Strasburg, 13/07/2007 (Agence Europe) - On Wednesday 11 July, the European Parliament adopted the own initiative report by Dutch Socialist Ieke van den Burg on the European Commission's White Paper on the EU financial services policy from now until 2010. The report broadly welcomes the measures adopted in the Financial Services Action Plan (FSAP), calling for an in-depth examination of their economic impact. On the future political priorities, it wants to see progress in prudential control and the implementation of measures concerning retail financial services.
Concentration. Success is not enough - we have to ask who really benefits, said Ieke van den Burg, addressing the debate in plenary on 10 July. She warned against the danger of integration of financial services leading not only to greater concentration but also to monopoly practices. The report notes a high level of concentration in the market in the upper segment of financial services supplied to blue chip companies by auditing firms and financial ratings companies. The rapporteur said that at the vote, under pressure from the City of London, the MEPs had scrapped a reference to the concentration of investment banks from the draft report. To deal with industry concentration, the EP is calling on the Commission and member states to meticulously apply competition rules to financial services. Believing that ratings agencies should meet the same high standards of accessibility, openness, quality and reliability as banks, the EP asks whether a really European stakeholder might emerge.
Prudential control. Another striking element in the report is the MEPs' concern that the current national and industry-based surveillance system might fail to follow the speed of development of the financial markets. The MEPs stress the importance of an integrated EU system of controllers cooperating nationally and industry-wide, who can ensure effective surveillance of big financial firms and local bodies alike. They welcome the greater cooperation among the European Bank Regulators' Committee, the Committee of European Securities Regulators (CES) and the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS), but warn that if progress is not forthcoming in this connection, pressure could build up for examining a centralised control system. They call for greater convergence and cooperation among control of origin and hosting authorities in current structures. Intervening in plenary, EU Internal Market Commissioner Charlie McCreevy said he understood the MEPs' concerns about the division of labour among supervisors.
Retail financial services. When it comes to retail financial services, the report calls for an approach tackling obstacles to cross-border user mobility and urges the financial industry to introduce pilot EU-wide financial products, like retirement pensions, mortgages, insurance contracts and consumer credit. The EP wants the Commission to draw up a suitable regulatory and surveillance system covering contract law, taxation, consumer credit and consumer protection. In May this year the European Commission unveiled a Green Paper on retail financial services (see EUROPE 9417).
Hedge funds. Aware of the impact of hedge funds and private equity funds on the liquidity of the financial markets, the MEPs share the concerns of some central bank controllers that hedge funds may endanger the entire system and cause high levels of exposure to other financial institutions, but they simply ask the Commission to open a debate so it is prepared for future talks at international and EU level. McCreevy said the necessary safeguards were in place but recognised the importance of vigilance and drawing up voluntary guidelines. (mb)