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

Underpinning the strategy is a series of measures designed to enhance consumer confidence and protection, including further harmonisation of national consumer and investor protection rules, the establishment of out-of-court redress, measures to build trust in Internet payments and enhanced cooperation between public authorities responsible for the supervision of cross-border trade in financial services.

The Commission Communication detailing the plans also provides clarification of the impact on financial services of the e-commerce legal framework Directive, its interaction with other financial services legislation and contains steps to ensure that its implementation in the financial services area takes full account of the need to protect consumers and retail investors operating on-line within the European Union.

"Harnessing the power of new technology is vital if the Lisbon European Council deadline of 2005 for the creation of an integrated European market in financial services is to be met," the Commission Communication states.

The approach is based on the principle that the trading rules applied to the cross-border sale and purchase of financial services should be those of the country of origin. This should ensure a level playing field between on-line and more traditional modes of distance trade, states the Commission.

"We also need to look at the legislative security that European consumers receive when paying on-line," the Communication states. "Legislative backing is needed for a refund system that establishes rights for consumers in the event of payment problems or non-delivery of services. This is particularly important for clear cases of fraud, when consumers who do not pay on the net but find that their card details have been used."

There needs to be greater transparency about the cardholder protection rules that currently exist, the Commission argues. Similar protection should be developed for emerging payment technologies and not just cards. And the same protection should be enjoyed when paying cross-border within the European Union as when paying nationally.