A great deal of legislation has already been agreed upon by the banking, insurance and share dealing sectors, but EU countries are often slow to implement the rules at national level and the need for further work arises as BCCI-type scandals are revealed.
A key step in opening up the market for banks was taken when the second banking directive came into force on Jan. 1, 1993, making it possible for banks to establish branches anywhere in the Union on the basis of a single authorization.
The landmark banking rule had been applied by all EU countries but Spain at the end of February 1994, one financial expert at the European Commission said.
Similar directives were approved in the insurance area but will come into force only on July 1. The new rules will effectively introduce the single license for both non-life and life insurance businesses, which means that an insurance company will be able to market its products and services throughout the union.
Whether this will mean that the union's 345 million people will be able to shop around for the best insurance policy is unsure, since the benefit of a cheaper policy might be nullified by higher taxes on premiums from foreign insurance firms.
Investment firms will have to wait longer before they can take full advantage of the single market as it is not before January 1996 that they will be able to offer their services EU-wide without going through lengthy and costly authorization procedures.
Other pieces of legislation which build up to a true single financial market have already come into force, but several EU countries are dragging their feet when it comes to their implementation.
One example is EU rules which require banks to keep identification files of every client who deposits more than 15,000 European currency units ($17,000) to prevent the laundering of criminal proceeds.
The money laundering directive was due to be implemented in January 1993 but Britain, the biggest EU financial center, Ireland and Denmark have so far failed to do so. The European Commission has opened legal procedures against them.
Despite the feeling in some circles that the time has come for the legislature to take a rest and allow the market to digest and apply the plethora of existing rules, the commission has put forward new proposals and others are in the pipeline. The collapse of the Bank for Credit and Commerce International, or BCCI, in 1991 because of fraud on a massive scale convinced EU countries of the need to strengthen the supervision of the banking system.
EU finance ministers agreed in November that financial institutions must have their registered office and head office in the same country and imposed on auditors the duty to report any wrongdoing they might come across.
Further action was also announced by Internal Market and Financial Services Commissioner Raniero Vanni d'Archirafi regarding prudent surveillance of insurance groups and financial conglomerates.
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