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The new services directive

DATE: 24.06.2011

 

The Services Directive (Directive 2006/123/EC) is due to be transposed into Irish law on 28 December 2009. It has been described by the Department of Enterprise, Trade and Employment (the “Department”) as one of the most important initiatives adopted by the EU in recent years. During the course of this year, the Department has published a Regulatory Impact Assessment and a Consultation Paper. The Consultation is now closed and the Services Directive will be implemented, by Ministerial Regulation, by the end of the year.

The Services Directive aims to eliminate barriers to the development of services activities between Member States. In other words, it seeks to make it easier for service providers to set up shop in various EU jurisdictions. For example, in some countries, estate agents must have a physical presence in the Member State in order to provide services there. In others, no more than one driving school can operate for every 1500 people.

In the main, it seems likely that small and medium size businesses looking to expand their footprint in various markets stand to benefit most. For Ireland, which was recently ranked as tenth largest exporter of services worldwide, accounting for 2.7% of all services exports[1], this is potentially a very important piece of legislation both in terms of business opportunity and increased competition. The real economic impact of the Services Directive is acknowledged, however, as being difficult to measure at this stage.

While Ireland is on track to implement the Services Directive on time, there is some concern throughout Europe that many countries may meet the implementation deadline from a legal perspective but that the practical and operational aspects of the Directive will not be fully implemented for some time. The administrative task of full operational implementation is a significant one.

The Services Directive is not sector specific and will remain sub-ordinate to other EU legislation. It applies to “services of a general economic interest” but in simple terms, if you are not specifically excluded from its scope, then you are likely to be subject to the legislation. A number of key sectors are excluded such as financial services, certain transportation services, healthcare services and gambling services.

There are four key pillars to the practical change that full operational implementation of the Services Directive will bring about:

  • Points of Single Contact: each Member State must nominate one or more ‘go to’ points where service providers can locate necessary information and complete the formalities required to do business in the relevant Member State. Initially in Ireland, it is likely that this will be an internet portal operated by the Department which will provide or pro-actively point the user to a comprehensive range of information but is for general information purposes rather than the provision of legal advice;
  • Administrative Co-operation: each Member State will be required to nominate national liaison points as the focus for mutual assistance between the home state and the host state and to facilitate an efficient information exchange for the purposes of supervising the activities of service providers. Notably it will include an alert mechanism where service providers whose activities endanger health, safety or the environment can be highlighted to other Member States and a mechanism to facilitate the exchange of information on the good repute of service providers;
  • Quality of Services: each Member State must establish a means by which recipients of services can easily access (electronically and at a distance) information on service providers. So for example, if an Irish consumer is considering using the services of a Slovakian based architect, the aim is that she would be able to access a portal to find out more about the regulatory framework within which the architect operates. The principle is similar to the single point of contact but the audience will be different. Importantly Irish service providers will have specific obligations in relation to the information which they are required to provide to potential customers, for example, the general conditions and clauses, if any, used by the provider. For certain service providers whose services pose a particular risk to health or safety or to the financial security of the recipient, they may be required to have in place professional liability insurance. The draft Regulations suggest that the actual scope of these requirements, their applicability, the process of building up the information database and the technical and operational means by which it is made available will take some time.
  • Legislative Screening: one of the most significant tasks for Members States is to establish the extent to which existing law and administrative practices need to be amended, if they are not compliant with the Services Directive. For example, the Services Directive aims to avoid different member States and organisations requiring the same information but in different formats in order to achieve the same authorisation, accreditation, licensing or registration function. Authorisation of service activity should be non-discriminatory, proportionate and necessary. It also aims to ensure that procedures should enable applicants to have their authorisation applications processed within a reasonable period of time which is both fixed and made public in advance. The Department has confirmed that its screening process has not, to date, revealed any conflicts.

While Ireland looks set to implement the Services Directive on time, assessing the real practical impact on business is likely to remain a work in progress for some time to come.



[1].            Forfas Input to the Services Directive Regulatory Impact Assessment October 2008.

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