education policy;
  • providing sponsorship (including messages of support and the use of European logos) to the Member States and actors in the private sector, for the organisation of national and regional conferences and for any other initiatives seeking to promote financial education;
  • publishing on the Commission website a database of financial education programmes and research in the EU, in order to facilitate consultation of best practices and research in this field;
  • developing, from 2008, a new Dolceta module for teacher-training in financial education, with the aim of encouraging and helping teachers in primary and secondary education to incorporate financial issues into the general curriculum.


Commission Decision 2008/365/EC of 30 April 2008 setting up a group of experts on financial education [Official Journal L 125 of 9.5.2008].
This Decision sets up a group of experts on financial education whose mission is to promote best practice in this field and to advise the Commission on the implementation of the principles detailed in its Communication of 18 December 2007. The group is composed of 25 specialists representing the public and private sectors appointed by the Commission for a mandate of three years renewable.

Institutions for occupational retirement provision

Institutions for occupational retirement provision

Outline of the Community (European Union) legislation about Institutions for occupational retirement provision


These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: general framework

Institutions for occupational retirement provision

Document or Iniciative

Directive 2003/41/EC of the European Parliament and the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision. [See amending acts].


The Directive lays down rules for the taking-up and pursuit of activities carried out by institutions for occupational retirement provision. It aims to ensure a high level of protection for future pensioners (“members” * and “beneficiaries” * of pension funds) while guaranteeing efficient investment by establishing three sets of rules:

  • strict prudential rules to protect the beneficiaries and members of IORPs, who must have sufficient information on the rules of the pension scheme, on the institution’s financial situation and on their rights;
  • investment rules adapted to the characteristics of IORPs and to an efficient management of savings since IORPs invest on a long-term basis and have to diversify their assets by taking full advantage of the benefits offered by the single market and the euro. If each institution is to establish the safest and most efficient investment policy, the investment rules, and in particular the rules for investing in shares, must not be too restrictive;
  • rules permitting cross-border management of occupational pension schemes.

This cross-border management requires mutual recognition of supervisory methods in force in the Member States and must be supplemented by an appropriate degree of tax coordination.

This Directive does not concern the institutions covered by the Directive on life insurance and the Directive on Alternative Investment Fund Managers.

The European Insurance and Occupational Pensions Authority (EIOPA) is responsible for collecting the information communicated by Member States and for publishing such information on its website. The Authority must be informed of the cross-border activities of an IORP.

The EIOPA may develop draft implementing technical standards on the forms and formats for the documents necessary for the exercise of supervision. It cooperates closely with Member States and the Commission.

This Directive will help achieve the following aims:

  • Ensuring a high level of protection for members and beneficiaries of pension funds

    The Directive clearly sets out how IORPs should function. Members and beneficiaries are properly informed about the rules of the scheme, the financial situation of the institution in question and their rights. Commitments as to future benefits are carefully calculated and represented by sufficient assets on the balance sheet.
    Member States are urged to confer on their supervisory authorities the necessary powers to supervise their IORPs effectively.
  • Allowing institutions to accept as members companies located in other Member States and to manage their pension schemes

    On the whole, occupational retirement providers operate only in the Member State in which they are based. Companies located in ten different Member States must therefore call on the services of ten different providers. For multinational companies, this could cost around EUR 40 million a year. Considerable economies of scale could be achieved if one IORP could manage all the different schemes of the same company doing business in several Member States.
    To this end, the Directive authorises mutual recognition of the supervisory schemes in force in Member States. An IORP can therefore manage the schemes of companies located in other Member States by applying the prudential rules of the Member State in which they are located (home-country control).
    The Directive nevertheless guarantees the continuing application of Member States’ social and labour legislation (i.e. the legislation governing the relationship between “sponsoring undertakings” * (which pay contributions into IORPs) and members).
  • Allowing IORPs to implement investment strategies suited to the characteristics of their pension schemes

    Given that IORPs invest on a very long-term basis, they need to be free to apply whatever investment policy is best suited to the commitments they have made. The Directive lays down a set of principles aimed at helping IORPs define their asset-allocation strategy in accordance with the “prudent person” rule.
    In accordance with this rule, assets should be invested in the best interests of members and always in a broadly diversified manner in order to ensure the portfolio’s security, quality, liquidity and profitability. The Directive also lays down that investments in shares and capital investment should not be unduly restricted. However, Members States will be able to subject IORPs established under their jurisdiction to more detailed investment rules but must allow IORPs to invest at least 70 % of their technical provisions or their portfolio in shares and corporate bonds and at least 30 % in currencies other than that in which their future pension payments are expressed.
    Furthermore, the Directive allows the host Member State (where the company paying the contributions is based) to request the home Member State (where the retirement provision institution is located) to apply certain quantitative rules to assets held by cross-border pension schemes provided that the host Member State in question applies the same (or stricter) rules to its own funds. These quantitative rules govern investments in assets not admitted to trading on a regulated market, assets issued by the sponsoring undertaking and assets denominated in currencies other than that in which their future pension payments are expressed.
    Finally, Member State shall require IORPs an adequate available solvency margin at all times which is at least equal to the requirements in this Directive. The available solvency margin shall consist of the assets of the institution free of any foreseeable liabilities, less any intangible items. It is possible that one third of the required solvency margin shall constitute the guarantee fund (minimum EUR 3 million – this amount shall be revised every year).
  • Respecting Member States’ prerogatives regarding social protection and pension schemes

    The principle of subsidiarity lays down that it is for the Members States to organise social protection and pension schemes. The choice between pay-as-you-go or funding schemes, the balance that may need to be struck between these two types of scheme and the encouragement of certain types of retirement savings scheme are decisions left entirely to the Member States. Occupational retirement schemes based on the funding principle exist in most Member States, but they currently account for the bulk of retirement schemes available in Ireland, the Netherlands and the United Kingdom.
    The Directive in no way affects this national prerogative. It simply aims to allow the internal market to perform to its utmost, primarily in the interests of future pensioners, while fully respecting national prerogatives. A coherent Community framework strengthening the security and efficiency of IORPs and allowing them to benefit fully from the internal market and the euro will be a major asset for those Member States wishing to develop the role of occupational retirement schemes in their pension systems.


There are three main categories of pension scheme: social security schemes, individual schemes (life assurance contracts) and occupational schemes. IORPs cover some 25 % of the EU’s working population and manage assets of EUR 2 500 billion, i.e. about 29 % of the Union’s GDP. Thus, along with the other financial institutions, such as banks, insurance companies and UCITS, they play a key role in Europe’s economy. They differ from other bodies by the very long-term nature of their activities. In view of the ageing of the Union’s population, it is vital to ensure that IORPs can operate with maximum security and efficiency. Savers must also be protected by strict prudential rules, due attention being paid to the cost of pensions.

In this context, Directive 2003/41/EC has been adopted in order to lay down a prudential framework aimed at protecting future pensioners’ rights. With an integrated capital market and the introduction of the euro, it also helps remove barriers to investment on the part of pension and retirement funds.

Key terms used in the act
  • Institutions for occupational retirement provision: an institution, irrespective of its legal form, operating on a funded basis and established separately from any sponsoring undertaking or trade for the purpose of providing retirement benefits in the context of an occupational activity on the basis of an agreement or contract agreed individually or collectively between the employer(s) and employee(s) or their respective representatives, or with self-employed persons, in compliance with the legislation of the home and host Member States, and which carried out activities directly arising from that purpose.
  • Pension scheme: a contract, an agreement, a trust deed or rules stipulating which retirement benefits are granted and under which conditions.
  • Members: persons whose occupational activities entitles or will entitle them to retirement benefits in accordance with the provisions of a pension scheme.
  • Beneficiaries: persons who receive retirement benefits.
  • Sponsoring undertaking: any undertaking or other body, regardless of whether it includes or consists of one or more legal or natural persons, which acts as an employer or in a self-employed capacity or any combination thereof and which pays contributions into an institution for occupational retirement provision.


Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2003/41/EC



OJ L 235, 23.9.2003

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Directive 2009/138/EC



OJ L 335, 17.12.2009

Directive 2010/78/EU



OJ L 331, 15.12.2010

Directive 2011/61/EU



OJ L 174, 1.7.2011

The successive amendments and corrections to Directive 2003/41/EC have been incorporated into the basic text. This consolidated version is for reference only.


Report from the Commission of 30 April 2009 On some key aspects concerning Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision (IORP Directive) [COM(2009) 203 final – Not published in the Official Journal].

This Report describes the application of the IORP Directive (Institutions for Occupational Retirement Provision) in the Member States, examining in particular the technical provisions and the adaptation of national supervisory systems.
The Report underlines the fact that IORPs in several Member States use different methods and assumptions to determine their technical provisions. The rules on the calculation of technical provisions from a cross-border perspective should be harmonised.
In order to facilitate the adaptation of national supervisory systems, the “Budapest Protocol” was established in February 2006. It defines provisions for supervision and exchange of information between home and host supervisory authorities of cross-border IORPs. Work carried out under this Protocol is considered as satisfactory.
Consequently, the Commission considers that it is not necessary to amend current IORP legislation.

Framework for action

Framework for action

Outline of the Community (European Union) legislation about Framework for action


These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: general framework

Framework for action

The following communication sets out a strategy for improving the operation of the single market in financial services, based on the effective application of current legislation and amendment of the legislation where it is ineffective or incomplete.

Document or Iniciative

Commission communication of 28 October 1998 entitled ” Financial services: building a framework for action  “


The communication responds to the invitation, issued by the European Council at its meeting in Cardiff, to prepare a “framework for action” for financial services. It sets out the conclusions of a consultation process involving Member State experts, users of financial services and market practitioners.

The communication calls for discussion of a range of important issues with a view to ensuring that the single market in financial services is competitive at world level and meets the needs of the main players (investors, businesses and consumers) while maintaining high standards of consumer protection. The financial services market should also make it possible to take full advantage of the single currency and should be capable of weathering international instability and ensuring long-term growth, competitiveness and employment.

The Commission takes the view that prudential legislation for the single financial services market does not require radical surgery. It does, however, need to be kept under constant review in order to see that it acts as an effective bulwark against financial instability and serves job creation and increased competitiveness. This calls for the adoption of faster, more streamlined legislative procedures and for timely and effective implementation of existing legislation. Checks will therefore have to be stepped up in the Member States. There is also a need for clear and uniform interpretation of the rules, for example through interpretative communications and by encouraging the supervisory authorities to cooperate more closely.

The prospect of the single currency is spurring a market-driven modernisation of wholesale financial markets in the EU. On the demand side, issuers should enjoy easy access to capital markets on competitive terms, in particular by:

  • adopting new, more flexible rules on prospectuses (particularly for prospectuses that have to be published where public offers are made involving securities);
  • taking effective action to assist unlisted innovative start-up companies;
  • achieving some harmonisation of the regulatory framework for corporate governance (among the harmonisation proposals requiring progress, the European company statute is given priority in the single market action plan).

On the supply side, investors should be free to invest their assets without encountering legal, administrative or information barriers. This requires:

  • further harmonisation of accounting rules to ensure greater transparency and better comparability of accounts;
  • eliminating restrictions on investments by supplementary pension and life assurance funds (unless justified on grounds of prudential soundness);
  • a level playing field for similar financial products, such as pension funds, life assurance and some UCITS, while harmonising the prudential and tax aspects of the regulatory framework.

The existing legislation relating to investment service providers needs to be revised. In this context, the Commission undertakes to determine the best way of making the Investment Services Directive more effective with a view to promoting greater convergence of national approaches to conduct of business rules. Supervisory authorities are urged to cooperate more closely.

A truly single market for retail financial services still remains to be achieved. The need to protect consumers allows Member States to use their prerogative of applying their own legislation, provided that it is proportionate to the objective sought (the principle of the general good). Nevertheless, application of this principle should not create further obstacles to cross-border business. There is therefore a need to develop pragmatic ways of reconciling the aim of effective financial market integration with that of ensuring high levels of consumer protection. To that end, the Commission will:

  • clarify the distinction between professional and non-professional users of financial services;
  • identify the main differences between existing national measures that justify the application of home-country rules (to check whether they are proportionate);
  • promote the convergence of national practices towards a high standard of consumer protection.

The communication sees a need for developing structured cooperation between national supervisory authorities. In this connection, it would be desirable to draw up a “supervisors cooperation charter” which would assign responsibilities for different tasks and establish machinery for coordination between the different authorities responsible for prudential supervision. The communication also calls for international cooperation on regulatory and supervisory matters, as well as review and updating of the existing rules on prudential supervision.

The general conditions for a fully integrated EU financial market require coordinated action by the public authorities responsible for regulation, supervision and competition. This should result in an integrated infrastructure enabling cross-border transactions to be settled as smoothly and efficiently as those within national borders. It is also necessary to close legal loopholes in payment and securities settlement systems and in retail payment systems (in the case of the latter, by scaling back the obstacles that arise from statistical reporting).

Another important factor in the integration of financial services is the need to secure a level playing field for financial operators. This calls for strict application of the Treaty rules on competition and state aid, which often causes major distortions of competition. The Commission also undertakes to present the Ecofin Council with a report on “services of general economic interest in the banking sector” and the application of Article 90(2) of the Treaty (concerning undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly).

It will not be possible to achieve an integrated financial market without ironing out disparities in the tax treatment of income from private savings. Adoption of the proposed Directive on the taxation of income from savings is a priority objective here. Other measures need to be taken in the tax field, in particular:

  • limiting harmful tax competition between financial centres;
  • removing tax obstacles to cross-border membership of pension funds, thereby encouraging labour mobility;
  • eliminating differences in the tax treatment of debt and equity (dividend income from shareholdings is usually subject to higher levels of taxation, which penalises investment in assets representing a higher risk).

The communication outlines a number of issues on which political discussions could lead to concrete measures that are feasible in the long term. The Council and the European Parliament are invited to join the Commission in this debate. It is also proposed that a Financial Services Policy Group be set up, to be composed of personal representatives of the Finance Ministers and to be chaired by the Commission. The Group, which would also be responsible for monitoring the application of financial services legislation, should pursue the following objectives:

  • to identify and prioritise a set of actions to be carried out over a three-year period (the programme should be presented to the European Council during the first half of 1999);
  • during the period prior to June 1999, to address a number of immediate priorities indicated by the Finance Ministers and the European Council at its meeting in Vienna.

A high-level consultation mechanism will be established to ensure that both market practitioners and users of financial services are able to make an effective contribution to the framing of policy in this area.

Related Acts

Commission Communication of 11 May 1999 entitled “” [COM(1999 232 final – Not published in the Official Journal].

World Trade Organisation

World Trade Organisation

Outline of the Community (European Union) legislation about World Trade Organisation


These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: general framework

World Trade Organisation

Document or Iniciative

Council Decision 1999/61/EC of 14 December 1998 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the results of the World Trade Organisation negotiations on financial services. (pdf )


When the Uruguay Round of trade negotiations was concluded in December 1993, it was not possible to include the financial services sector on a permanent basis in GATS. The Uruguay Round commitments on financial services therefore came into force for a limited period, which expired on 30 June 1995. A successive interim agreement was concluded by certain WTO members (excluding the United States) in order to maintain the commitments they had entered into until December 1997.

On 12 December 1997 the Committee on Trade in Financial Services approved the results of the negotiations on financial services, whereby those services are to be included in GATS on a permanent basis and in accordance with the most-favoured nation (MFN) principle.

The aim of the Council Decision is to approve on behalf of the European Community the Fifth Protocol to the General Agreement on Trade in Services, under which the financial services sections of the schedules of specific commitments and the lists of MFN exemptions of the members concerned are to be replaced by the lists annexed to the Protocol.

The schedule of specific commitments of the European Communities (GATS/SC/31/Suppl.4) sets out the limitations on market access, listed by sector (insurance, banking and other financial services), applicable in each Member State. Likewise, the list of MFN exemptions (GATS/EL/31) sets out, in accordance with the same criteria, the limitations on national treatment.

A list of additional commitments is also annexed to the Protocol. It contains specific provisions which are binding on the European Communities and their Member States, particularly in the insurance sector.

Act Entry into force – Date of expiry Deadline for transposition in the Member States Official Journal
Decision 1999/61/EC 14.12.1998 OJ L 20 of 27.1.2999

Financial Services Action Plan

Financial Services Action Plan

Outline of the Community (European Union) legislation about Financial Services Action Plan


These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: general framework

Financial Services Action Plan (FSAP)

This communication on the implementation of a financial services action plan proposes policy objectives and specific measures for improving the single market in financial services .

Document or Iniciative

Commission Communication of 11 May 1999 entitled “Implementing the framework for financial markets: action plan” [COM(1999) 232 final – Not published in the Official Journal].


This action plan follows on from the Communication of 28 October 1998 entitled “Financial services: building a framework for action”. It was presented at the request of the European Council, meeting in Vienna in December 1998, which invited the Commission to draw up a programme of urgent work to achieve the objectives set out in the framework for action, on which a consensus had emerged. It is also based on the discussions held within the Financial Services Policy Group (FSPG), composed of personal representatives of the finance ministers and the European Central Bank (ECB).

At its meeting in Cologne on 3 and 4 June 1999, the European Council requested the Commission to continue the work undertaken on the action plan within the FSPG.
The action plan for a single financial market puts forward indicative priorities and a timetable for specific measures to achieve three strategic objectives, namely establishing a single market in wholesale financial services, making retail markets open and secure and strengthening the rules on prudential supervision.

Wholesale markets

The euro is the catalyst for a market-driven modernisation of EU securities and derivatives markets. Changes in the organisation of financial marketplaces are already visible, notably in the closer relationship between different exchanges and in the consolidation of payment and securities settlement systems. Broadly, the action planned is in six areas:

  • Establishing a common legal framework for integrated securities and derivatives markets.
    The Commission must prepare the ground for the effective cross-border provision of investment services. This means, among other things, urgently updating the Investment Services Directive, putting forward a proposal for a Directive on market manipulation and drafting a communication determining the protection rules applicable to sophisticated investors and household investors.
  • Removing the outstanding barriers to raising capital on an EU-wide basis.
    The existence of national rules, which hinder the offering of securities in other Member States, makes such operations extremely costly and is inhibiting pan-EU activity. The Directives on reporting requirements and on public-offer prospectuses therefore need to be updated. It will also be necessary to step up cooperation between the Commission and the Forum of European Securities Commissions (FESCO).
  • Moving towards a single set of financial statements for listed companies.
    There is an urgent need for solutions which give companies the option of raising capital throughout the Union using financial statements prepared on the basis of a single set of financial reporting requirements. International Accounting Standards (IAS) currently seems the most appropriate benchmark for framing a single set of such requirements. Likewise, International Standards on Auditing appear to be the minimum which should be satisfied in order to lend credibility to published financial statements. A future Commission Communication will deal with these issues and will in particular propose that the Fourth and Seventh Company Law Directives be amended.
  • Creating a coherent legal framework for supplementary pension funds. The development of funded pension schemes calls for the creation of a strict prudential framework affording scheme members a high standard of protection. This should stimulate job creation by lowering labour costs and help to reduce the burden of financing old-age pensions caused by demographic change. The lack of a Community framework can also discourage labour mobility. The Commission plans to bring out a Communication on the topic which will serve as a basis for a proposal for a Directive on the prudential supervision of pension funds.
  • Providing the necessary legal certainty to underpin cross-border securities trading.
    The mutual acceptance and enforceability of cross-border collateral is indispensable for the stability of the EU financial system and for an integrated securities settlement structure. Legislative measures are therefore needed to achieve these objectives, and the Commission will, amongst other things, be putting forward a proposal for a Directive on the cross-border use of collateral.
  • Creating a secure and transparent environment for cross-border restructuring.
    All areas of the European economy are currently undergoing radical restructuring, and in particular the financial sector. Adoption of the Directive on takeover bids and the European Company Statute should protect minority shareholdings and make for a more rational organisation of corporate legal structures in the single market. Adoption of the European Company Statute will enable the Commission to come forward with proposals for Directives on cross-border mergers of public limited companies and transfers of company headquarters. Prudential considerations must also be taken into account. To avoid such considerations impeding the restructuring process under way, objective and publicly disclosed criteria will have to be adopted for authorising restructuring operations in the banking sector.

Retail markets

Fundamental change in the EU financial markets is being driven mainly by wholesale services. However, the retail sector is itself in the process of considerable adaptation. A legal framework is now in place that allows financial institutions to offer their services throughout the Union and has established a bulwark against institutional failure and systemic risk. And yet, an array of legal, administrative and private law obstacles hamper the cross-border purchasing or provision of these services (e.g. single bank account, mortgage credit). The Communication identifies a number of pragmatic steps that could be undertaken to overcome these obstacles. The Commission has identified six key areas for action:

  • Information and transparency. 
    Clear and understandable information for consumers is vital when they are investing some or all of their savings in another country. Action must be taken to enhance information provision, transparency and security in the cross-border provision of retail financial services; this will comprise a proposal for a Directive on distance selling of financial services, a recommendation on mortgage credit information, a proposal for a Directive on insurance intermediaries, and an action plan to prevent counterfeiting and fraud in payment systems.
  • Redress procedures.
    Efficient and effective machinery for the amicable and judicial settlement of disputes needs to be set in place to provide the necessary confidence in cross-border activity. The Commission will base its action on, and follow the approach advocated in, Recommendation 98/257/EC on the principles applicable to the bodies responsible for out-of-court settlement of consumer disputes which it adopted on 30 March 1998. On 1 February 2001, the Commission launched the FIN-NET network to facilitate out-of-court settlements of disputes in the financial field where the service provider is established in another Member State. All categories of retail financial services (on-line and off-line) are covered in order not to block the expansion of e-commerce or the efficient development of cross-border services. The aim of FIN-NET is to boost consumer confidence by proposing simple, rapid and inexpensive alternatives to traditional justice procedures. Alternative dispute resolution (ADR) arrangements will be galvanised by the euro and are a response to the political will of the Member States to make cross-border trade as straightforward as national trade. At present, the length, complexity and cost of trans-national services often discourage the consumer.
  • Balanced application of consumer protection rules.
    For a number of specific financial products, the Commission will analyse national consumer protection rules and will attempt to establish possible equivalence between clearly similar rules. Its action will focus mainly on drawing up an interpretative communication on the concept of the general good in the insurance sector.
  • Electronic commerce.
    The overall impact of electronic commerce will be to reinforce market integration, but it can be expected that certain problems, already identified for cross-border sales in retail financial markets, will be thrown into even sharper relief. The proposals for Directives on electronic commerce and distance selling are in the process of being adopted.
  • Insurance intermediaries.
    Member States’ national rules contain provisions that protect consumers in their relations with insurance intermediaries. However, these rules were drawn up along very different lines, a fact which can hamper the freedom to provide services. The Commission will put forward a proposal for a Directive updating the 1976 Directive on insurance intermediaries and strengthening consumer protection. This measure, to be adopted in 2002.2002, will replace the 1997 Directive and thus become the single binding European text applicable to insurance intermediaries. .
  • Cross-border retail payments (BG) (CS) (ET) (GA) (LV) (LT) (HU) (MT) (PL) (RO) (SK) (SL).
    The advantages of the single currency are liable to be not immediately perceptible to individual consumers of financial services if appropriate steps are not taken. Low-value credit transfers between euro zone countries will continue to attract high charges until such time as an efficient, cheaper cross-border payments system is put in place. Likewise, charges for cross-border card payments are often higher than for domestic card payments. There is therefore a clear need for an integrated retail payments system, providing secure and competitive small-value cross-border transfers, to be put in place. Cooperation in this area should be developed between the European System of Central Banks (ESCB), the European institutions and the private sector.

Strengthening prudential structures

EU regulatory safeguards need to keep pace with new sources of financial risk and state-of-the-art supervisory practice in order to contain systemic or institutional risk (e.g. capital adequacy, solvency margins for insurance companies) and to take account of changing market realities (where institutions are organised on a pan-European, cross-sectoral basis). Suggested measures include:

  • moves to bring banking, insurance and securities prudential legislation up to the highest standards, taking account of the work of existing bodies such as the Basle Committee and FESCO; work on prudential supervision of financial conglomerates.
  • work on prudential supervision of financial conglomerates; following the third report on progress in the implementation of the Action Plan for the Financial Services set out below, the Commission felt that the drafting of a proposal for a Directive in this field was one of its ten priorities. Financial conglomerates are entities which offer a range of financial services in areas such as banking, insurance and securities. These structures which often operate on a cross-border basis have developed so fast that new rules are required. The traditional approach whereby financial operators were distinguished by sector no longer holds;
  • initiatives to improve cross-sectoral discussion and cooperation between authorities on issues of common concern which include the creation of a Securities Advisory Committee.

General conditions

Disparities between Member States’ rules on corporate governance can give rise to legal and administrative barriers which hinder the efficient operation of the EU financial market. However, the term “corporate governance” covers a wide range of issues whose ramifications for the single financial market are at present unclear. Any Community initiative in this area should therefore initially be confined to reviewing national codes of corporate governance applied in the different Member States in order to identify any barriers which could frustrate the development of a single EU financial market.

Another important issue is the elimination of tax barriers and distortions. It would be politically difficult to create a single market in financial services as long as the process of tax coordination in financial markets was incomplete. The communication therefore underlines the need for early adoption of the Directive proposed in 1998 to ensure minimum effective taxation of cross-border savings income.The Commission will keep up its efforts to eliminate tax barriers impeding the smooth operation of the single market in financial services, and it plans to table proposals on pension funds and insurance, with the support of the Taxation Policy Group.

Implementing the action plan

Mechanisms are to be set in place for monitoring progress and contributing to the practical implementation of the different measures. One of these mechanisms will be continuation of the work of the Group of personal representatives of the finance ministers with a view to identifying future challenges, providing strategic data and setting priorities. A high-level forum could also be created to take soundings from bodies representing the principal EU interest groups which have an interest in the smooth and efficient operation of financial markets. EU representative bodies should also play a part in identifying experts who could help the Commission in assessing the implications of more technical solutions.

State of progress and preparation for the future

On 27 October 2003 the Commission set up a specialised group to measure the state of progress of the FSAP and prepare for the future. With the help of four new groups of market experts, it launched an in-depth evaluation of the state of integration of Europe’s financial markets. This process began as the five-year legislative phase of the FSAP was coming to an end. The evaluation must be extensive, 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 task of these groups is to help the Commission identify the main questions which will be examined in the course of the ensuing consultation.

More information on the evaluation of the FSAP by expert groups: DG MARKT.

Related Acts

Commission staff working document, of 5 January 2006, “Single Market in Financial Services Progress Report 2004-2005” [SEC(2006) 17 – Not published in the Official Journal].

In this progress report, the Commission reviews the achievements in financial services since mid-2004. Progress reports are among the undertakings made in the White Paper on financial services policy 2005-2010 published on 5 December 2005. The Commission concludes that 98% of the measures provided for in the PASF have been achieved within deadline (2005). Work has begun on implementing the measures.

The report mentions, among others, progress made in adopting:

  • the Capital Adequacy Directive;
  • the Reinsurance Directive
  • the Fifth Motor Insurance Directive;
  • the Directive on cross-border mergers;
  • the Eighth Company Law Directive on statutory audit;
  • the Third Money Laundering Directive.


Tenth progress report, of 2 June 2004, entitled “Turning the corner – preparing the challenge of the next phase of European capital market integration”.

This tenth progress report concludes that almost all of the 42 FSAP legislative measures (93%) have been adopted within the given deadlines in mid-2004. Since the ninth progress report in November 2003 agreement has been reached on:

  • the Markets in Financial Instruments Directive (Investment Services Directive);
  • the Directive on information about security issuers;
  • the Directive on takeover bids;

The Commission has also adopted:

  • a Communication on the regulation of UCITS depositaries (undertakings for collective investment in transferable securities);
  • two recommendations concerning the information to be included in the UCITS simplified prospectus and the use of derivatives by UCITS;
  • a Communication outlining the direction of future work on cross-border clearing and settlement.

As future priorities the Commission underlines the importance of continuing the legislative work on:

  • the modernisation of the Eighth Company Law Directive on Statutory Audit;
  • the Third Money Laundering Directive;
  • a Directive on capital adequacy setting out revised capital requirements for banks and investment firms (CAD III),
  • the Tenth Company Law Directive on cross-border mergers;
  • simplification and modernisation of the second Directive on the maintenance and alteration of the capital of public limited liability companies.

Ninth report, of 24 November 2003, on implementation of the Financial Services Action Plan, entitled “The FSAP enters the home straight”.

The Commission’s last intermediate report (PDF ) concludes that the FSAP, which is scheduled for completion in 2005, is one of the driving forces behind the development of the European capital market. The FSAP has thus improved the prospects for sustainable, investment-driven growth and employment. Further progress has been made in adopting the legislative measures provided for by the Plan, and in particular:

  • the Directive on taxation of savings income;
  • the Prospectus Directive;
  • the Market Abuse Directive;
  • the new organisational architecture in all financial services sectors.

Nevertheless, the report stresses that, on account of the European Parliament elections and enlargement of the European Union in May and June 2004, it is essential to reach an agreement over the next four months on the important FSAP measures still to be taken, namely: the Investment Services Directive, the Transparency Directive and the Directive on takeover bids.
Lastly, the report emphasises the initiatives taken by the Commission in assessing the state of integration of European financial markets.

Eighth report, of 2 June 2003, on implementation of the Financial Services Action Plan – nine months left to deliver the FSAP.

According to the eighth report (PDF ), the overall financial outlook strengthens the political case for integrating financial services within the EU. This integration, through the FSAP, should make it possible to reinforce financial stability and market integrity, establish a framework for the implementation and enforcement of common European legislation and ensure that the new additional markets after enlargement will be absorbed smoothly into the EU regulatory system.
Even if many of the legislative measures needed to establish an integrated financial market have already been adopted, the report stresses that it is crucial to finalise the rest of these measures to ensure that the FSAP is fully implemented by 2005.
In the short term, the Commission does not intend to propose a new complete programme of measures in the financial services sector, but to work on two broad policy goals where more work is needed over the coming years: (a) common implementation and enforcement, notably by developing networks of financial regulators and supervisors; (b) the global dimension of the European financial market, in particular relations with the United States.

Seventh report, of 3 June 2002, on implementation of the Financial Services Action Plan.

The seventh report (PDF ) notes that considerable progress has been made in integrating the sector, notably as regards investment services, capital adequacy of banks and investment firms, clearing and settlement, the new directive on takeover bids, prospectuses, pension funds, financial conglomerates and market abuse. Almost all the priority measures identified in 2001 have now been adopted. The report does, however, emphasise that momentum must be kept up if the 2005 deadline set by the FSAP is to be met in spite of ailing financial markets and decreased investor confidence. To strengthen the monitoring of the FSAP, the Commission will develop a series of indicators to help prioritise financial policy initiatives. It would also be desirable to extend the “Lamfalussy” process to all financial sectors, allowing EU regulation to respond rapidly and flexibly to market developments. Lastly, it raised the issue of drawing up an action plan for company law including corporate governance in the course of 2003.

Sixth report, of 3 June 2002, on implementation of the Financial Services Action Plan [COM(2002) 267 final – Not published in the Official Journal].

This sixth report states that tangible progress has been made but calls on the Member States to do more. It notes that eight legislative proposals still have to be adopted in the field rapidly. The proposals concern market abuse, financial collateral arrangements, distance marketing of financial services, insurance intermediaries, prospectuses, financial conglomerates, international accounting standards and supplementary pension funds. The report regrets that, after twelve years of negotiations, the proposal on takeover bids has been abandoned and notes that the Commission is to put forward a new proposal on this subject. In the wake of the Enron group’s collapse, a group of experts is to submit recommendations on best practices in corporate governance and auditing practices. Nevertheless, the Commission stresses that most of the issues highlighted by Enron are already being tackled in the context of the action plan. Lastly, new proposals on financial analysts and credit rating agencies are in the pipeline.

Fifth report, of 30 November 2001, on implementation of the Financial Services Action Plan [COM(2000) 712 final – Not published in the Official Journal].

The progress report stresses the urgent need for an integrated European financial sector. The latest developments affecting the sector, such as the introduction of the euro, the economic slowdown, market volatility in the wake of 11 September and efforts to combat the funding of terrorism, must be taken into account. The report welcomes the progress made, such as the adoption of the anti-money laundering Directive, the agreement on the Regulation on cross-border payments, the adoption of the Statute for a European Company, the political agreement on the distance marketing Directive and the setting-up in the securities sector of the committees recommended in the Lamfalussy Report. However, proposals on pension funds, prospectuses, financial conglomerates and international accounting standards and the new proposal on takeover bids are all key measures which must be adopted quickly.

Fourth report, of 5 June 2001, on implementation of the Financial Services Action Plan [COM(2001) 286 final – Not published in the Official Journal].

The report assesses the state of progress with the relevant proposals and directives. It states that decision-making powers now lie with the Council and the European Parliament. Since the action plan was endorsed, eighteen measures have been put forward and, although agreement has been reached on some points, others represent a real challenge. A real political will is needed to complete the action plan by 2003-05. This is the case, for instance, as regards the setting-up of the two securities committees advocated in the Lamfalussy Report. As matters stand, the European Parliament is unwilling to grant powers to an unelected body and it has clashed with the Council on this point. The report also states that the rapid changes which have taken place in the banking sector will have to be taken into account; the urgency of revising supervisory regulations is more pressing than had been thought. Another area dealt with is cross-border cooperation between stock exchanges. Lastly, the report mentions progress achieved in implementing the action plan (financial conglomerates, prospectus to be published for securities offered to the public or admitted for trading, market abuse, collateral risk and lending risk) and the remaining problem areas (pension funds and e-commerce).

Third report, of 8 November 2000, on implementation of the Financial Services Action Plan [COM(2000) 692/2 final – Not published in the Official Journal].

On the whole the situation is satisfactory although, for want of sufficient momentum, the FSAP will not on present form be completed for the ambitious date of 2005. The Commission has adopted a detailed timetable (“critical path”) to ensure compliance with the deadlines, as monitored by the “2005 Group”. In order to follow market developments and trends, the Commission has prepared a list of indicators.

Second report, of 30 May 2000, on implementation of the Financial Services Action Plan [COM(2000) 336 final – Not published in the Official Journal].

This report recalls that the Lisbon European Council called for the action plan to be implemented by 2005. The Commission notes that substantial progress has been made. However, little progress has been made in some fields: the European company statute, fraud and counterfeiting in payment systems and transposal by the Member States of the Directive on the definitive nature of the regulation. In order to meet the cut-off date of 2005, implementation of the action plan must be speeded up in five priority sectors: a “European passport” for issuers of securities, enhanced comparability of companies’ financial statements, elimination of barriers to investment by pension funds and UCITS, improved functioning of cross-border sale and repurchase markets and a fundamental review of the Investment Services Directive.

First report, of 24 November 1999, on implementation of the Financial Services Action Plan [COM(1999) 630 final – Not published in the Official Journal].

The report tracks progress over the first five months since the action plan was adopted. It focuses in particular on progress in several areas following the adoption of a number of the measures envisaged. The report also paints a generally favourable picture of the efforts made to prepare the ground for specific initiatives contained in the action plan, and it acknowledges the scale of the contribution made by the various market players and by consumers and users. The report stresses that both the Council and Parliament have redoubled their efforts to secure progress on a number of proposals, even if these have not always borne fruit. It goes on to call on the Commission to step up its efforts in the months ahead to come forward with a series of important measures in accordance with the timetable laid down in the action plan (pension funds, Green Paper on the Investment Services Directive, modernisation of accounting strategy, e-commerce Green Paper). In addition to the measures contained in the action plan, the European Union will need to refine its strategy with a view to accelerating structural change on financial markets.

Communication of 21 May 2003 from the Commission to the Council and the European Parliament entitled “Modernising Company Law and Enhancing Corporate Governance in the European Union – A Plan to Move Forward” [COM(2003) 284 – Not published in the Official Journal].

The Commission considers that the European regulatory framework for company law and corporate governance needs to be modernised, particularly because of the recent financial scandals, the growing tendency of European societies to operate trans-nationally within the internal market, the continued integration of European capital markets, the development of new information and communication technologies and the imminent enlargement of the EU to ten new Member States. With this in view, the Commission is setting key policy objectives, distinguishing between short-, medium- and long-term objectives, and indicating the types of instruments to use and when to use them. The main objectives of its action plan are strengthening shareholders’ rights and third-party protection, and fostering efficiency and competitiveness of business. Furthermore, in drawing up its action plan, the Commission pays particular attention to the need for any regulatory response at European level to respect a number of guiding criteria: respecting the subsidiarity and proportionality principles; being flexible in application but firm in the principles; help shape international regulatory developments.
Several initiatives related to this action plan but distinct from it are covered by this integrated approach:

  • the 1999 Financial Services Action Plan;
  • the 2000 financial reporting strategy;
  • the 2002 communication on corporate social responsibility;
  • the communication on industrial policy in an enlarged Europe;
  • the communication on the priorities for the statutory audit in the EU.


Distance contracts for financial services

Distance contracts for financial services

Outline of the Community (European Union) legislation about Distance contracts for financial services


These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: general framework

Distance contracts for financial services

Document or Iniciative

Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services and amending Council Directives 90/619/EEC, 97/7/EC and 98/27/EC [See amending acts].



The Directive covers contracts for retail financial services (banking, insurance, payment and investment services, including pension funds) that are negotiated at a distance (e.g. by telephone, fax or over the Internet), i.e. by any means which do not require the simultaneous physical presence of the parties to the contract.

Right to reflect

The Directive gives the consumer the right to reflect before concluding a contract with a supplier. The supplier is thus required to transmit a draft contract to the consumer, in writing or on a durable medium (e.g. floppy disk, CD-ROM or e-mail), including all the contractual terms and conditions. The reflection period is 14 days, during which all the terms and conditions remain valid. The parties are nonetheless free to agree on a longer period or to negotiate other conditions.

Right to withdraw

The consumer has the right to withdraw within 14 days (30 days in the case of life assurance and personal pension operations) in the following circumstances:

  • when the contract has been signed before the consumer has received prior notice of the contractual terms and conditions (e.g. consumer takes out an insurance policy in order to obtain immediate cover);
  • when the consumer has received the contractual terms and conditions but has been unfairly induced to conclude the contract during the reflection period.

If the consumer exercises the right of withdrawal after having already agreed to partial performance of the service, he may be required to pay the supplier for the service rendered. If the service has been rendered in its entirety before the right of withdrawal is exercised, that right can no longer be exercised and the consumer will have to pay for the service. Consumers must be informed in advance of the price to be paid (or of the basis on which it will be calculated).

In order to avoid speculative manoeuvres, the right of reflection or withdrawal does not apply to services whose price is liable to fluctuate as a result of developments on financial markets (e.g. the securities market).

Right to reimbursement

Certain financial services, notably futures (e.g. an instruction given by a consumer to purchase a certain number of shares at a fixed price), may sometimes be totally or partially unavailable at the time of performance of the contract. In this case, the consumer is entitled to reimbursement of the sums paid over to purchase the services.

Cancellation of payment by card in the event of theft

In the event of fraudulent use of his credit card, the consumer may request cancellation of the payment or reimbursement of any amount already paid.

Protection against unsolicited supply of services

Customers are protected by Directive 2005/29/EC, which regards the unsolicited supply of services as an unfair commercial practice. Failure to reply to an offer to supply services does not put the customer under an obligation and does not constitute tacit consent.

Complaints procedures

Member States must ensure that adequate and effective complaints and redress procedures (court, administrative and out-of-court) are put in place for the settlement of possible disputes between suppliers and consumers.


Member States must also ensure that operators and suppliers of communication means put an end, technology permitting, to illicit activities performed using means of distance communication.


The proposal for a Directive is intended to supplement European Parliament and Council Directive 97/7/EC, which ensures appropriate consumer protection in respect of most products and services other than financial services (excluded in view of their specific characteristics). It aims to rectify this legal omission by establishing common rules to govern the conditions under which distance contracts for financial services are concluded.


Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2002/65/EC



JO L 271 of 09.10.2002

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Directive 2005/29/EC



JO L 149 of 11.06.2005

Directive 2007/64/EC



OJ L 319 of 5.12.2007

Successive amendments and corrections to Directive 2002/65/EC have been incorporated in the basic text. This consolidated version  is for reference purpose only.

Review of the Lamfalussy process

Review of the Lamfalussy process

Outline of the Community (European Union) legislation about Review of the Lamfalussy process


These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: general framework

Review of the Lamfalussy process


Communication from the Commission of 20 November 2007 entitled “Review of the Lamfalussy process – Strengthening supervisory convergence” [COM(2007) 727 final – Official Journal C 55 of 28.2.2008]


The Lamfalussy process was launched in 2001 for the purpose of strengthening the European regulatory and financial sector supervision framework. It consists of four levels. It starts with the adoption of the framework legislation (Level 1) and detailed implementing measures (Level 2). For the technical preparation of the implementing measures, the Commission is advised by committees, made up of representatives of national supervisory bodies, which exist in three sectors: banking, insurance and occupational pensions, and the securities markets. These committees then contribute to the consistent implementation of Community directives in the Member States, ensuring effective cooperation between the supervisory authorities and convergence of their practices (Level 3). Finally, the Commission enforces the timely and correct transposition of EU legislation into national law (Level 4).

Based on the review of this process, the Commission proposes practical improvements to strengthen the Community supervisory framework, especially during periods of market instability.

The evaluation of the Lamfalussy process is positive on the whole. However, despite undeniable contributions (flexible regulatory system, convergence, cooperation, etc.), there is a need for certain improvements.

Improvements in the legislative process and enforcement

Experience with the adoption of framework legislation and implementing measures has generally been positive, with only a few adjustments necessary between institutions with regard to supervision and implementation.

The evaluation of the schedules for the sequencing of the measures for the adoption of legislation and implementation (Levels 1 and 2) proves to be complicated as the deadlines are so variable. Consequently, it is difficult to set reasonable deadlines for both transposition and application. To resolve this, the transposition deadline for the whole legislative package could be linked to the adoption of the last implementing measures identified in Level 1. Work on the Level 1 and Level 2 measures could also be carried out more in parallel for greater coherence and facility.

The Lamfalussy process has enabled sound regulatory principles to be introduced and applied. In particular it has led to improved quality of legislation and enhanced transparency and predictability of European Union (EU) policy-making. However, Member States must refrain from adding further national rules (“gold-plating”). For greater transparency regarding consultation, the systematic publication of contributions should also become general practice. Finally, impact assessment should be extended to all significant implementing measures.

In order to increase transparency regarding transposition, the impact of the various disclosure instruments put in place (under the Capital Requirements Directive, etc.) should be strengthened. The Commission publishes regular statistics on the state of play of transposition by Member States, especially concerning Level 1 and Level 2 directives. For their part, Member States should provide the Commission with transposition tables. In the case of late implementation, infringement proceedings will be launched under Article 226 of the EC Treaty.

Supervisory cooperation and convergence

Supervisory cooperation and convergence are one of the innovations of the process, but have not always had the expected effects.

Strengthening the Level 3 Committees [or committees of regulators] is essential. As regards political accountability, an overall two-step approach (political guidance from the European Parliament, the Council and the Commission and committee reports) should enable them to deliver more results. In addition, the mission of the national supervisors is to be extended to include a cooperation and convergence requirement at European level. As regards the legal status of Level 3 Committees, changes to the legal framework will be considered concerning the decisions setting them up and the definition of their role.

Reducing the practical obstacles at European and national levels would strengthen mutual trust and the implementation of the measures. Decision-making, especially of the committees of regulators, should be facilitated (extension of qualified majority voting and definition of solutions in the case of a blocking minority) and carry more authority (even if non-binding) in relation to the national regulators and supervisors.

Member States also have a key role to play to guarantee the application in full of the standards and guidelines concerning:

  • the powers of national supervisors and sanctions. In view of the divergence of the national systems, the regulators and supervisors should have sufficient supervisory powers and tools, including sanctions, to be able to fulfil their obligations;
  • the guarantee of the operational independence of national supervisory authorities in four fields: institutional, regulatory, budgetary and supervisory;
  • the proposals strengthening cooperation between home and host regulators. The Commission’s role is to raise awareness, evaluate and take measures (delegation of tasks, multilateral memoranda of understanding, role of ‘lead’ supervisor, etc.).

The development of common standards to ensure optimum cooperation between colleges of supervisors would guarantee greater coherence and uniformity of application and would allow the problems of competences between home and host countries to be resolved.

Cross-sector cooperation is based on a joint protocol on cooperation, signed in 2005, and is provided for when added value can be expected from a joint action. Level 3 Committees have agreed on joint annual work programmes since 2006 to deal with priority subjects such as financial conglomerates and common reporting standards.

As regards crisis management, rapid information procedures must be provided for to ensure efficient, collective action in the case of a major market disturbance or financial crisis.

The Commission considers that some financial assistance from the EU budget may be appropriate in response to the calls made on the committees of regulators arising from their Community obligations.

White Paper on Financial Services Policy

White Paper on Financial Services Policy

Outline of the Community (European Union) legislation about White Paper on Financial Services Policy


These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: general framework

White Paper on Financial Services Policy (2005-2010)

This White Paper presents the European Commission’s financial services policy priorities from 2005 to 2010. The Commission considers it essential that the progress of the Financial Services Action Plan (FSAP) continue in order to open up untapped potential for economic growth and employment in the financial services sector of the European Union. The consolidation of the progress achieved the elimination of remaining barriers and the improvement of legislation and controls are the leitmotifs of the White Paper for the period 2005-2010.

Document or Iniciative

Commission White Paper of 1 December 2005 on Financial Services Policy 2005-2010 [COM(2005) 629 final – Not published in the Official Journal].


The dynamic consolidation of financial services

Completing the single market in financial services is a crucial part of the Lisbon economic reform process.

In this context, the integration of European financial markets envisaged by the Financial Services Action Plan for 1999-2005 (FSAP) proves to be essential, as it will open up considerable potential in terms of growth and employment that has not yet been tapped.

In the White Paper, the Commission lays down the main aims of its policy for the next five years:

  • consolidation of the progress achieved;
  • completion of current measures;
  • enhancement of supervisory cooperation and convergence;
  • removal of the remaining barriers to integration.

The document thus identifies a number of priorities, in particular the increased efficiency of the pan-European markets for long-term savings products, the completion of the internal market for retail services and a more efficient venture capital market.

Better Lawmaking

Open consultations and impact assessments attached to new legislative proposals will continue to play a central role and will be required before any legislation is deemed necessary.

The Commission considers it important to strengthen the control mechanisms for the effective application of Community legislation; to do this, increased cooperation between the Member States is considered necessary. In order to facilitate the effective monitoring of progress:

  • the annual Progress Report on financial services will give an account of the overall rate of transposition and the online FSAP transposition matrix will be updated regularly;
  • the transposition workshops with Member States and European regulators will continue to play a central role in the implementation of particular provisions of EC legislation.

The ex-post evaluation of all legislative measures is a priority in the upcoming years. By 2009, the Commission will endeavour to have completed a full economic and legal assessment of all FSAP measures.

The Commission is planning a number of targeted initiatives to strengthen the coherence and consistency of the body of law which includes the Community and national implementing measures for legislation on financial services. In detail, the plans are to:

  • bring together the relevant Community instruments on the Internet;
  • check sectoral consistency in the securities field;
  • detect, through a study to be carried out in 2008, any inconsistencies in the information supplied in response to the requirements in the existing EC rules;
  • publish a Communication/Recommendation in 2006 concerning collective investments in order to resolve uncertainties from an information angle;
  • codify sixteen insurance Directives concerning the framework for the Solvency II project into a single directive;
  • where any incorrect implementation of Community law is found, take appropriate action, including the opening of infringement proceedings.

Users make an important contribution to the definition of European policy on financial services. Accordingly, the FIN-USE forum plays an essential role.
Furthermore, the Commission considers that it is necessary to improve the transparency and comparability of financial products and to help consumers understand them better. The Commission will therefore write a periodic newsletter to explain the most relevant user/consumer aspects of its ongoing work.

The efficiency of FIN-NET, the network for the out-of-court settlement of cross-border disputes in the financial services sector, will be improved. In the coming years, the Commission plans to strengthen the synergy between financial services policy and other policy areas, particularly competition, consumer affairs and taxation.
With regard to taxation, the Commission intends to present a legislative proposal to adapt the rules on VAT on financial services to changes in the single market for financial services.

EC regulatory and supervisory structures

Community policy on the regulation and supervision of financial services is based on the four levels of the Lamfalussy process. The Commission intends to develop this process over the next five years. The key regulatory policy issues are:

  • to continue the debate on comitology reform;
  • to improve the system of accountability and transparency;
  • to develop cross-sectoral regulatory cooperation;
  • to ensure that the four levels of the Lamfalussy process respect the Better Lawmaking agenda;
  • to contribute to the global convergence of standards.

It is extremely important for the supervisory authorities to cooperate and exchange information, and the Commission wishes to encourage this by:

  • clarifying and optimising the responsibilities incumbent upon, respectively, the Member State of origin and the host Member State;
  • exploring the possibility of delegating certain types of tasks and responsibilities;
  • improving the efficiency of supervision, without increasing obligations and, consequently, reporting and information costs;
  • ensuring faster and more consistent cooperation, and contributing to the development of a European supervisory culture.

Ongoing and future legislative activities (2005-2010)

The Commission is currently involved in four legislative projects:

  • retail banking: the Commission will publish a White Paper on mortgage lending in 2006; two proposals for Directives will also be presented, one concerning payment services and the other consumer credit;
  • Solvency II: in connection with this project, the Commission will present a comprehensive draft text in 2007 with the aim of modernising regulation and supervision in the insurance sector;
  • review of qualifying shareholdings: the supervisory authorities must ensure more clarity and transparency. In particular, the Commission is planning to amend the Banking Directive (Article 16) and the Insurance Directive (Article 15) and to establish common supervisory criteria;
  • clearing and settlement: the Commission will carry out an extensive consultation and an impact analysis to assess the need for a framework Directive to make cross-border transactions for clearing and settlements carried out by operators in the sector efficient, safe and low-cost.

The Commission intends to conduct in-depth reflection in five fields, namely the elimination of unjustified barriers to cross-border consolidation, the E-money Directive, Insurance Guarantee Schemes, the Hague Securities Convention and the feasibility of optional instruments (“Article 26 scheme”) in the financial services sector.

The Commission is planning two future initiatives in the field of investment funds and retail financial services which should bring benefits to the EU economy:

  • In 2006, the Commission will publish a White Paper on enhancing the legislative framework for investment funds. The general purpose of this document, which will be the result of a process of extensive consultations, is to offer soundly structured, well administered collective investment instruments which deliver the highest possible returns consistent with the individual investors’ financial capacity and risk appetite. The risks and costs incurred by this type of activity must be duly communicated to investors;
  • In the Commission’s opinion, the retail financial services market is still too fragmented and new measures need to be taken. In particular, the obstacles associated with all types of bank accounts (current, savings or securities accounts) must be removed, consumer choice widened and competition between service providers improved. In the field of credit intermediaries, the Commission believes that further investigation is needed.

The external dimension

As the standards set today on accounting, auditing and equity capital have an international dimension, the EU deems it essential to take a leading role in setting standards at global level, and in particular in the opening of the global financial services markets. The Commission intends to develop the dialogue on financial markets between the EU and the United States, and to extend cooperation to include other countries such as Japan, China, Russia and India. The EU needs to be represented strongly in international bodies, where it must be able to speak with one voice on sensitive issues such as money laundering, terrorism financing and tax evasion. European coordination in international fora (the Basel Committee, IAIS, IOSCO or UNIDROIT) needs to be stepped up.

The Commission undertakes to draft a report each year outlining the developments and progress achieved. Annex I to the White Paper gives an overview of the tasks or activities planned in the field of financial services.


In 2004, as the legislative phase of the FSAP was coming to an end, the Commission decided to take stock of progress on the integration of the financial markets in Europe and to launch a general consultation on the basis of reports from four high-level expert groups. The Green Paper on Financial Services Policy, which opened a public consultation in mid-2005, focused mainly on the implementation of existing measures and on cooperation, not on the proposal of new legislation. The resulting White Paper sets out the priority means for achieving the integration of the financial services market.

Related Acts

Commission Green Paper of 3 May 2005 on Financial Services Policy 2005-2010 [COM(2005) 177 final – Not published in the Official Journal].

This document presents the Commission’s initial ideas concerning Community priorities for the financial services policy. This work is the result of the two-year consultation process which started with the work of four expert groups, followed by a wide public consultation.

Community programme to support financial services, financial reporting and auditing

Community programme to support financial services, financial reporting and auditing

Outline of the Community (European Union) legislation about Community programme to support financial services, financial reporting and auditing


These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: general framework

Community programme to support financial services, financial reporting and auditing (2010-2013)

Document or Iniciative

Decision No 716/2009/EC of the European Parliament and of the Council of 16 September 2009 establishing a Community programme to support specific activities in the field of financial services, financial reporting and auditing.


The aim of the Programme is to support the activities or actions of certain bodies in the fields of financial services, financial reporting and auditing. It applies to two types of activity:

  • activities supporting the implementation of Community policies aimed at the convergence of supervisory practices;
  • activities developing or providing input to the development of standards.

Beneficiaries of the Programme

The following bodies may benefit from the Programme:

  • the European Financial Reporting Advisory Group (EFRAG);
  • the International Accounting Standards Board (IASB);
  • the Public Interest Oversight Board (PIOB);
  • CEBS Secretariat Limited, based in London, which supports the Committee of European Banking Supervisors (CEBS);
  • a French not-for-profit organisation, based in Paris, which supports the Committee of European Securities Regulators (CESR);
  • a German not-for-profit organisation, based in Frankfurt, which supports the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS).

Other bodies may also benefit from the Programme provided they meet the following criteria:

  • they must be non-profit-making legal persons which carry out activities connected with public interest and pursue an aim of general European interest;
  • they must not be in the situation described in Articles 93(1), 94 and 96(2)(a) of the Financial Regulation.

Award of grants

The European Commission awards grants to the EFRAG, the IASCF and the PIOB in the form of operating grants, to cover expenses such as the running of secretariats and the remuneration of employees.

The support structures of the European supervisory committees receive funding in the form of action grants covering the following activities:

  • information technology projects;
  • training programmes and staff secondment schemes for staff from national supervisors;
  • hosting conferences, seminars, training sessions and meetings of experts;
  • preparing and issuing publications, preparation and execution of other information activities;
  • carrying out research and preparing studies;
  • other specific supporting activities in the field of accounting, auditing and supervisory convergence or cooperation.

The Commission awards funding in the form of grants to other bodies which have submitted an appropriate work programme and estimated overall budget.

Grant beneficiaries are obliged to indicate, on a website or in the annual report, that they have received funding from the budget of the European Union.

The financial reference amount is EUR 38.7 million for the period 2010-2013.

Monitoring procedures

The Commission shall ensure that a technical and financial report, and an activity and financial report are submitted annually by the beneficiary of the grant. It may exercise supervision and financial control, as may the Court of Auditors.


This Programme is introduced as part of the period of reflection which followed the financial crisis of October 2008. This period has been marked by a range of initiatives such as the adoption of the Communication from the Commission of 29 October 2008 – From financial crisis to recovery: A European framework for action, and the establishment of the De Larosière Group of experts responsible for considering the future supervisory architecture in Europe.

At the same time, the G20 summit held in Washington on 15 November 2008 also highlighted the need to improve international coordination between financial supervisory bodies.


Act Entry into force Deadline for transposition in the Member States Official Journal

Decision 716/2009/EC



OJ L 253 of 25.9.2009

Related Acts

Communication from the Commission of 29 October 2008 – From financial crisis to recovery: A European framework for action [COM(2008) 706 final – Not published in the Official Journal].

This Communication emphasises the need to redefine the regulatory and supervisory model of the European Union financial sector.