CEPS Task Force

Internal Market for Retail Financial Services


Since the formation of the euro area, the integration of both wholesale and retail financial markets has been a European priority. Indeed, if the elimination of currency barriers has brought markets together, it has also drawn attention to the opportunity costs of fragmentation.

The most tangible evidence of the renewed political focus on financial integration has been the Financial Services Action Plan (FSAP). Adopted in 1999, the FSAP serves as the blueprint for creating a common regulatory framework for Europe’s financial markets. It aims at creating a single integrated market in financial services in Europe. This was regarded as critical for providing individuals with the best savings opportunities and for giving companies access to “deep and liquid markets for raising capital”. More specifically, a single wholesale market would allow corporate borrowers to raise capital on an EU-wide basis and would give investors and intermediaries access to all markets at a single point of entry; and an open retail market would remove the barriers to cross-border retail services and give retail customers the information and assurance required to access services on a EU-wide basis.
Today, economic and market evidence suggests that European financial integration is underway in many sectors, including wholesale markets, stock exchanges and clearing and settlement. Conversely there is a high degree of fragmentation in retail markets. In the latter area, obstacles persist and much remains to be done to ensure the free flow of capital and financial services.
The purpose of this Task Force is therefore to make constructive proposals for the completion of a genuine retail financial services market within the EU. The ultimate goal is both to advance the Lisbon growth and productivity agenda and to improve the quality of and access to financial services. The work will focus on where integration is most limited: the retail financial services markets for individuals and SMEs. The services considered will be transaction accounts, payments and treasury management, credit (secured and unsecured), savings and investment including UCITS, life and risk insurance and private pensions. Corporate banking and services to high net-worth individuals, such as private banking and portfolio management, will not be dealt with. The benefits of integration will not be taken for granted as markets alone might not guarantee that all users share in the benefits created. Financial services products are complex, resulting in a high degree of information asymmetry, and existing EU measures mainly reflect suppliers’ interests. The emphasis will therefore be on how to achieve a form of retail market integration that better meets consumers’ and SMEs’ needs.
Anton Van Rossum, Former CEO, Fortis
Rym Ayadi, Research Fellow, CEPS
Odile Pilley, Financial Services Strategy Consultant
1st meeting: 19 October 2005
2nd meeting: 19 January 2006
3rd meeting: 22 November 2006
4th meeting: 20 April 2007

Rym Ayadi

Karel Lannoo

Chief Executive Officer

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