Europe to harmonise cross-border banking

The European Commission (EC) has published a plan which aims to increase consumer confidence in buying from pan-European banks and insurers.

The plan is designed to ensure fair competition between online and offline banks and insurers across Europe.

By 2005, the EC wants to establish an integrated European market in financial services by applying the trading rules of the country where the provider is based to all cross-border sales. For example, a UK customer buying a pension from a German-based firm would buy it under German rules and regulations.

The EC hopes its plans will ensure UK customers are as confident buying pensions from firms in other European countries as they would be from UK companies, and vice-versa. To achieve this, they want differences in consumer and investor rules in other countries ironed out as much as possible by 2005.

Other proposed measures include the establishment of out-of-court redress, building trust in internet payments, and enhanced international co-operation between national regulatory authorities, such as the UK's Financial Services Authority (FSA).

Frits Bolkestein, commissioner for the internal market, said in a statement: "The steps outlined today represent a change of gear towards the establishment of an integrated European market in retail financial services.

"Updating our legislative framework to harness the benefits of the new knowledge economy is essential if the benefits are to feed through to the European consumer in terms of increased choice, competition and lower prices.

"It is vital also that we provide European businesses with an environment in which they can flourish and remain competitive in the global economy. Progress towards a fully functioning Internal Market in financial services must be made in a surefooted manner, ensuring that consumers and retail investors are fully protected."

He added: "The measures announced today pave the way for consumers to access financial services from throughout the European Union with as much confidence as they currently have in their national market. This should lead to a step change in the supply and demand for cross-border financial services within the Union."