In 1999 the European Commission adopted the ambitious Financial Services Action Plan 1999-2005 (FSAP) to advance European financial market integration and so fully reap the benefits of the single currency.1 The FSAP has brought forth many new financial services directives, such as the Markets in Financial Instruments Directive (MiFID), which facilitates the cross-border provision of investment services by banks, investment firms and regulated markets.2
A key priority in the FSAP was the introduction of a European regulatory framework for pension funds: the IORP Directive.3 It contributes to ensuring adequate pensions for European households, while pension savings provide European industry with a steady flow of long-term capital. An important feature of the IORP Directive is that investment regulation is based on the prudent person principle. This means that it is no longer appropriate for member states to impose quantitative restrictions on foreign securities but also on alternative investments.
The period 2005-2009 was marked by consolidation. The time was spent in bringing about sound implementation of the numerous new financial services directives. But important new regulatory regimes were also introduced for insurance companies (Solvency II) 4 and investment funds (UCITS IV) 5.
The financial crisis will give new impetus to financial services policy in the coming years. The European Commission has introduced an extensive programme for financial market reform based on the recommendations made by the High Level Group on financial supervision in the EU chaired by Jacques de Larosière.6
1 Please refer the European Commission's website on the FSAP for more information
2 Directive 2004/39/EC, 21 April 2004 on markets in financial instruments, OJL 145, 30/04/2004
3 Directive 2003/41/EC, 3 June 2003 on the activities and supervision of the institutions for occupational retirement provision, OJL 235, 23/09/2003
4 Directive on the taking-up and pursuit of the business of Insurance and Reinsurance, Solvency II
5 Directive on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (recast)
6 Report of the High Level Group on financial supervision, 25 February 2009
Back to top