Better EU financial services regulation
42. Believes that better financial regulation implies a robust framework and starts with Member States applying the current acquis; stresses that effective, efficient and consistent implementation of the legislation is crucial and calls on the Commission for regular reports to Parliament on the state of transposition and implementation of the legislation, and where applicable, the infringement proceedings brought against Member States; urges the Member States to properly enforce the legislation; considers that gold-plating does not facilitate the functioning of the internal market and competition; considers that attracting business through the discretionary use of lower standards does not facilitate the functioning of the internal market either; asks the Commission to come up with a thorough analysis and report of all gold-plating measures taken by Member States in the field of financial legislation and to submit them to Parliament by the end of 2016;
43. Calls on the Member States to commit to respecting the deadlines set for the transposition of directives since, in addition to being a legal requirement, this is key in order to avoid undue delays in the full implementation of legislation, as well as its partial or uneven application across the Union, which might result in the absence of a level playing field for the different actors involved and in other types of distortions;
44. Highlights the need for better quality and cross-sectoral coordination in the Commission’s or the ESAs’ drafts and drafting processes, encompassing timing, prioritisation and the avoidance of overlaps; stresses that this should avoid any duplication of the basic act in delegated acts, but also avoid political decisions which should be resolved within the basic act from being left to the delegated acts;
45. Calls on the Commission to enable the early involvement of all relevant stakeholders, including at the level of experts groups; urges the Commission to ensure balanced participation in consultations by reflecting the diversity of stakeholders, and by facilitating and providing better conditions for the participation of small stakeholders representing business, consumers and civil society, including the way consultations are organised and questions asked;
46. Welcomes the objectives of the better regulation agenda; acknowledges the general need to examine the fitness of regulation now and in the future; however, this fitness cannot be decoupled from the functioning of the financial sector as a whole; underlines the role of REFIT in achieving efficient and effective financial services regulation that takes due account of the proportionality principle and in supporting the stocktaking exercise; calls for Parliament to have a bigger role in the decisions and assessments intrinsic to REFIT; recalls that the focus must be on improving regulation, not deregulating; stresses that ensuring transparency, simplicity, accessibility and fairness across the internal market should be part of the better regulation agenda for consumers; stresses also that the EU must not create an unintended compliance burden in the drive to bring about greater harmonisation under the CMU;
47. Believes that the ESAs and SSM have a crucial role to play in achieving the objectives of better regulation and supervision; highlights the role of the ESAs and the SSM in ensuring coherence and consistency between different pieces of legislation, in reducing uncertainty and regulatory arbitrage and in fostering mutually beneficial cooperation among market participants; stresses that the ESAs and SSM have to be adequately funded and staffed if they are to fulfil the tasks given to them by the co-legislators;
48. Highlights that the revision of the ESA regulations must reflect the accountability and transparency provisions for enhanced scrutiny by Parliament, as laid down in the SSM and SRM regulations, and must reinforce the independence of the ESAs from the Commission; considers it necessary to explore possibilities for facilitating greater ESA participation at an advisory level during the level 1 phase while respecting the prerogatives of the co-legislators;
49. Stresses the need to respect the interplay, consistency and coherence between the basic acts and delegated and implementing acts; stresses again that political decisions have to be made by the co-legislators within the basic act, and should not be left to the delegated acts, which are meant ‘to supplement or amend certain non-essential elements of the legislative act’ (Article 290 of the Treaty on the Functioning of the European Union); insists that the Commission and the ESAs, when drafting delegated and implementing acts and guidelines, stick to the empowerments laid down in the basic acts and respect the co-legislators’ agreement; regrets that in the past the supervisory authorities, in drawing up implementing acts, have not always adhered to the mandate set out by the European legislators; deplores that the coordination between the Commission (delegated acts) and the ESAs (technical standards) is insufficient and may therefore negatively affect the quality of compliance, particularly where detailed requirements are not adopted until shortly before the implementation deadline of the basic act;
50. Calls on the Commission to fully unbundle both delegated and implementing acts and to avoid package approaches in order to allow for the timely adoption of those acts;
51. Calls on the Commission to make any amendments made to the draft regulatory technical standards (RTS) and implementing technical standards (ITS) submitted by the ESAs transparent to the co-legislators and stakeholders;
52. Emphasises that an early legal review by the Commission should not reduce either the transparency of the process vis-à-vis Parliament or Parliament’s right to be consulted; requests that during the drafting process the ESAs proactively provide Parliament regularly, comprehensively and without delay with provisional drafts and interim information on the progress of work and consult Parliament thereon;
53. Calls on the Commission and the ESAs to fully respect the deadlines for submission set by the co-legislators and to immediately provide the co-legislators with an explanation when a deadline is not expected to be met;
54. Reminds the ESAs that technical standards, guidelines and recommendations are bound by the principle of proportionality; calls on the ESAs to adopt a careful approach to the extent and number of guidelines, particularly where they are not explicitly empowered in the basic act; notes that such a restrictive approach is also required in view of the ESAs’ limited resources and the need to prioritise their tasks, whereby the practical limits of effective supervision must not be set by budgetary constraints, and asks that adequate resources be secured for ESAs so as to enable them to carry out reliable, independent and effective supervision in the performance of their mandate; [...]
The way forward
57. Calls on the Commission and ESAs to conduct regular (at least annual) coherence and consistency checks, including on a cross-sectoral basis and on every draft legislative act, and on the implementation of adopted legislation, including RTS and ITS, and to dedicate resources to this activity;
58. Calls on the Commission and ESAs to conduct regular (at least annual) proportionality and effectiveness checks, particularly with regard to the requirements applicable to small and medium-sized market participants, and on every draft legislative act, and to dedicate resources to this activity; calls on the Commission to publish a Green Paper exploring new approaches to promoting proportionality in financial regulation;
59. Stresses that the impact of individual legislative measures differs from their cumulative impact; calls on the Commission services, in cooperation with the ESAs, SSM and ESRB, to conduct a comprehensive quantitative and qualitative assessment every five years of the cumulative impact of EU financial services regulation on financial markets and its participants at EU and Member State level in order to identify shortcomings and loopholes, to assess the performance, effectiveness and efficiency of the financial services regulation and to ensure that it is not impeding fair competition and the development of the economy, and to report back to Parliament; stresses the importance of performing detailed impact assessments and cost-benefit analyses for any future legislation in order to demonstrate the added value of legislation, in particular as regards economic growth and job creation; underlines that impact assessments and cost-benefit analyses should include thorough evaluations of the impact of Level-2 measures, which form a significant part of the EU financial regulatory framework; recalls that quantifying the impact of legislative measures might be difficult, in particular given that their benefits are difficult to measure, but methods for quantification should still be used;
60. Calls on the Commission services to complete the first assessment by the end of 2016 and to report on the overall impact and, in separate chapters, relying also on independent research, on the following:
- the effects on the different financial sectors, including an appropriate differentiated breakdown of the market participants by size, complexity and business model, and on non-financial entities,
- possible gaps and loopholes, while considering the possible development of new threats and risks as well as overlaps and unintended consequences,
- the actual and expected economic effects, as well as the competitiveness of the European financial sector in the world,
- the possibilities of benefiting the real economy, including SMEs, consumers and employment,
- the need to further improve existing, and extend complementary, funding channels, including the effect on access to finance for SMEs and mid-cap companies;
- the effects on supply and demand of long-term financing,
- the effects on the allocation and diversification of assets and risks, and on the development of equity tier 1 to total asset ratios in financial institutions,
- the effectiveness and appropriateness of the framework for retail investors, institutional investors and consumers and customers, including the framework on transparency,
- the effectiveness of removing barriers to the single market, limiting regulatory arbitrage and fostering competition,
- the overall effect on financial stability and moral hazard, including an assessment of the possible costs and risk of the lack of regulation, while taking into account the effective implementation of G20 recommendations, and the level of interconnectedness between financial firms;
- the impact on financial stability of IFRS fair value accounting compared with prudent accounting,
- the effectiveness and appropriateness of the framework for macroprudential supervision in the EU,
- the capacity of ESAs to fulfil the tasks given to them under the current legislative framework and on the steps that may be needed to improve the framework, especially the financing of ESAs in the near future,
- the interdependencies with international standards and the effects on the global competitiveness of European businesses, taking into account a comparison between the EU and other major jurisdictions in terms of existing regulation and the extent to which it is implemented [...]
Full report
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