In relation to a financial services firm established in an EU country, the term 'freedom of services' means which of the following?

In relation to a financial services firm established in an EU country, the term 'freedom of services' means which of the following?

• A. Provide any type of financial service the firm wishes to provide, without requiring any fresh authorisation.
• B. Provide financial services to consumers in another EU country on a cross border basis.
• C. Charge different levels of fees to different consumers, without requiring authorisation to do so.
• D. Set up a branch in another EU country.

Answer: (B)

The main idea being tested is the ability to provide financial services across borders within the EU without setting up a local presence. Freedom of services means a firm that is authorised in one EU country can offer its services to clients in another EU country on a cross-border basis, using its home-country authorisation (passport) to operate abroad. The host country may require compliance with its consumer protection and supervisory rules, but the firm does not need to obtain a fresh authorisation in that country or establish a local branch. This distinguishes cross-border service provision from establishing a branch (which is about the freedom of establishment) and from merely charging different fees or avoiding authorisation altogether, neither of which captures the essence of delivering services across borders from a home base.

The main idea being tested is the ability to provide financial services across borders within the EU without setting up a local presence. Freedom of services means a firm that is authorised in one EU country can offer its services to clients in another EU country on a cross-border basis, using its home-country authorisation (passport) to operate abroad. The host country may require compliance with its consumer protection and supervisory rules, but the firm does not need to obtain a fresh authorisation in that country or establish a local branch. This distinguishes cross-border service provision from establishing a branch (which is about the freedom of establishment) and from merely charging different fees or avoiding authorisation altogether, neither of which captures the essence of delivering services across borders from a home base.