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BIPAR PRESS No 1 - March 2008Editor:BIPAR Secretariat Av. Albert-Elisabeth, 40 B-1200 Brussels Tel: +32-2-735 60 48 Fax: +32-2-732 14 18 bipar@skynet.be www.bipar.org BIPAR Press is also available on poi.compuvista.com Whilst this information is gathered with suitable care, it is only published as a matter of documentation. Given that "BIPAR Press" only mirrors the articles as published in the specialised press, BIPAR cannot assume any responsibility as to the overall accuracy of its contents. Contents Europe
EU - Supplementary pension schemes hinder workers' mobility According to two new independent studies presented by the European Commission on 22 January, supplementary pension schemes continue to pose obstacles to mobility for workers across Europe. The studies are part of a Europe-wide initiative to improve people's access to supplementary pension rights when changing jobs or working in another EU country.
EU . "Mission for flexicurity" launched by EU ministers On 1 February, during an informal meeting, EU employment ministers decided to launch a "mission for flexicurity" to ensure the "full integration of the common principles of flexicurity into the EU", as defined in the December Employment Council. Flexicurity is a policy strategy to enhance the flexibility of labour markets, work organisations and labour relations on the one hand, and employment and income security on the other. This mission's mandate is to help Member States promote the visibility of the common principles of flexicurity at all levels and find ways to facilitate this integration into the Lisbon strategy. It will therefore visit several Member States between March and September. It will issue recommendations, which could be endorsed (under the French EU Presidency) by employment ministers in December 2008. An interim report will be sent to the Employment Council of Ministers in October, with the final report handed to the Council in December. EU . Commission proposes measures to boost venture capital funds The European Commission has recently proposed new measures to promote cross-border investments of venture capital funds with the purpose of financing and stimulating innovation of small and medium-sized enterprises (SMEs). Venture capital provides a source of external financing to growing companies against a share in the company. The current 27 different national regulations have an adverse impact on fundraising and investing. The Commission is advocating a broad partnership with and between Member States to work towards mutual recognition of the current national frameworks for venture capital funds. A better regulatory framework would lower operational costs and risks, raise returns, increase flow of venture capital and improve the functioning of venture capital markets. This would particularly benefit innovative SMEs. Figures show that companies in the EU receiving private equity and venture capital, created one million new jobs between 2000 and 2004. EU . Commission publishes new study on European investment funds On 12 February, the European Commission published a study on European investment funds, which surveys the investment outcomes (performance and related risks) of UCITS (Undertakings for Collective Investment in Transferable Securities) and non-UCITS funds over the past five years. UCITS III Directive (which entered into force in 2004) allowed UCITS fund managers to invest in a much wider range of eligible assets, to invest in derivates for hedging and leveraging purposes, and to pursue new types of investment strategy. The study takes stock of how UCITS managers have used these new investment possibilities. A Commission's communication on non-harmonised investment funds is to be published in autumn 2008. The results of the current study will be presented to an open hearing on nonharmonised investment funds that the Commission will host in Brussels on 8 April 2008. The study is available in English only on the following website: http://ec.europa.eu/internal_market/investment/other_docs/index_en.htm#studies EU . Single Euro Payments Area launched On 28 January 2008, the Single Euro Payments Area (SEPA) was officially launched. The aim of SEPA is to make cross-border electronic and card payments as quick, easy and secure as those made within national borders. SEPA will operate across the euro area and for all payments in euros, even in Member States outside the eurozone. Four neighbouring States have also joined the scheme: Iceland, Liechstenstein, Norway and Switzerland. Change will be progressive for consumers. At first, only SEPA credit transfers will be enabled. Crossborder direct debits, although now technically possible, will have to wait till the implementation of the Payment Services Directive, which is the legal basis of the new system. This Directive was adopted by Parliament in April 2007 and became law on 13 November 2007. It is to be transposed into national law by 1 November 2009. It is estimated that the removal of barriers to payment will save the EU economy €28bn per year. The benefits to business should be seen more quickly. At present corporates and, in particular SMEs, incur significant costs because they have to operate different bank accounts in the Member States in which they deal. With SEPA, all business will be transacted from a single account. EU . SMEs want a binding Small Business Act The European Commission is expected to propose the European Small Business Act (SBA) inspired by the US in June of this year. It wants to reduce the regulatory burden on SMEs, facilitate access to Single Market/public procurement, help provide necessary financial/ human resources for SME development and help SMEs face the challenge of globalisation and climate change. However, the Commission has made it clear that it will reject for instance one of the main features of the US scheme whereby a 23% share of public procurement contracts is reserved for SMEs. The SBA is a "non legislative action/communication". According to the European association of SMEs (UEAPME), the SBA should set out legally binding principles to be followed by both the Commission and Member States in their policy making, in order to ensure that SME interests are respected. UEAPME believes that the initiative will otherwise fall foul of the same shortcomings as the existing EU Charter for Small Enterprises (adopted by EU leaders during the Feira European Council of 19-20 June 2000). The Commission opened a public consultation on the European SBA on 31 January. It is open until the end of March. Organisations representing the interests of SMEs have responded negatively to this consultation paper; one of the key complaints being that the Commission is asking questions where it should already know the answer (such as general questions on how to improve policies affecting SMEs' access to finance, and on whether there is a need to improve SMEs' access to public procurement). Moreover, the document does not address the central question concerning the SBA, i.e. whether it should be binding or not. EU - Commission's strategy for simplifying the regulatory environment On 30 January 2008, the European Commission published the second progress report on the strategy for simplifying the regulatory environment, which provides a comprehensive stocktaking and update of the Commission's rolling simplification programme underway since October 2005. Simplification of EU legislation aims at making rules clear, easy to understand and user-friendly without watering down essential regulatory protection. The simplification rolling programme is now composed of about 164 initiatives covering all policy areas (e.g. financial services/insurance, public procurement, employment, taxation ...). The programme uses legislative techniques such as repeal, codification and recasting. On 30 January the Commission also reported on the first year of operation of the Action Programme for reducing administrative burdens. €500m is the estimated savings for companies by cutting red tape imposed on business. In the area of company law alone, 75 information obligations were identified that are particularly burdensome and seem outdated, excessive or duplicative. Company law is therefore the pilot priority area for cutting red tape The Action Programme includes "Fast Track Actions" (FTA), i.e. immediate measures that are likely to generate significant benefits through technical changes in existing rules. Five out of ten FTA have already been adopted and the rest are awaiting adoption in the first months of 2008. The Commission will seek the opinion of the newly established High Level Group of Independent Stakeholders on Administrative Burdens chaired by Edmund Stoiber (former Minister-President of Bavaria) before finalising the list of FTA for 2008. The Commission's report is available in all EU languages on the following website: http://ec.europa.eu/enterprise/regulation/better_regulation/simplification/intro.htm EU - Consumer Market Watch In its Communication "Monitoring consumer outcomes in the Single Market: the Consumer Markets Scoreboard", which was published on 29 January 2008, the Commission proposes to establish an annual "Consumer Market Watch" process to monitor the performance of markets in terms of economic and social outcomes for consumers. The first step in this process will be a comprehensive screening of markets against 5 key consumer indicators - prices, complaints, switching rates, satisfaction and safety - for patterns which could indicate market malfunctioning. These irregularities - which may be indicative of practices which distort consumer choice and hinder competition at retail level - can then trigger the second phase of the process, an in-depth, targeted consumer market investigation and corrective actions. Compiling this data will be a major task for the next years for consumer policy as the results of the first consumer scoreboard (made public on 31 January) show that comparable data on basic products are strikingly absent. Another short-term priority for the Commission will be to identify barriers to cross-border sales in tradable goods. The first sector to go under Commission scrutiny will be retail financial services. EU - 3 Member States referred to Court of Justice for non implementation of MiFID The European Commission has decided to refer the Czech Republic, Poland and Spain to the European Court of Justice for non-implementation of MiFID (Markets in Financial Instruments Directive) and its implementing Directive. The deadline for transposition of those measures expired on 31 January 2007. MiFID creates a new legal framework for the provision of investment services in the EU by establishing authorisation and operating conditions for investment firms and regulated markets. A key feature of the regime is the ability for investment firms to use the authorisation obtained in one Member State to provide financial services in another Member State. MiFID also concerns investment firms providing investment advice only, such as independent financial advisors (IFAs) and insurance intermediaries. The benefits of this regime cannot be fully realised by firms from Member States that have not transposed the Directives, and also by firms from other Member States wishing to operate on the territory of Member States that are late in transposing. EU - Sigma publication on bancassurance Issue no 5/2007 of Sigma, published by Swiss Re, deals with "Bancassurance: emerging trends, opportunities and challenges". This report offers an overview of the concept of bancassurance and its associated benefits and pitfalls. It updates readers on current bancassurance development in different regions around the world. The study is available in English, French, German, Italian and Spanish and can be downloaded free of charge on Swiss Re's website: http://www.swissre.com/pws/research%20publications/sigma%20ins.%20research/sigma%20 no.%205_2007.html Germany . Motor insurance price war According to the German Insurance Association (GDV), the price war in the motor insurance sector is expected to continue in Germany in 2008, resulting in cheaper new offers. Prices have dropped over the last three years, and market leaders Allianz and Huk-Coburg have so far tried to stop this trend. 2007 figures show that premium incomes have sunk 1,8 per cent and motor insurance prices are as low as in the late nineties. Motor insurance accounts for 38 per cent of non-life insurance income premiums, remaining the most significant and profitable line of business. The price war in the motor insurance sector was triggered by Allianz, with the Scoring-Tariff introduced in 2004 and which sets a price depending on the customer's speciality. Allianz had hoped in this way to win back lost market shares. But in the meantime, the war on prices has toughened and internet has become one of the most used channels to sell insurance policies. Also, more and more companies offer their insurance policies through retailers (e.g. insurer Zurich through fashion retailer C&A) or car dealers (e.g. Allianz through VW - in 2006, one out of three cars was sold in Germany by VW with the motor insurance policy). Germany - Allianz defeated on reduced commissions for motor policies On 6 February 2008, German insurer Allianz suffered a significant court defeat over reduced commissions for insurance agents. In August 2005, Allianz had changed its motor insurance rates as a result of fierce competition and had introduced a new, low-price motor policy for price-sensitive customers. It unilaterally reduced its agents' commissions from 10% to 6% for this new product. Affected were those agents with contracts signed before August 2005. Two agents went to court over the introduction of lower commissions and insisted on the contractually agreed 10%. The higher regional court in Munich refuted Allianz argument that this new cover is a completely new insurance product to which existing commissions do not apply. According to an Allianz spokesman, following this court decision, German insurers will have many more difficulties cutting commissions in the future and are likely to look for alternatives such as the internet and sales via retailers. Allianz will not have the possibility to appeal to Germany's highest civil court. UK - Commission disclosure The British Financial Services Authority (FSA) has decided not to mandate commission disclosure for insurance intermediaries for the moment, but has planned a series of measures for the coming months. The FSA published in the first quarter of 2008 a Discussion Paper on the topic, inviting views on the cost-benefit analysis of mandatory disclosure. The FSA will also examine the extent and nature of the conflicts of interest arising from the remuneration and contractual arrangements between insurers and brokers and how these are managed. The FSA will also investigate into ways to raise commercial customers' awareness of the value of commission information. At the end of 2006, the FSA engaged consultant CRA International to undertake a comprehensive study including an "objective Market Failure Analysis" resulting from nondisclosure, and a "corresponding Cost Benefit Analysis". CRA recently published their findings. Crucially, CRA found that the compliance costs associated with a mandatory commission disclosure regime are not likely to be exceeded by the benefits from reducing market failures (primarily enhanced competition amongst intermediaries). Ukraine - Developing standards in the financial services sector A recently published report by consultant Axco reveals that standards in the Ukrainian financial services sector are gradually improving. In spite of the political uncertainty of these last years and difficulties in the privatisation of the large public sector, there has been an important economic development. Ukraine is reinforcing its links with the European Union and is seeking to join the World Trade Organization in the early future. European banks are currently contributing to the improvement of Ukrainian standards by bringing capital into the country. Motor casco and domestic and industrial property insurance are increasing; all driven by bank requirements on loan cover. If compulsory motor liability insurance was properly enforced, market premiums would rise substantially. The life insurance market is growing. |