1 Introduction
1. Over the next year or so, the United Kingdom's
financial services sector will need to implement a significant
amount of new regulation as a result of European Union (EU) decision-making.
For example, many firms will need to meet new requirements as
a result of the Markets in Financial Instruments Directive (MiFID)
and the Capital Requirements Directive (CRD, which will implement
the new Basel II capital adequacy framework). These will bring
significant challenges for City practitioners, lawyers and the
regulator. In addition, there is potential new legislation on
the horizon. The European Scrutiny Committee of the House of Commons
recently published a report setting out the programmes for 2006
of the European Commission (the Commission) and the Council of
the European Union (the Council), which includes possible measures
in the areas of mortgage credit and clearing and settlement.[1]
2. In the light of these developments, we decided
to undertake an inquiry into European financial services, looking
at the legislative process generally, together with case studies
on selected policy areas, namely the implementation of the Markets
in Financial Instruments Directive (MiFID), the Commission's consideration
of a possible Clearing and Settlement Directive and the Commission's
consideration of mortgage credit in the context of the development
of a single market in retail financial services. Our inquiry has
been limited to looking at the European legislative process in
the context of the Financial Services Action Plan (FSAP) and certain
directives, rather than a comprehensive examination of the merits
of all aspects of current or prospective legislation.
3. Our inquiry started with a visit to Brussels in
late-November 2005 to discuss informally the Commission's goals
for the financial services sector with Mr Charlie McCreevy, European
Commissioner for Internal Market and Services, and officials from
the European Commission's Internal Market and Services Directorate
General (DG MARKT). In addition, we met representatives from the
European Banking Federation (EBF, Federation Bancaire de L'Union
Européenne), the European Federation of National Insurance
Associations (CEA, Comité Européen des Assurances)
and the European Mortgage Federation (EMF). On 14 December 2005,
we heard oral evidence at Westminster from trade associations,
the Financial Services Authority (FSA) and consumer groups. We
subsequently invited interested parties to submit supplementary
written evidence on the Commission's formal drafts of the MiFID
'Level 2' implementing measures, which were presented on 6 February
2006. We would like to express our thanks to all who have contributed
to this inquiry and, in particular, to thank Commissioner Charlie
McCreevy for meeting us in Brussels.
1 European Scrutiny Committee, Twenty-fourth Report
of Session 2005-06, The Commission's and Council's Programmes
for 2006, HC 34-xxiv, p 13 Back
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