Memorandum by Santander
Santander is the world's 12th largest financial
group by market value, with 69 million customers and over 10,800
branches. It operates in 12 European countries. It is a leading
retail bank in Spain, Portugal and, following the acquisition
of Abbey in 2004, the UK. Santander also has an extensive consumer
credit franchise across Europe.
1. What has been achieved so far and what
are the remaining significant barriers to achieving the Single
Market?
Within financial services, the measures to facilitate
a single market have largely targeted the wholesale sector. Steps
to integrate retail markets are underway, for example, via the
Commission's Green Paper on Financial Services. Integration of
retail markets is inevitably more complex due to differences in
language, culture and consumer behaviour as well as differences
in local markets, access to information and legal and tax systems.
The key to achieving integration will be facilitating cross-border
mergers and acquisitions by financial services providers, rather
than cross-border purchasing by consumers. Our response, therefore,
focuses primarily on barriers to this activity.
2. What have been the benefits of the integration
of the EU financial services sector to your business? Which segments
of your business have benefited most, and which have remained
unaffected? How have consumers benefited?
No response
3. What has been the impact of the Financial
Services Action Plan (FSAP) on the financial services sector?
Has the regulatory burden under the FSAP increased more in some
areas than others?
No response
4. What do you consider to be the remaining
gaps in the FSAP?
We believe that the focus of the FSAP should
be on the features of regulation that would improve the way markets
work across the EU and would facilitate improvements in the efficiency
of financial products. This is a much more effective way to consistently
deliver favourable outcomes for customers than focusing on harmonisation
of consumer protection measures. For example, if the Consumer
Credit Directive (CCD) tackled key elements such as taxation,
recovery process and protection of collateral harmonisation the
resulting efficiencies in products would lead to decreased prices
and increased quality of service. Unless these gaps are tackled,
we cannot identify any element within the CCD that will increase
cross-border activity in this field.
5. In light of the increasing focus on the
competition policy, do you think there is sufficient coordination
between regulators and competition authorities?
6. Is there a need for greater cooperation
between National Regulatory Authorities of different Member States?
7. Do you consider that the integration of
EU financial services sector is better achieved by market-led
initiatives as opposed to regulatory developments (eg the Code
of Conduct on Clearing and Settlement instead of a directive)?
Response to 5, 6 & 7:
Greater cooperation and more consistent practice
between National Regulatory Authorities is desirable and would
make operating in new markets more straightforward. Different
supervisory regimes result in multiple requests for different
information or for the same information but on a different basis
and with different definitions. This has significant time, resource
and cost implications. Greater consolidation in supervision would
alleviate these pressures.
We would echo some comments made in a recent
speech by Charlie McCreevy, European Commissioner for Internal
Market and Services, and are keen to see the Commission taking
action to pursue this objective:
— "We need regulatory and supervisory
structures in all sectors that allow our firms and markets to
deliver world-class performance. The quality of these structures,
the way we work and co-operate, and the outcomes of our regulatory
processes are of critical importance for the long run competitiveness
of our financial sector."
— "Level 3 Committees must demonstrate
progress on convergence quickly and convincingly. Progress in
this area is urgently needed and I am convinced it will bring
about a more efficient and better supervised financial system."
— "The cost of the present supervisory
arrangements for pan-EU institutions is one major problem which
we should try and address urgently, without however taking the
slightest risk to with respect to financial stability."
More important than the nature of supervision
of retail financial services once operating in a market, however,
is the ability to enter that market in the first instance. We
believe that closer integration of the retail financial services
sector will be driven largely by cross-border mergers and acquisitions
and not by the sale or purchase of goods across borders. We believe
the market will drive this process and that regulatory initiatives
should be kept to a minimum. Santander's purchase of Abbey is
a good example of commercial drivers facilitating integration.
Santander found the process of entering the
UK market largely a positive experience. There were some regulatory
difficulties: the double taxation of dividends and the problems
Abbey shareholders experienced in receiving Santander shares due
to the lack of co-ordination in stock registry and settlement
issues. However, there were no major obstacles to market entry.
Not all markets are open to the same extent.
We believe that one way in which the Commission could help to
facilitate integration would be by encouraging National Regulatory
Authorities to create a more level playing field in terms of access
to markets.
One of the major obstacles facing a financial
services company attempting to enter a new market is prudential
assessment from the host regulator. In March the Commission approved
the Directive on Prudential Assessment of M&A in the Financial
Sector. This reduces the discretionary veto powers of local supervisors
by establishing a clear and transparent process of valuation for
the authorities supervising cross-border mergers and acquisitions.
We strongly support the Commission's initiative in its objective
of providing clear and consistent rules so that the market can
operate efficiently. We would, however, stress the need for these
processes to be agile. Consolidating the information processes
of central banks involved in cross-border operations would be
one way to facilitate this.
8. Do you consider further legislative measures
by the Commission to be necessary for the completion of the Single
Market? What would you consider appropriate?
Where change is required to enable the market
to more effectively drive integration (such as the example above)
both self-regulatory and legislative measures should be considered.
9. To what extent do you consider that EU
Member States are fulfilling their responsibilities in setting
the framework for the integration of the EU financial services
sector (eg timely adoption of the Payment Services Directive or
transposing directives into domestic laws)?
10. Are the current remedies available to
the Commission to enforce Single Market legislation adequate,
and are they used effectively?
Response to 9 & 10:
Implementation of EU legislation is not always
undertaken in a timely manner by all member states and Commission
remedies are not always sufficient for enforcement. This is evidenced
by MIFID which has been transposed into national law in very few
countries. Indeed only the UK had implemented the legislation
by the deadline of 31 January 2007.
The delay in approval of the Payment Services
Directive prevents the direct debit element coming into effect
before the end of 2009. We would like to see the application deadline
aligned with those for SEPA in order to achieve optimal implementation.
Greater vigilance is required in ensuring deadlines
are achievable and are met.
12 July 2007
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