The European Council approved a package of rules on financial services on July 27 2009 as a key part of the EU’s response to the financial crisis.
 
It adopted a regulation introducing a legal framework for credit rating agencies, a directive updating capital requirements for banks, a regulation on cross-border payments and a directive on electronic money.
 
The European Council also approved the establishment of an EU programme to support activities in the field of financial services, financial reporting and auditing, it said in a media statement.
 
On credit rating agencies, the European Council said that such agencies "play an important role in securities and banking markets, as their ratings are used by investors, borrowers, issuers and governments in taking decisions on investment and financing.
 
"They are however considered to have failed to reflect early enough in their ratings the worsening of market conditions in the run-up to the financial crisis."
 
The regulation is aimed at ensuring that credit ratings used in the EU for regulatory purposes are of the highest quality, and issued by agencies that are subject to stringent requirements, the European Council said.
 
Currently, credit rating agencies are only to a limited extent subject to EU legislation and most member states do not regulate their activities, although their ratings are used by financial institutions which themselves are subject to EU rules.
 
The agencies, most of which have their headquarters outside the EU, may however apply a voluntary code of conduct issued by the International Organisation of Securities Commissions.
 
The regulation comes in response to calls from both the European Council and the G20.
 
The European Council said that the regulation "establishes a common framework for measures adopted at national level, in order to ensure the smooth functioning of the EU's internal market with comparable levels of investor and consumer protection from one member state to another".
 
It provides for a legally-binding registration and surveillance system for credit rating agencies issuing ratings that are intended for use for regulatory purposes.
 
It is also aimed at ensuring that credit rating agencies avoid conflicts of interest in the rating process, or at least manage them adequately; improving the quality of methodologies used by credit rating agencies and the quality of their ratings; and increasing transparency by setting disclosure obligations for credit rating agencies.
 
The European Council said that the directive on capital requirements for banks is aimed at tightening up the rules on capital requirements for banks, in response to specific weaknesses identified in the light of the financial crisis.
 
The regulation on cross-border payments is aimed at achieving a single market for payment services in euro without distinction between cross-border payments and payments made on a national basis, thereby providing significant savings and benefits to the broader European economy, the European Council said.
 
The directive on electronic money is aimed at promoting the design of electronic money services that are both innovative and secure, while fostering competition between market participants and providing market access to new players, according to the media statement.
 
The decision on the financial services programme will enable the EU to participate in the funding of certain bodies, both European and international, "so as to ensure the effectiveness of EU policies in the financial services sector and in the fields of financial reporting and statutory audit".
 
The decision provides for a financial envelope amounting to 38.7 million euro for the 2010-13 period.