• About the FSA
  • What we do
    • International and EU
      • European
        • Directives and other initiatives
        • Lamfalussy
        • Relevant documents
        • Glossary

The FSA actively engages with the EU and devotes significant resource to working with European institutions and our fellow EU regulators. We do so because:

• Deepening the single market in financial services has involved a comprehensive legislative programme which must then be implemented and applied in the UK.
• The activities of internationally active firms require regulators to enhance their levels of co-operation and co-ordination if regulatory duplication is to be avoided and risks are to be better identified, prioritised and mitigated.

Single market legislation

There has been specific Community legislation promoting the single market since the 1980s. However, there was a step change when the Financial Services Action Plan (FSAP) was launched in 1999. It consists of 42 measures, including 24 EC Directives to be transposed into the law of each Member State, and Regulations, which apply directly in all Member States.

The FSAP has three specific objectives:

• to create a single EU wholesale market;
• to achieve open and secure retail markets; and
• to create state-of-the-art prudential rules and structures of supervision.

These objectives are designed to promote Europe's wider economy by removing barriers and increasing competition among financial services firms, thereby making markets more efficient and reducing the cost of raising capital to industry generally.

Since 1999 the Community has adopted or updated requirements concerning, amongst others:

• the amount of capital which firms should hold;
• the rules they must comply with when carrying on business with their customers;
• the controls they must apply to counter the risk of money laundering and terrorist financing;
• the tests to apply when assessing the suitability of new controllers or large shareholders;
• the requirements they must impose to counter the risk of market abuse; and
• the disclosures which companies must make when seeking new capital.

Completion of the FSAP within a tight deadline was accompanied by a new legislative approach to developing and adopting EU financial services legislation, the Lamfalussy approach.

For more information on individual pieces of Community legislation, see Directives and other initiatives.

For background documents on the FSAP and the single market in financial services, see relevant documents.

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Regulatory co-operation

The need for enhanced regulatory co-operation and co-ordination is particularly important in Europe because of the considerable level of integration in the wholesale market and because the Community's single market legislation implies and requires high levels of co-operation and co-ordination. Within Europe the regulator of the group, the regulator of the subsidiary, of the branch, and the regulator in the country where the recipient of a service is based each has areas of exclusive responsibility and control, and areas where responsibilities overlap.

The result is that there are some areas where the home regulator delivers some important consumer protections for the host regulator, for example, in the areas of capital and depositor and investor compensation schemes; some areas where responsibility is shared, e.g. liquidity; and some where the responsibility is mainly the host's, for example disclosure.

Enhanced regulatory co-operation is needed to ensure that regulators with their varying responsibilities are properly informed about relevant risks, that duplication of regulatory activities is avoided, that the oversight of internationally active firms is improved and that a consistent approach to common Community requirements is adopted. Since 2001 the EU has sought to achieve this through the network of national regulators, the so-called Lamfalussy Committees. For more information see the Lamfalussy pages.

Better Regulation

One of our priorities in Europe has been to encourage the Commission to adopt a Better Regulation approach. Our focus has been on promoting the use of impact assessments and we have provided advice on improving their quality and offered to participate in them. View more information on our approach to Better Regulation in Europe.

General background

For more detail on the background to the FSAP and to access a number of documents relevant to the single market in financial services see Relevant documents.

Glossary

There is a number of technical terms that are used in European discussions. View the Glossary for definitions of these terms.

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