Financial services
Financial markets are crucial to the functioning of modern economies. The more integrated they are, the more efficient the allocation of capital and long-term economic performance will be.
Completing the single market in financial services is a crucial part of the EEA's objective of achieving more and better jobs in a more dynamic, innovative and attractive Europe.
The financial services sector covers three major areas in respect of which similar policies apply:
- Insurance
- Banking
- Stock exchanges and securities
Other areas covered include the distance marketing of consumer financial services and the supplementary supervision of financial conglomerates through the Financial Conglomerate Directive.
Insurance
Rules in the insurance sector can be divided into five categories:
- non-life insurance
- life assurance
- motor insurance
- supervision and accounts
- other
Measures relating to non-life insurance and life assurance seek to abolish restrictions on the freedom of establishment and freedom to provide insurance services in the EEA by harmonising the rules in place in EEA States. For example, they harmonise the technical instruments for prudential supervision so that insurance companies can be granted a single licence that is valid throughout the EEA.
Measures relating to motor insurance cover civil liability in respect of use of motor vehicles, with the aim of harmonising national legislation in order to ensure adequate and timely compensation for victims of traffic accidents.
As regards supervision and accounts, the Insurance Groups Directive provides for additional supervision of insurance undertakings belonging to insurance groups; other rules deal with accounting practices and reporting.
Other acts in the field of insurance include the Insurance Mediation Directive and the Directive on reorganisation and winding-up of insurance undertakings.
Banking
Rules in the banking sector can be divided into four categories:
- co-ordination of legislation on establishment and freedom to provide services
- deposit-guarantee schemes
- accounting
- anti-money laundering
Credit institutions are regulated by the Capital Requirements Directive, which introduces rules to abolish restrictions on freedom of establishment and freedom to provide services by credit institutions in the EEA. The Directive harmonises technical instruments for prudential supervision so that credit institutions can be granted a single licence valid throughout the EEA. Credit institutions are supervised by the authorities in their home EEA State. The Directive also contains rules on the capital requirements of credit institutions.
Other relevant coordinating measures in the EEA include the Directive on reorganisation and winding-up of credit institutions, the E-money Directive and the Payment Services Directive.
As regards deposit-guarantee schemes, the rules in force provide protection for deposits up to a minimum sum of EUR 20,000.
Several measures have been adopted in relation to the accounting rules and obligations of banks and other financial institutions in the EEA.
Rules on anti-money laundering introduce measures designed to prevent the use of the financial system for the purpose of money laundering and the financing of terrorists.
Stock exchanges and securities
The EEA rules relating to stock exchanges and securities aim at developing a single securities market for new issues and securities trading in the EEA.
The Markets in Financial Instruments Directive (or “MiFID”) establishes a harmonized framework of rules concerning the setting-up, authorisation and operation of securities exchanges and investment firms. The two main objectives of the MiFID are:
- to protect investors and safeguard market integrity, and
- to promote fair, transparent, efficient and integrated financial markets.
The Prospectuses Directive establishes requirements for the issuing of securities.
The Admission and Listing Directive lays down minimum requirements for the information that must be disclosed to the public when securities are listed on a securities exchange. It also seeks to facilitate cross-border listing of securities.
The Transparency Directive also concerns the need to provide investors with correct and relevant information on securities and their issuers. It requires that any changes to information originally provided at listing be disclosed to the public, and original information documents be periodically updated and made available to investors.
The Market Abuse Directive aims to ensure that investors operate on a level playing field when investing in securities. The Directive covers insider trading and market manipulation.
The Investor Compensation Schemes Directive is aimed at providing minimum guarantees throughout the EEA for the protection of investors in cases where investment firms fail to comply with their obligations.
The Directive on Undertakings for Collective Investment in Transferable Securities (UCITS) facilitates the marketing of units of investment funds across the EEA and co-ordinates the applicable conditions.
Relevant links:
- Annex IX to the EEA Agreement (PDF), which lists all applicable EEA financial services acts and specific adaptations for the EFTA States
- European Commission website on financial services
- Summary of legislation (general framework)
