The Commission launched the Financial Services Action Plan (FSAP) in May 1999, with the intention that by 2005 all gaps and existing barriers would be removed so as to provide a legal and regulatory environment that supports the integration of financial markets across the EU.
Research conducted for the Commission predicted that the integration of EU financial markets would bring significant benefits to businesses, investors and consumers. Conservative estimates from the research predict that EU-wide real GDP will directly increase by 1.1% – or €130 billion in 2002 prices – over a decade or so. Total employment will increase by 0.5% and investors will benefit from higher risk-adjusted returns on savings.
To date, 38 of the 42 proposed measures contained in the FSAP have been adopted by the EU. Work is continuing to complete the remaining Directives within the timescale set by the Commission, but the attention of Member States is now turning to the actual implementation of the new regime.
To this end, HM Treasury, the Financial Services Authority and the Bank of England yesterday published two documents detailing how the reforms will be made.
The "EU Financial Services Action Plan: Delivering the FSAP in the UK" outlines the steps being taken by the UK authorities to implement the large number of EU measures – more than 20 – that are likely to affect the financial sector over the next three to four years.
It then provides guidance notes on each of the measures due to be implemented in the UK and in other EU Member States, and encourages the UK-based financial sector to consider the impact of these measures on their own business and to prepare accordingly.
The second document, "After the Financial Services Action Plan: A new strategic approach", considers what can and should be done to further integrate the Single Market in financial services.
Chancellor Gordon Brown commented:
"The financial sector is a key part of the European economy and reform in financial services is essential to economic reform in Europe, to contribute to economic growth and employment."
The onus is therefore on the Government, regulators and industry to ensure that the transition to the new regime takes place smoothly, although the Treasury emphasises that the authorities are committed to do everything possible to alleviate the compliance burden affecting the financial sector.