On 30 September 2015, the European Commission (the Commission) launched its Call for Evidence: EU regulatory framework for financial services. The consultation closed on 31 January and its results were published by the Commission on 17 May 2016.
The key points to note are:
- Stakeholders were consulted on the benefits, consistency, gaps in and coherence of the EU regulatory framework for financial services. 288 responses were received across 25 different countries, with the majority of respondents located in the UK and Belgium.
- The majority of responses came from the financial sector.
- There were 15 pre-defined topics included in the consultation, with the majority of responses focussing on constraints on financing, proportionality, compliance costs, reporting and disclosure obligations and overlaps and inconsistencies.
- With regard to investor and consumer protection, respondents suggested that a ‘silo mentality’ to consumer protection rules has led to a lack of clarity for consumers and duplication, with the result being increased compliance costs for the competent authorities. Respondents pointed out that there are inconsistencies across pieces of legislation when it comes to pre-sale disclosure requirements to retail investors. The result of this might be that retail investors may receive differing and multiple disclosures for similar products.
- With regard to proportionality, stakeholders commented that more proportionality is needed in regulation of smaller firms or those with low risk profiles and that reporting requirements can be particularly burdensome for smaller entities.
- There is a perceived overlap of regulation creating an unnecessary regulatory burden with tight timelines for implementation and transposition for regulated firms and supervisors. Respondents called for less complexity in the overall regulatory framework.
- Banking associations and banks highlighted inconsistencies in the reporting burdens imposed by national competent authorities, the Single Supervisory Mechanism, and the European Banking Authority.
- It was claimed that the complex regulatory frameworks disadvantage smaller companies and impede market entry. Banks showed particular concern that financial technology firms may not be subject to the same regulation even when offering identical services, whereas financial technology firms claimed it was the prudential and market rules that were keeping them out of the market.
- Several respondents noted that gaps remain in the financial regulatory framework. Examples given were the need for stricter rules on creditworthiness in the Consumer Credit Directive 2008 and gaps in consumer protection legislation.