In response to the Commission’s White Paper, the Parliament has adopted a report addressing future issues of EU financial-services policy, such as market consolidation, retail financial services and hedge funds.
On 11 July 2007, the Parliament adopted a report on financial-services policy in response to the Commission’s White Paper, outlining political priorities ranging from banking, clearing and settlement, hedge funds and payment systems.
The report, drafted by Socialist MEP and Rapporteur Ike van den Burg, places particular emphasis on concerns about market concentration in financial services, comments on retail financial services, as well as issues concerning the regulation of hedge funds and private equity.
- Market concentration
The Parliament report raises concern about the „high market consolidation in the top segment financial services provided to large listed companies“, especially by credit- rating agencies and audit firms. MEPs urge the Commission and national competition authorities to apply competition rules to these players and to be „vigilant of the risk of unlawful market concentration“ and „cases of market manipulation“.
- Retail financial services
The report recognises that in comparison with wholesale markets, which are better integrated, there are still too many cross-border barriers to retail financial services. However, it warns against „one-size-fits-all harmonisation“ and stresses that competition should not be „based on the lowest supervision and security standards“ in order to ensure that the same risks, profiles and business strategies can be matched by the same security throughout the EU.
MEPs also stressed the need for improved financial literacy. The report states that „financial literacy should be more actively promoted than hitherto and access to proper information and unbiased investment advice is essential“.
- Hedge funds
The report recognises the positive effect alternative investment vehicles, such as hedge funds and private equity, can have in terms of providing liquidity and diversification in the market, as well as helping to improve the efficiency of corporate management. However, MEPs „share the concern of some central banks and supervisors that they may give rise to systemic risk and to high levels of exposure of other financial institutions“. They asked the Commission to „launch a debate on hedge funds“ and take a „broader and more critical approach in its analysis of such funds with respect to the risks of market abuse“.