‘Single passport’ planned for finance firms

Date: 12/10/00

By Renée Cordes

BANKS, insurers and other professional investors should find it much easier to do business across the EU if plans due to be unveiled by the European Commission soon are approved by member states.

Internal market chief Frits Bolkestein will call for a major overhaul of the EU's seven-year-old investment services directive to allow investment firms to become members of several securities exchanges simultaneously through the use of a 'single passport'. "The current directive is completely outdated," said one Commission official. "The aim of the reform is to create a more integrated financial market."

The new proposals, set to be adopted by the full Commission later this month or in early November, are a key part of the institution's wider goal of creating a genuine single market in financial services.

The original reform blueprint, unveiled in May 1999, proposed several sweeping measures to ensure that investors could take advantage of the single currency without sacrificing consumer confidence and protection.

Earlier this year, Union leaders set a target date of 2005 for implementing the plan and agreed a 2003 deadline for a separate measure on risk capital for start-up companies. Now Commission officials are considering whether the overall financial services action plan should be revised to ensure that those areas most in need of reform are tackled first.

"The plan is going well but we are looking at areas which are critical and which we need to speed ahead with," said the Commission official, adding that the insititution could unveil revised timetables for key areas when it issues its biannual progress report next month.

To a large extent, claim critics, implementation of the action plan has been held up by the EU's bureaucratic decision-making procedures. They point out that only nine of the 42 measures outlined in the reform plan involve new directives, while the rest will be addressed through non-binding recommendations or amendments to existing legislation.

Simon Gentry, head of European affairs for the Association of British Insurers, welcomed the move to revise the directives and fine-tune the action plan as a whole. "We hope that they will tackle bottlenecks in the system," he said.

In a recent speech, Bolkestein urged financial service industry representatives to play their part in ensuring an integrated market, adding that the Commission could not achieve this entirely on its own.

"A European economy which encourages entrepreneurs will benefit us all by generating jobs, increasing wealth and improving the quality of life," said the Dutch Commissioner. "If we are to deliver such an economy, then financial markets must have a central role, connecting entrepreneurs looking to raise capital on the most favourable terms with household investors looking to make the most of their savings."

Banks, insurers and other professional investors should find it much easier to do business across the EU if plans due to be unveiled by the European Commission are approved by Member States.