Finance ministers push ahead with financial services agenda

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.

Statutory Audit

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.

Competition enquiries

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.

EU/US Relationship

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.

Internal Market Commissioner McCreevy welcomed the agreement on the CRD and statutory audit. The CRD is "important legislation which will benefit consumers, businesses and Europe’s economy", he said. On the audit directive he was even more enthusiastic: "This is a crucial directive which will bring EU financial reporting into the 21st century."

Gordon BrownUK Chancellor of the Exchequer, voiced the view that any legislation which hindered financial services from working EU-wide should be weeded out and scrapped. In his view, this is necessary to allow European financial services to compete fully in a global market.

UK and US banking groups have been frustrated at the lack of convergence of rules across the altantic as this hinders global trade and competition. Commissioner McCreevy supports working together with the United States on financial regulation, seeing a stronger role for the EU in influencing the development of US regulation which impinges on European activity. He has already had constructive talks with US authorities on international financial accounting rules (see EURACTIV 22 April 2005).

Commenting on the statutory audit directive, the Comité Européen des Assurances welcomed the more flexible approach of the final compromise, in particular the scrapping of the proposal that all publicly listed companies should have separate committees overseeing  financial reporting matters.

The clear message from the EcoFin Council is that the optimum functioning of the financial services sector, both within Europe and globally, is crucial for the economic future of the Union. The adoption of the Capital Requirements Directive (CRD) and the 8th Company Law Directive mark a successful conclusion to the Financial Services Action Plan.

  • White paper on financial services policy 2005-2010 to be published in November 2005.
  • Competition policy sectoral enquiries into retail banking and business insurance to be initiated late 2005.
  • Results of competition enquiries expected in 2006.
  • Capital Requirments Directive to be implemented by member states from January 2007.

Subscribe to our newsletters