The principle of 'home country control' in EU financial services and other related sectors : challenges and opportunities

Abstract

This Dissertation critically examines how the concept of "home country control" in financial services has developed in Europe during the past few years and how it is now driving operators to call for the same principle to be adopted for innovative distribution channels, such as e-commerce. Chapter 1 explores the regulatory framework of cross-border financial services activities. The discussion touches on the various examples of international cross-border activities, whilst analysing regulation and supervision as applied to such activities. Chapter 2 traces back the number of pathways which led towards achieving a single market in financial services. Although the conceptual founding block has been the Treaty itself, the European Court of Justice, through a series of landmark cases, sought to interpret and clarify a number of legal and operational issues with the aim of up-rooting the protectionist stance which Member States attempted to maintain despite effort towards a fully liberalised single market. In Chapter 3, the concepts of "home country control", "minimum standards" and "mutual recognition'', which underlie the single financial services market, are discussed by referring to a number of important directives and related documents. Two recent initiatives - the Financial Services Action Plan and the Committee of Wise Men - provided a much desired impetus for a much needed change in the EU' s financial services legislative framework. Both initiatives injected considerable momentum into the heart of a number of legislative proposals, touching upon concepts which were revived and applied in other scenarios. As emphasised in Chapters 4 and 5, the concept of home country control is the underlying theme for such new initiatives. Chapter 5 discusses how the concept of home country control has been extended to ecommerce in respect of financial services. For the European Commission, the concept is at the heart of future growth in financial services. Some Member States, however, are not very comfortable with applying the home country control concept to e-financial services for a number of reasons - mainly consumer protection. Lastly, Chapter 6 examines the concept of home country control further by taking into consideration the current debate on the delicate balance between home and host authority responsibilities. Another issue discussed is that relating to the current debate on the EU's regulatory framework. Analysis is made of a number of opportunities and challenges which might arise if a single European regulatory agency for financial services is established.