European finance ministers, meeting on 11 October 2005, have pushed through two important financial services directives and agreed on a strategy for future integration of financial service markets throughout the EU.
Ministers adopted the Capital Requirements Directive (CRD) which will incorporate into EU legislation the Basel II rules on capital to be held by banks (see Basel II LinksDossier). They agreed the amendments proposed by the European Parliament, meaning that the measure will be passed on first reading.
The Council also backed Parliament’s view on the 8th Company Law Directive (statutory audit directive) which will set up a cross-Europe legal framework for the auditing of companies and is intended to prevent a recurrence of scandals such as Parmalat and Ahold. This will also therefore go through on its first reading.
With the adoption of the above two directives, the Council concluded, the 1999-2004 financial services action plan (FSAP) was now successfully in place and the priority should shift to effective implementation and enforcement. They endorsed the broad plan for the next five years set out in the Commission’s May 2005 green paper. The Council heard that the Commission will publish a white paper with its definitive post-FSAP strategy in November 2005. This will focus on limited legislation in the areas of investment funds, clearing and settlement and retail financial services.
A sectoral enquiry into competition issues in the financial services sector was begun in June 2005, concentrating mainly on card payment services. This is to be widened to other retail banking issues and business insurance during the remainder of 2005. Conclusions will be published in 2006.
Since 2001 the Commission has held regular meetings with US financial authorities in the Financial Markets Regulatory Dialogue. In June 2005, the EU and the US held a summit to discuss convergence on capital market regulation (see EURACTIV 21 June 2005). The statutory audit directive also will allow extended co-operation with the US Public Company Oversight Board. The Council endorsed UK Presidency proposals that EcoFin should in future be more involved in EU-US summits aimed at improving regulatory co-operation in the fields of financial services and innovation.