Three European countries face European Commission (EC) legal action after failing to transpose financial legislation into law.

The Markets in Financial Instruments Directive (MiFID) aims to create a single market for investment services in Europe.

But Spain, Poland and the Czech Republic have failed to translate the directive into national law by the 31st January 2008 deadline.

The EC says that the benefits of MiFID cannot be fully realised across Europe until all member states have complied because firms will not be able to coordinate internationally.

But non-compliance by Spain, Poland and the Czech Republic does not present a significant barrier to the efficacy of the directive, according to Bob McDowall of advisory firm Towergroup.

"These countries are not the most significant financial markets in Europe and do not present significant barriers to MiFID," he said.

And they are not the only countries that are not technically compliant.

"Following inclusion in national legislation the MiFID requirements have to be incorporated in to the rule books of national financial services regulators, " said McDowall.

"Many countries have not yet completed this second step and are also not MiFID compliant."

The case has been referred to the European Court of Justice.