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Full and effective implementation of the European Union’s Financial Services Action Plan (FSAP) will become increasingly difficult as its stakeholders in the Retail Market continue to hold mixed views about its merits.

That is the message from industry expert John Walker, who this week (Thursday) addressed guests at the peterevans Forum event in London.

"The retail market is likely to segment on delivery of the FSAP into two groups – the ‘have’s’ - those with the technological infrastructures and capability to ensure compliance with the new regulations, and the ‘have not’s’ - those who have not accommodated European legislation compliance into their operating models," said Mr Walker, who is a senior advisor to leading UK stockbroker comdirect.

The FSAP, launched in 1999 and due for full implementation by the end of 2005, is a series of 42 measures to promote and increase integration between markets in EU Member States with the aim of creating a sustainable single market for financial services.

"The market today is a different creature to the one it was in 1999 when the Plan was first devised. Pan-European strategies in the retail market were a must-have for shareholders and managers in 1999 – but in reality very few had sustainable business models which subsequently gave rise to underlying fundamental operational issues," added John Walker.

"The ‘Have’s’ operate effective systems and administrative capability and have enabled development of products and services to meet demand. They have robust and scalable operating models that accommodate market volume fluctuation and have effectively combined insource/outsource arrangements. Additionally, they’ve accommodated the idea of future National and European legislation as well as ongoing changes to compliance rules. The ‘Have Not’s’ fail on one or more of these requirements and the result is likely to be increased stakeholder risk."

He said the ‘Have Not’s’ were likely to voice strong resistance to regulatory change to protect their legacy operations which would slow up implementation of the FSAP, causing it to lose momentum, while regulation at national level continued to develop and align to the needs of the markets they served.