The impetus for urgent action towards the integration of financial services throughout the European Union came at the Cardiff European Council in June 1998. It had become clear that an overall framework for the integration of financial services was a prerequisite for the attainment of the EU’s economic potential on the introduction of the Euro. The Financial Services Policy Group, made up of EcoFin ministers, representatives of the European Central Bank and under the chairmanship of the Commission, was given the task of identifying priorities for action.
In October 1998, the Commission published a Communication setting out a Framework for Action on Financial Services, followed by the FSAP itself in May 1999.
At the European Council in Lisbon (see Euractiv Linksdossier on Innovation) in April 2000, it was agreed that the FSAP should be completed by the end of 2005 with the first stage, the integration of the securities markets, being in place by the end of 2003. The Council saw the FSAP as being an integral part of what has come to be known as the 'Lisbon Agenda', a plan to make the EU 'the most dynamic, innovative, knowledge-based economy in the world by 2010'. To achieve this, companies, whatever their geographical base, would have to be able to raise capital EU-wide. Similarly, for investment, financial statements would have to be compatible. There would have to be legal security for cross-border trade in securities and cross-border mergers and takeovers would have to be relieved of the existing blocks and pitfalls.
Underlying the FSAP aims was the recognition that financial services were increasingly becoming an international market and that any European rules would have to be compatible with those used on the world stage. The FSAP rules, therefore, were to be tight and restrictive enough to ensure legal certainty and confidence, but also loose and malleable enough to allow institutions to act and adjust on an international level.
In October 2003, the Commission set up four expert groups to report on the success of the FSAP in promoting integration in banking, insurance, asset management and securities trading. Their reports overall showed that the FSAP had been successful not only in the adoption of legislation but also in the fostering of an atmosphere of co-operation between the European Institutions and market participants. The reports were made open for public comment and a substantial consultation process was carried out.
In its tenth progress report on the FSAP, in June 2004, the Commission stated emphasis from 2005 onwards will be on ensuring implementation and monitoring the effectiveness of the plan through, inter alia, the Financial Integration Monitor.