John Purvis, Conservative MEP recently addressed a three day meeting in Edinburgh in which over 200 delegates of the European People’s Party and European Democrats Group in the European Parliament. John is vice-chairman of the Committee on Economic and Monetary Affairs.

After ten years of waiting, Europe stands poised to see the true completion of the Single Market. In 1992, free movement across internal frontiers became the rule rather than the exception for people, goods and capital in all but one important area – financial services. Over recent months, however, The European Parliament has finally passed legislation which sets the direction for the liberal opening up of borders for the financial sector.

In achieving a single market in financial services throughout Europe, we faced two very large hurdles. First was the stark difference between the liberal, open, lightly regulated northern (actually UK, Netherlands and Scandinavia) approach and the consumer protective southern approach. Secondly was the sheer technical complexity of this industry.

To deal with the legislative impasse, a committee was set up under Count Lamfalussy, who reported last year. He suggested that the European legislators (the Parliament and Council of Ministers) should confine themselves to the major aspects and thus provide a broad framework, while the technical detail (including any new regulatory and technological developments) would be decided in committees composed of experts from the regulatory bodies of the member states.

The nub of the argument between north and south, regarding structure and regulation of financial services, is whether to have strict quantitative rules or to depend on the “prudent person”.

The UK, which, with the Netherlands, was the most “liberal” and also, probably not uncoincidentally, the most developed market for private sector funded pension funds and other investment products, depended on managers being “prudent” in their management of their customers’ assets.

The European Parliament has now processed first readings of directives on UCITS (investment trusts and unit trusts) and on pension funds which come down decisively on the side of the prudent person approach, albeit with some residual allowance for relatively small quantitative requirements.

The European Parliament has also recently passed legislation concerned with accounting standards, market abuse and prospectuses. All these are vital building blocks in achieving a true single market in financial services by 2005, which is the stated aim.

The market is opening and Scottish operators in this market would be particularly foolish ostriches if they did not take the trouble to catch up with what is happening and then capitalise on their experience and expertise in a European market which so badly needs to develop in these areas.

We hear a lot about the demographic time bomb ticking away in Europe as our population turns greyer. The door stands now somewhat ajar and is opening further as I write. The first to squeeze through will find a virtually untapped prospect.