The strategy committee of the French Asset Management Association (known by its French acronym, AFG), which represents asset management companies located in France, was in Brussels on Thursday 19 and Friday 20 October, for a series of meetings with representatives of the European institutions to discuss the implications of Brexit on financial competitiveness, and on various recently tabled legislative proposals.
“We decided to go where things are decided at European level”, the chair of AFG, Éric Pinon, told a small group of journalists (our translation throughout), stressing that the visit had two aims: to defend the competitiveness of the Paris stock market in the context of Brexit, and to get involved in educating investors on the European market.
Defending the Paris stock market following Brexit. With €3.8 trillion in assets under management at the end of 2016, the French sector holds the top spot in continental Europe and therefore has a responsibility to speak out at European level, particularly in view of Brexit, AFG representative Jean-Louis Laurens explained.
“We regret Brexit, but it is happening”, they said, adding that it must now be prepared for. Although AFG was not originally in favour of a transition period, it now feels that this is inevitable and supports the idea of 'safeguard clauses', Pierre Bollon, the association's delegate general, explained.
Better interaction between ESAs and the financial industry. When asked by EUROPE about AFG's position on the legislative proposal aiming to reform the European supervisory authorities (ESA) (see EUROPE 11864), they said that they were broadly satisfied, but added that extending the ESAs' competences should be accompanied by a change to their decision-making process.
Arguing in favour of better interaction with the financial industry, they explained that the ESAs' consultation process was by no means as good as that of the European Commission, for instance. Their grievances include the possibility of providing stakeholders with feedback when they respond to a public consultation and their proposals are not taken on board, or being able to exercise a kind of remedy in such cases. “Better interaction with the stakeholders can only lead to better decision-making”, they concluded.
On the question of financing, they oppose the concept of an annual contribution, as proposed by the Commission, from the financial institutions indirectly supervised by the ESAs as, they argue, actual supervision is carried out by the national supervisors. Basically, their position is that AFG members should not pay an annual contribution to the ESAs as they are already paying indirectly, through the financing earmarked from the EU budget, and directly, through their contributions to the French national regulator.
Against a compulsory default guarantee for the PEPP. During their time in Brussels, the representatives of AFG also discussed the proposal on the creation of the pan-European personal pension product (PEPP), which will offer savers a choice between five investment options, including a default investment option that will guarantee that they get back at least the capital they invested, by using risk attenuation techniques (see EUROPE 11819).
Although AFG considers that this is a good proposal, it nonetheless opposes the introduction of a compulsory default guarantee as proposed by the Commission. For a long-term investment such as this, with such low interest rates, it would not be beneficial to consumers and would generate high costs, they explained.
They feel that the Commission's text is unclear on this point and could be read differently, as it refers to protection of capital, but does not state when the saver may get back the capital invested. It also said that they had commissioned assessment reports into the costs of the various options on offer, in the hope of influencing the course of the negotiations. (Original version in French by Marion Fontana)