On Thursday 5 June, France, Spain, Portugal, Germany, Luxembourg, the Netherlands and Estonia launched a European savings label called ‘Finance Europe’. This is the first initiative of the ‘European Competitiveness Laboratory’, launched last March by the Spanish Minister for the Economy, Carlos Cuerpo, to rapidly test financial integration projects across an embryonic group of EU Member States (see EUROPE 13596/15).
“Together with a number of willing Member States, we have chosen to take action to strengthen European competitiveness and cross-border integration. It is against this backdrop that the ‘Finance Europe’ label was born”, declared the French Minister for the Economy, Éric Lombard, at a launch event held in Paris.
The Minister underlined the complementary nature of the project with the Savings and Investment Union, launched by the European Commission (see EUROPE 13603/5).
“Of course, we want to enlarge it”, he continued, referring to potential interest from Italy, Ireland and Hungary.
The label, designed to apply to existing savings products without creating new ones, can be obtained if at least 70% of a company’s investments are made in the European Economic Area (EEA), with a commitment to an investment horizon of at least five years.
Labelled products should focus on productive equity investments, with priority given to equities. However, no public capital guarantee will be required “in order to support innovation and risk-taking by savers”, said Mr Lombard.
Participating countries will be invited to accompany this label with tax incentives, based on their national discretion.
A “voluntary and decentralised” approach. The label will be self-declared by market players, i.e. banks, insurance companies and asset management companies, on the basis of a common reference framework. It will be up to the national competent authority in each of the Member States to check compliance with the criteria for this European label.
Better Finance believes that the initiative lacks ambition. According to the European Federation of Investors and Users of Financial Services (Better Finance), the efforts made by some EU Member States to promote cross-border savings vehicles are a step in the right direction. However, the organisation considers that the initiative lacks the ambition to remedy the high level of fragmentation in the European market for retail investment products.
“Despite its stated and excellent objective to enhance European competitiveness and channel private savings into productive investment, the initiative demonstrates a worrying disregard for the very citizens it purports to serve”, said Better Finance in a press release.
For the organisation, the label, as envisaged, constitutes a “plan B” compared to other solutions, in particular the “Pan-European Personal Pension Product” (PEPP).
Better Finance also regrets that it was neither consulted nor invited to contribute to the design and public discussion of the project. “European households are by far the main source of long-term capital. And yet their interests are totally absent from this initiative”, lamented the European federation’s senior adviser Guillaume Prache. (Original version in French by Bernard Denuit)