Brussels plans to take tough action against European states that fail to implement the incoming Mifid in full, senior officials at the Commission have indicated.
The Commission may even offer tacit support to financial institutions that want to sue European governments that have failed to implement the legislation on time, officials say.
“I would not be surprised if some people were sued [by banks or investors],” Charlie McCreevy, internal market commissioner, told the Financial Times.
He also said the Commission was ready to start infringement proceedings.
The comments came as the deadline passed for implementation of the Markets in Financial Instruments Directive, which is aimed at encouraging competition and improving investor protection.
Some countries, such as the UK, have already implemented the directive in full. Companies operating in the UK need to comply with it for their UK operations but also have full rights to sell services across the EU, using the so-called “passport” concept.
However, a large group of countries, including Estonia, Greece, Latvia, the Netherlands, Portugal and Slovenia, have signalled that they will not have put in place all the measures needed to implement the legislation.
Four other countries – the Czech Republic, Hungary, Poland and Spain – are even further behind.
This means any financial institutions based in these jurisdictions will not be able to use the “passport” concept to sell services in other areas. “A few member states will be regrettably late,” David Wright, a Commission director who is overseeing the introduction of MifiD, explained last week.
“That lateness means that those firms will not be able to avail themselves of the new passports …and those states will have a lot of explaining to do to their own firms which will be at a competitive disadvantage.”
It is unclear whether any banks plan to launch legal actions against their own governments – not least because the EU states vary significantly in the degree to which they permit their own regulators to be sued.
However, industry observers will be watching to see if the Commission backs up its threats with tangible legal action.
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