Professional services associations across the European Union were asked by the European Commission earlier this month to take part in a survey on the question of codes of conduct. Responses to the survey are due by 30 July 2007.

Why the Commission's interest in this area? Well, the examination of individual national codes of conduct (with a view to developing Europe-wide codes) forms part of a much larger EU exercise in facilitating the freedom to provide professional (and other) services under the Directive on Services in the Internal Market (2006/123/EC) (the Services Directive) which was adopted in December last year and which has to be implemented by 2009.

Which professions are covered by the Directive?

The Services Directive essentially applies to all services provided for remuneration, with certain limited exceptions, such as for the transport, healthcare and financial services sectors.

Professional services, such as those provided by the following:-

lawyers
accountants
actuaries
engineers
management consultants
architects
professional sportsmen and women
are all therefore caught, to a greater or lesser degree, by the Directive.

What are the aims of the Directive?
The Services Directive is designed to tackle continuing obstacles to the effective exercise of two basic freedoms guaranteed by the EU Treaties. First, there is the freedom of establishment, i.e., the right to set up in business on a permanent basis in any Member State in order to provide services to customers in that same Member State. Second, there is the freedom for a person established in one Member State to provide services on a cross-border basis to customers in a second Member State.

How does the Directive go about tackling these obstacles?

The Services Directive contains a wide range of provisions which seek to tackle obstacles to each of these two freedoms.

In relation to the freedom of establishment, for instance, the Directive sets down strict rules which apply to any national legal or regulatory mechanism for controlling access to or the exercise of a service (described as an 'authorisation scheme' by the Directive). The Directive requires all such schemes to conform to certain basic requirements as to non-discrimination, transparency and proportionality.

The Directive also prohibits certain requirements (such as requiring professional indemnity insurance to be taken out where adequate insurance is already held in another Member State), whilst requiring others (such as obligations on service providers to take a particular legal form) to be phased out.

There are also general provisions which seek to underpin the ability of service providers to provide services on a cross-border basis.

Does the Directive address the professions directly?

There are various provisions in the Services Directive which are addressed specifically to the professional services sector: article 24, for instance, requires the dismantling of limitations on the ability of professional services firms freely to advertise their services.

On the other hands, there are provisions which apply to services generally, but are likely to have particular impact on the professions. Article 25 of the Directive is a case in point. This seeks to prevent restrictions on the establishment of multi-disciplinary practices, a topic of considerable interest in the professional services context (hence the inclusion of limited carve-outs relating to preservation of professional independence and impartiality).

Where can I get further information on the Directive?

The European Commission has an information site on the Services Directive, which can be found at: http://ec.europa.eu/internal_market/services/services-dir/index_en.htm. Shepherd and Wedderburn will also be producing regular updates on the implementation of the Directive, in particular as regards the professional services sector.