Single, but not levelThe 1992 programme is going to run a bit late for the European Commun

Single, but not level

The 1992 programme is going to run a bit late for the European Community's financial services companies. The earliest that the whole -- more or less -- of the industry will be able to take advantage of its single market now looks like being mid - 1994. That is the European Commission's unstated timetable for EC member countries to implement its third life - insurance directive, whose draft is published on February 20th. The directive, which follows similar directive on non -life insurance published in draft a few months ago, is the last big element in its push to open financial markets that are still highly protected.

The broad idea is that financial service companies should have the right to operate through- out the EC on the basis of a single "passport", issued by the supervisory authority in their home country. The commission hoped to have the main insurance - all liberalised together at the end of 1992. Now it looks as if only the banking directive, adopted by the Council of Ministers in December 1989, will be operative in time.

A draft investment services directive was submitted by the commission to the council in January 1989, and is much further along the legislative road than the two insurance directives. Yet the obstacles that it has run into make it probable that even it will miss the end - 1992 deadline.

The directive would let investment banks and stockbrokers serve clients throughout the EC and trade on all EC exchanges, subjected only to home - country control. Problems arose last November, when France proposed to curb their freedom to trade securities outside recognised exchanges. This has split the EC into the usual north/south, liberal/interventionist groups. The 12 finance ministers will try again on February 25th, but progress is unlikely.

Eventually, a compromise will no doubt be reached, probably one saying that small investors should have their orders executed on official markets unless they want otherwise. But all this will take time to negotiate. The council is unlikely to adopt the directive formally much before the end of this year. Governments will then be hard put to get it on to their national statute books by mid-1993.

Do the delays in the investment services and insurance directives matter？ The EC is adept at missed deadlines, and end - 1992 was never carved in stone. The trouble is that banks, investment houses and insurers are now in competition with each other. Banks therefore will have a head start over their non - banking rivals in selling competitive products across the EC. Instead of the single, level playing field for financial services that the Community talks of, the field will indeed be single but still sloping from one end to the other.

Senior commission officials say that it is up to national governments to get a move on. This is wishful thinking. On February 19th the British government began consulting with interested parties on last autumn's non -life -insurance draft directive. This process will take months to complete, and only then, say the British, will they be able to begin serious negotiations in the Council of Ministers.

The draft life directive, while sharing some principles with the non-life draft, also poses new problems that will take time to resolve. These concerns such issues as consumer protection (that is, disclosure, supervision and so on), calculating technical provisions to meet insurers' liabilities, and the removal of certain national provisions like Belgium's ban on life - insurance policies linked to unit trusts.

Look Carefully at Paragraph 7. Then decide which of the following is the best explanation of the last sentence in that paragraph.

A．Banks will not be in competition with insurance companies and investment service companies after 1992.

B．Only banks will be allowed to alter their areas of activity after 1992.

C．Banks will have an unfair advantage over other financial institutions from 1922.

D．The European Commission wishes to give banks a special position in the single market.