EUROPE – The European Council has reached political agreement on the Investment Services Directive - although five countries voted against it.

The European Parliament’s rapporteur for the directive said the result was “dire”, though the Commission said it was a “major step”.

The agreement was reached by qualified majority, with Finland, Ireland, Luxembourg, Sweden and the UK voting against.

“This draft directive forms part of a coherent programme of legislative measures to facilitate the emergence of integrated and efficient European capital markets,” the Council said.

It said investor protection would be enhanced and hailed the promotion of “fair, transparent, efficient and integrated” markets.

The European Parliament’s rapporteur on the ISD, MEP Theresa Villiers, said: "This is a dire result which is bad for financial markets across Europe - bad for investors and bad for competition.

“The text adopted by finance ministers is unclear and unworkable. It would add huge costs to investment firms and could grant a de facto monopoly to exchanges.”

Internal markets commissioner Frits Bolkestein said: “The directive will make it easier for businesses to raise money, improve investor confidence and promote growth.”

“I now hope the European Parliament will show similar flexibility at second reading on the few remaining points of difference.”

The proposed Directive will give investment firms a “single passport” to let them operate throughout the EU, the Commission said.

“We will all need to work hard to try to salvage something from this mess,” Villiers said. “I will be working closely with my colleagues in the European Parliament to promote a sensible and workable outcome on the ISD."