Follow Us

Follow us on Twitter  Follow us on LinkedIn

14 January 2014

ECON Committee publishes responses to consultation on the coherence of EU financial services legislation: BoE, BBA, EBA, EBF, EFAMA et al

Default: Change to:

ECON held a consultation on enhancing the coherence of EU financial services legislation, which closed in June 2013. The responses are now being analysed to determine the best way to follow up on the issues raised.

Bank of England

For the EU to improve the coherence of financial services legislation, it is essential to make changes to the way in which policy is developed. BoE's response is therefore structured around the policy process, in substance concentrating on question 6 on ways to improve the coherence of legislation. But the response also draws links to other questions asked in the consultation.

Reviews of policies after they have been introduced should be a key tool in improving the EU legislative framework. Currently, such reviews tend to focus on specific examples of regulatory failure. They do not assess whether the new policy achieved its objectives or whether the predicted impacts were realised. The reviews are specific to a piece of legislation and so do not give a view of the overall effectiveness of policy packages. The coherence and effectiveness of EU legislation would be strengthened by comprehensive ex-post assessment of the legislative framework against its original objectives, and the identification of unintended consequences.

Full response


  • BBA supports all efforts at unified approaches that offer a simpler, uniform and more transparent regime; however it believes that a unified code for financial services law may not be realistic. As such, BBA would caution against such a move where previous attempts at unified contract law or unified securities law have failed.
  • Review clauses included in initial pieces of legislation which link to the reviews of related legislation are important and help with ensuring the coherence of financial services legislation.
  • More information is needed on a unified, legally binding code of financial services law prior to responding. If however, such a code increases clarity and transparency, then this would be an avenue worth exploring.
  • There needs to be increased transparency within the EU Institutions for the handling of legislative proposals. For example, in the European Parliament, negotiations on compromise amendments must be made public, either through video transmission of the Shadow meetings or via minutes taken by the Secretariat. Moreover, negotiations within Council Working Groups must also be made public, either through video transmission or via minutes taken by the Secretariat.
  • The importance of Impact Assessments (“IAs”) cannot be overstated. Current COM proposals are written on a products-/services-basis, whereas the client experience of interacting with a firm is multi-faceted and is not constrained within a silo. IAs therefore, reflect this silo-based nature of COM proposals. In order to get a relevant IA analysis therefore, there is a need to investigate the impact of a proposed legislation on other aspects of financial activity that may not intuitively be related to the proposed legislation. Whilst the COM produces an IA for a legislative proposal at the outset, once the proposal has been through the EU decision-making process, it seldom reflects the original COM proposal. As a result, this nullifies the initial IA. It will be beneficial therefore, for a comprehensive IA to be conducted on the final proposal following deliberations but prior to formal adoption. 

Full response


Possible measures in the area of consumer protection and financial innovation would be to:

  • Bring about greater consistency in the speed and depth of consumer protection legislation across the three financial sectors of banking, insurance, and investments;
  • Identify the national competent authorities to which the EBA is mandated to address its legal instruments on consumer protection and financial innovation; by bringing consumer protection-related directives fully within Article 1(2) of the EBA founding regulation and ensuring all competent authorities are referred to in Article 4(2).

In addition to greater coordination between the three ESAs as described in question 1, the above could potentially be achieved by increasing coordination between the organisational units of the EU Commission that are drafting financial services regulation for the three sectors of banking; investments; and insurance respectively. 

Full response


The implementation of EU legislation concerning financial sector services requires EU supervisory agencies to draft detailed technical rules. It is essential for the quality of regulation and for the international credibility of the ESAs themselves that the ESAs are provided with the time and opportunity to succeed. Level 1 Legislation should, therefore, restrain from imposing very short timeframes on the EU supervisory agencies. More particularly, timelines for level 2 implementation, as set out in level 1, should not be defined in absolute date-specific terms, but by specifying a period for ESA drafting, starting from the date when the level 1 measure is adopted (or enters into force). It is critical that the ESAs be given a period of no less than 12 months post-adoption (or entry into force) to draft standards. Furthermore, to the extent that it may be considered impracticable for the ESAs to complete all of the envisaged mandates to a high quality within a particular timeframe (given available resources) we would suggest that a principle of prioritisation be incorporated in the level 1 mandates. If all tasks cannot be achieved over a specific period, a phased approach should be taken. Ideally, the legislators should consider conferring powers on the European Commission to extend the implementation deadlines in justified instances.

Enforcement of ESMA Guidelines

The competent authorities within Member States are required to implement ESMA guidelines on a comply-or-explain basis. It would seem, however, that national competent authorities have confirmed that they subscribe to the ESMA guidelines notwithstanding that they have failed to integrate the guidelines into their supervisory practices in full. Such practices create an unlevel playing field. Moreover, and more importantly, they clash with the very objective of the existence of ESMA guidelines, which is ensure the coherence, efficiency and effectiveness of supervisory practices and the common, uniform and consistent application of EU law (cf. Article 16 of Regulation (EU) No 1095/2010).

Need to consider the outcome of relevant research when preparing legislation

There have been several instances in which the European Commission has taken the initiative to launch legislative proposals without awaiting the outcome of relevant research that EU official bodies were still in the process of undertaking. Clearly, legislative initiatives need to be taken only once the facts are evident and not before. 

Full response


As a general comment EFAMA would like to stress that the need for more consistency does not necessarily lead to more legislation. As a first step coherence of EU financial legislation can be further improved through:

i. Setting the principals prior to setting the detailed rules. In that context it should be highlighted that MIFID II should have set the base ground for transparency duties on which the EMIR rules would then apply, but the EMIR legislative debate has already been concluded whereas the MIFID II one is still open.

ii. A more refined Level 2 process. This means more alignment between the principles of Level 1 and the Level 2 provisions and better defined periods for the publication of Level 2 provisions and their national implementation.

iii. Harmonised national implementation of the existing legislation has to be reinforced. Moreover in order to ensure coherence the legislative discussion on proposals with equivalent regulatory purposes has to take place at the same period of time and the same topic should normally not be covered by several legal frameworks as this causes legal uncertainty for market participants. This does not mean that a ‘one size fits all’ approach has to be followed.

The simultaneous legislative debate on regulation with comparable purposes and scope will further improve the understanding of similarities and differences of each financial sector and the need to avoid the replication of identical rules on products/services/activities of different sectors. 

Full response

All responses

Please click on PDF link below to see the original questionnaire, which closed on 14 June, 2013.

© European Parliament

Documents associated with this article

ECON 20130314ATT63250EN (2).pdf

< Next Previous >
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information

Add new comment