Communication: Call for evidence – EU regulatory framework for financial services

In the 2016 State of the Union address, President Juncker emphasised the commitment of the Commission to a thorough review of all existing European legislation to ensure it delivers real value and results. The call for evidence on the EU regulatory framework for financial services is an important example of such an exercise. It is a key contribution to the Commission’s Better Regulation agenda and the Regulatory Fitness and Performance (REFIT) programme, which ensures that EU legislation delivers results for citizens and businesses effectively, efficiently and at minimum cost.

The call for evidence is also the first example of such an exercise internationally. Rules on financial services should help to create an environment that protects consumers, promotes market integrity and supports investment, growth and jobs. The financial crisis triggered the adoption of more than 40 new pieces of EU legislation to restore financial stability and market confidence. These include:
- increased protections for consumers and increased transparency;
- an improved regulatory framework for banks, insurance, securities markets and asset managers;
- a single supervisory mechanism for large and systemic banks; and
- new tools for bank resolution and more effective deposit protection.

Overall, these reforms have made the financial system more stable and resilient. At the same time, it is important to monitor the continuing development, early implementation and functioning of the new rules to check that they are delivering as intended, and consider appropriate changes if they are not. This is an important part of democratic accountability and will ensure that those affected by the rules, including end users, have confidence in them. The call for evidence includes assessing the interaction between the individual rules, and their combined economic impact. It should ensure that unintended consequences, inconsistencies and gaps in the current regulatory framework are addressed. Developments in the financial sector and the economy more broadly, including rapid technological change, also need to be taken into account when checking that the rules remain suited to the changing realities.

This is an approach that is supported by the European Parliament and the Council. In line with the European Parliament Resolution on 'Stocktaking and Challenges of the EU Financial Services Regulation', the Commission’s call for evidence invited external stakeholders to share their experience with implementing EU financial regulations and to provide data, evidence and arguments to support the assessment of their combined impact. The majority of respondents signalled support for the financial reforms undertaken in response to the crisis. They took the view that the rules have enhanced the resilience of the financial system and improved protections for investors and consumers.

However, stakeholders also identified examples of possible friction, overlap and other forms of unintended interaction between different rules. These examples show the importance of considering and analysing the combined impact of rules. Some respondents also expressed concerns about rules stemming from the implementation of international agreements, such as the impact of upcoming measures being considered by the Basel Committee on Banking Supervision (BCBS), and how aspects of those rules interact with existing ones. The Commission has channelled the most relevant feedback on global standards to the relevant international bodies. In other areas where stakeholders raised concerns, the evidence submitted did not currently warrant change. Nevertheless, the Commission will continue to monitor developments and welcomes further evidence from stakeholders on issues that should be analysed further.

Based on a thorough review and analysis of all the responses to the call for evidence and the discussions during the public hearing held in Brussels in May 2016, the Commission has concluded that overall the financial services framework in the EU is working well. However, targeted follow-up action is required in the following areas:
- reducing unnecessary regulatory constraints on financing the economy;
- enhancing the proportionality of rules without compromising prudential objectives;
- reducing undue regulatory burdens;
- making rules more consistent and forward-looking.

Where appropriate and possible, the results of the call for evidence have been integrated into existing reviews and legislative initiatives. The feedback submitted by stakeholders has been incorporated into forthcoming legislative proposals and actions, including the review of the Capital Requirement Regulation and Directive (CRR/CRD IV) which resulted in the so-called CRR2 package proposed by the Commission on 23 November 2016, the development of future actions contained in the Capital Markets Union (CMU) Action Plan and the forthcoming REFIT revision of the European Market Infrastructure Regulation (EMIR). The feedback provided will also be taken into account in upcoming fitness checks and evaluations that will be conducted once more data on the results and longer term impacts of the measures is available. The call for evidence also identified a number of other issues which might require new policy action. These are indicated in this Communication.

ESO: Commission publishes results of Call for Evidence on EU financial services [European Commission: Press Release, 23.11.16] http://www.europeansources.info/record/commission-publishes-results-of-call-for-evidence-on-eu-financial-services/

EUR-Lex: SWD(2016)359: Commission Staff Working Document on the Call for Evidence http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2016:359:FIN

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