McCreevy will “bang the drum” on financial services

Internal Market Commissioner McCreevy has warned member states that they will face enforcement consequences if financial services legislation is not promptly transposed.

Single European Payments Area (SEPA)

SEPA is an idea, devised by banks themselves through their European Payments Council, to treat all payment transactions throughout the eurozone in the same way as domestic payments. It has the full backing of the Commission which is paving the way by means of a new legal structure under the New Legal Framework for Payments directive (see Linksdossier). (NB: this directive will apply throughout the EU – not just the eurozone.)
The scheme has two phases: (i) direct debit and credit transfer to be available across the EU by 2008 and (ii) new pan-European debit cards to replace domestic payment card schemes by 2010.
One area of disagreement among speakers at the conference was on whether SEPA would truly result in lower costs for consumers and whether it would prove to be worth the huge investment required by industry. The second point of doubt was as to whether the time limits set were realistic.

26th Regime

The idea of the “26th Regime” was first mooted as a general scheme which would provide financial products across Europe. It would be optional and would work outside existing member state legislation. It is currently most talked of in connection with pensions and Mr Henri de Castries, of AXA, gave a forceful argument for why it was essential for the increasing number of people whose careers span several member states.
For the Commission, both David Wright, Director of financial services in DG Internal Market and Commissioner McCreevy said that they would not discount the idea but that there were myriad problems to be solved, particularly on the standard of consumer protection for such products.


Commissioner for the Regions, Danita Hübner outlined the high importance of the availability of credit for SMEs and “micro-companies”, which, she noted, together count for 99% of EU companies. But these firms, subject to high risk and requiring extra financial advice, have trouble obtaining loans from mainstream sources. In some member states micro-credit is provided by specialised companies.
The Commission, therefore, together with the European Investment Bank, is promoting micro credit on a regional level through its JEREMIE  (Joint European Resources for Micro to Medium Enterprises) initiative. This will facilitate grants and loans to SMEs and will be fully operational by 2007. Ms Hübner also stated that she would consider carefully the idea of a European action plan for micro-credit, which had received much backing earlier in the conference.

On SEPA, Commissioner McCreevy said, "SEPA products need to be ….at least as good and innovative as existing products and not more expensive..... To make it worthwhile for the industry ….a critical mass of users is also needed. Public authorities should help kick-start SEPA migration by being early adopters of the new products. I will spare no effort to make sure this happens." He also stated that to date there has been too little consultation with consumer bodies and service providers: this situation had to change.

Roberto Nicastro  of Unicredit took the view that the pay-off for large pan-European banks was perhaps clear but it was not so for the smaller domestic banks. He also stressed, as did other speakers that the real hurdle was to persuade consumers to abandon cash and cheque payments in favour of electronic payments. This is a huge task, given that 80% of payments are still made via cash and cheque. He also doubted, together with Jean Clamon of BNP Paribas that the 2010 deadline was realistic.

Bernd Fieseler of the German Savings Bank Association warned that in Germany SEPA could well result in higher costs for consumers. He also agreed with Manfred Westphal of the Federation of German Consumer Organisations that, given that 99% of payments were domestic and the current system very effective, the benefit to consumers was not clear. Mr Westphal called for a full cost/benefit analysis.

Johannes Van der Velde of Visa Europe said that the huge investment by the industry had to be recognised and a higher level of trust engendered between industry and regulators. Member states also had to give their full support. In his view, also, interchange fees, which have been criticised, should not be subject to regulation as they were essential for the profitability and therefore the innovative capacity of banks.

On the 26th Regime, Mr McCreevy noted, "we are ready to explore the idea in greater depth, but on the basis of concrete projects and not philosophical considerations. We have urged the proponents of the 26th regime to do their homework before calling on the EU institutions to invest time and resources into it."

In a speech given at an in-depth conference on financial services in Europe held in Brussels on 7-8 June 2006, Mr McCreevy re-iterated his dissatisfaction with the level of member state transposition of financial services directives. He said, "there have been some improvements in the last 12 months. But we will continue to bang the drum, to name and shame and, if necessary, to go to the European Court."

However, overall, the conference, organised by Eurofi, saw broad consensus that progress was being made and would continue apace, towards a single market for financial services in Europe.

  • Directive on the New Legal Framework for Payments expected to be adopted in autumn 2006.
  • Consultation on DG Competition Interim Report on Payment Cards and Payment Systems is open until 21 June 2006.
  • Public hearing on DG competition retail banking sectoral enquiry 17 July 2006.
  • Internal Market Information System (IMI) is in development which uses automatic translation software to help member state administrations exchange information online. 
  • See also Links dossier Policy 2005-10.

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