Blunders delay banking proposal

Date: 18/04/1996

By Fiona McHugh

THE failure of the single market in financial services to get off the ground has prompted more than a few stern words from high-placed European Commission officials recently.

Member states who stand accused of mounting trade barriers to cross-border banking in the guise of citizen-friendly laws have been told time and again to drop their protectionist tricks or face court action.

Whether they will heed those warnings remains to be seen.

But the difficult passage through the Commission of a banking proposal designed to make the single market operate more smoothly reveals that governments are not the only ones guilty of bad behaviour.

Consumer ministers were originally due to discuss the plan to make life easier for citizens seeking to obtain car loans or mortgages from foreign EU banks at a meeting next week. But a series of blunders by Commission officials have delayed that discussion until later this year.

The proposal, which would allow consumers to compare at a glance the cost of credit in different member states, should have been adopted by the Commission before Christmas. But a host of what officials describe as “technical problems” meant a decision was put off until earlier this month - too late to get it on to the agenda of next week's ministerial meeting.

The first hiccup was caused by the low priority apparently given to the proposal, which was banished to the end of a long translation queue where it languished for some months before being produced in all the EU's 11 official languages.

No sooner had the linguistic barrier been overcome, however, than the proposal fell prey to another set of problems, this time of a mathematical nature.

Renowned for their ability to tot up figures and fines, members of Belgian Commissioner Karel Van Miert's Cabinet discovered - to their dismay and to everyone else's annoyance - that some of the numbers in the proposal simply did not add up.

A team of mathematicians called in to solve the problem eventually uncovered the reason for the discrepancy. The blame lay not with the draft directive, but with the computer programme used by Belgian banks for mathematical calculations. It differed from that of its 14 partners - hence the different results.

Despite the mathematicians' findings, weeks passed before Van Miert finally agreed to drop his opposition to the proposal.

The Commission's 'image police' were even less starry-eyed. Just when the ill-fated proposal looked set to go through the college, they stepped in to block its adoption.

DGXXIV, responsible for consumer affairs and hence the draft directive, had used the Union's symbol of 12 gold stars together with a percentage sign in the text without first getting the necessary permission to do so - apparently forgetting that use of the Union's symbol has to be sanctioned by a special unit in the Commission.

After a further delay, permission to include the stars was granted, but only after they had been turned the right way up. The single point of the gold stars must always look north - and not south as in DGXXIV's design.