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The European Commission may have to exclude the financial services sector from its plan to create a European Contract Law.

A recommendation to drop the financial services sector is set out in a new report into the Commission's proposals.

The report, which was adopted earlier this month by the influential ECON Committee of the European Parliament, backs the idea of an optional European Contract Law but specifically calls for the Commission to consider the financial services sector at a later stage.

The prospect of a European Contract Law raises important questions about its role and value.

It also raises important questions about the potential consequences for Europe's financial services sector – especially if the sector is excluded from the scope of the proposed law.

The Commission has said that a European Contract Law will help to improve the proper functioning of the internal market within the EU. Whether it will achieve this aim by providing a practical alternative to Europe's various national contract laws remains a keenly-debated issue.

The Commission outlined its proposals in July 2010 when it published a Green Paper on "policy options for progress towards a European Contract Law for consumers and businesses". The deadline for comment on the Green Paper closed on 31 January 2011.

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