Meeting in Brussels on Wednesday 30 April, a number of MEPs, institutional representatives and financial sector experts called for a simplification of the rules governing financial services in the European Union. But the discussions at the European Parliament also highlighted differences over the method to be adopted, particularly with regard to the European Supervisory Authorities (‘ESAs’) and certain institutional limits of the EU.
“Complexity closes more doors than it opens”, observed the MEP Stéphanie Yon-Courtin (Renew Europe, French) at the start of the session, when it became clear that the regulatory architecture had become too cumbersome to support the European economy’s competitiveness. This simplification, she explained, should not be seen as a one-off technical operation, but as a “state of mind” and a shared responsibility.
‘Less is more’. The discussions were based on the ‘Less is more’ report, published on 10 February by a group of experts who, according to the preface to the text, share the conviction “of working for the unification of European financial standards and supervision in the service of the development, competitiveness, and stability of our economies”.
Key recommendations include limiting the use of ‘review clauses’ which are seen as a source of instability, and clarifying the role of ‘levels 2 and 3’ of the EU legislative system, which include technical acts adopted by the European Commission or non-binding guidelines, often on the proposal of the relevant specialised authorities.
In addition, the authors call for a review of the founding texts of the sectoral supervisory authorities to limit their mandates and ensure that no guidelines are adopted without an explicit legal basis. Finally, they consider it necessary to strengthen the political and jurisdictional control of ‘level 2 and 3’ acts to ensure the democratic legitimacy of the regulatory process.
Reactions. “In practice, ESAs have developed a life of their own”, said MEP Markus Ferber (EPP, German), calling for their role to be restricted.
“We are not the political decision-makers”, stressed Petra Hielkema, Chair of the European Insurance and Occupational Pensions Authority (EIOPA), calling on the EU institutions to adopt a resolutely European approach to simplification, particularly in terms of reporting obligations.
“Are we one (Europe) competing with the rest of the world, or twenty-seven States competing with each other?”.
In Berlin, the report was “well received”, said a German diplomat present on Wednesday. “It’s a good starting point, let’s use it”, the diplomat declared, without giving any further details on the position of Germany’s new government.
On the Danish side, Louise Mogensen, Director General of the Danish Financial Supervisory Authority, qualified the integration approach regularly promoted in terms of supervision. “Every time we talk about full harmonisation across all, it leads to a lot of regulation and details… but in other areas (...), I believe minium requirements would be sufficient: we should talk about national differences and not only a harmonised level playing field”, she stressed.
Institutional limits. A number of criticisms have been levelled at the European legislative process, in particular at the interinstitutional negotiations (‘trilogues’), which are often concluded at late hours and during which last-minute compromises can push certain issues of legislation back to ‘level 2 and 3’ acts.
According to some speakers, the current cases of the ‘Retail Investment Strategy’ or the future regulation on access to financial data (‘FiDA’) illustrate the current stalemate between political ambition and targeted simplification.
To see the report ‘Less is more: Rethink financial Regulation in the EU’: https://aeur.eu/f/gmk (Original version in French by Bernard Denuit)