Treasury has published its response to the Commission’s now-closed call for evidence on the EU regulatory framework for financial services (see FReD 2 October 2015). Treasury says inconsistencies and unintended consequences of financial services legislation are creating a barrier to effective implementation of the financial stability regime and to the delivery of jobs and growth. The main points of its response cover:

  • technical issues preventing the smooth functioning of the single market, such as:
    • misaligned disclosure requirements within and across many pieces of legislation;
    • inconsistent definitions within and across legislation which generates regulatory risk and increases regulatory costs;
    • regulation via multiple legislative acts leading to discrepancies; and
    • insufficient differentiation of regulatory approach between small and complex firms causing specific needs to be less effectively targeted; and
  • wider issues which need to be addressed to deliver a competitive, innovative sector supporting economic growth, such as:
    • the long-term decline in market liquidity and its implications for market making and the efficiency of financing the real economy;
    • how financial services regulation can support long-term investment across the sector by building on the work done in Capital Markets Union; and
    • how best to support the openness of European and global markets as they adjust to new regulatory regimes.

(Source: Treasury Responds on EU Regulatory Framework for Financial Services)