§ 35. Mr. Ian TaylorTo ask the Secretary of State for Trade and Industry what progress is being made in discussions within the European Economic Community on the opening up of financial markets throughout the Community.
§ Mr. RedwoodWe are fully committed to the liberalisation of the EC's financial services sector. It is a fundamental element of the single market programme not only because of the beneficial effects of liberalisation which will be passed on to other sectors.
The capital liberalisation directive adopted on 24 June 1988 will enable the free movement of capital across the Community. Remaining exchange controls will be abolished. Many member states have already removed most if not all their controls.
More recent progress includes the adoption of the second banking co-ordination directive on 15 December 1989, which sets out the conditions on which credit institutions (broadly banks and building societies) may establish a branch in, or provide a wide range of cross-border services into, another member state on the basis of home state authorisation. The related solvency ratios directive adopted on 18 December and own funds directive adopted on 17 April set out minimum standards of capital adequacy for credit institutions.
The life services directive awaits the opinion of the European Parliament. The directive lays down rules for the writing of life assurance by an insurer established in a member state other than that of the policyholder.
Other measures at an earlier stage of discussion will, when implemented, open further the single market in financial services. The investment services directive will provide a similar single passport for investment firms to that available to banks under the second banking co-ordination directive. The supporting capital adequacy directive has not yet been presented to the Council, but the Commission hopes to propose a draft text in March. Its aim is to set out capital requirements for firms doing investment business.
The Commission has recently announced plans for a single licence approach to life and non-life insurance, similar to the single passport concept in the banking and investment service fields.