Although progress has been made through the successful completion of the Financial Services Action Plan (FSAP), the Commission concludes that the EU financial services industry (banking, insurance, securities, asset management) still has strong untapped economic and employment growth potential. The Commission's new strategy explores the best ways to effectively deliver further benefits of financial integration to industry and consumers alike. Priority No 1 is to dynamically consolidate progress and ensure sound implementation and enforcement of existing rules. No 2 is to drive through the better regulation principles into all policy making. No 3 is to enhance supervisory convergence. No 4 is to create more competition between service providers, especially those active in retail markets. No 5 is to expand EU's external influence in globalizing capital markets.

Internal Market Commissioner Charlie McCreevy said: "European financial integration has really moved forward in the last five years. The challenge now is to consolidate progress and work together on applying the better regulatory disciplines. Our aim should be to create the best financial framework in the world. It means creating real, tangible benefits for the citizens and businesses of Europe through lower capital costs, better pensions, and cheaper, safer retail financial products. Our new strategy is practical, economics driven and citizen focused. Only in a few, targeted areas are new initiatives foreseen."

Financial integration and the new initiatives

Studies show that the more integrated financial markets are, the more efficient the allocation of economic resources and long-run economic performance will be. Completing the single market in financial services is more and more recognised as one of the key areas for EU's future growth and jobs, essential for EU's global competitiveness and thus a crucial part of the Lisbon economic reform process.

Efforts need to continue in the next five years. Only when rules are implemented on time and enforced effectively, companies and citizens can benefit from access to pan-European markets. National regulators need to speed up on implementation. The current regulatory framework must be free of inconsistencies and legal ambiguities. Supervisory practices and standards need to converge across Europe. Cross-border investments need to be encouraged.

Unfinished business must be completed in a practical way. The new strategy has not identified and straitjacketed – ex ante – many new regulatory initiatives. However, if regulation is needed, each initiative will have to follow the better regulation principle, should be evidence based and comply with the subsidiarity principle.

Furthermore, while the FSAP focused mainly on the wholesale market, retail integration will become more important over the next period. Barriers associated with the use of bank accounts will be examined, with a view to enabling consumers to shop around all over Europe for the best savings plans, mortgages, insurance and pensions, with clear information so that products can be compared.

A consultative Green Paper was published 3 May 2005. Responses have shown broad support for these political priorities.