EC’s Action Plan to tackle regulatory imbalance

European CommissionThe European Commission has committed to review financial regulation and identify inconsistencies that could lead to an uneven playing field in the provision of financial services.

A consultation was launched this week as part of the Commission’s Action Plan on the Capital Markets Union (CMU).

Alexander Schindler, president of the European Fund and Asset Management Association (Efama), says: “We applaud the Commission’s plans to assess the impact of previous regulatory reforms. This should also serve the purpose of addressing, sooner rather than later, we hope, the current overlapping requirements that are either not fully consistent with each other, or which inadvertently create an unlevel playing field among financial sectors.”

Legal and other barriers still remain to a CMU, Efama says. ‘Goldplating’, whereby financial regulation may diverge between countries as one country attempts to create a ‘better’ regulatory environment, is one example.

The broader issue also relates to differences in regulation between financial products. Schindler adds that Efama “sees no reason for the coexistence of different levels of consumer protection in the current EU regulatory landscape” and that retail investors should be offered similar disclosure requirements that will allow them a fair and meaningful comparison of similar investment options.

Broadly, industry figures welcomed the Action Plan for the CMU. The plan contains plans for a review of securitisation, among other initiatives, and the CMU is aimed at increasing growth in the European economy.

Jack Inglis, the chief executive officer of the Alternative Investment Management Association (Aima), says Aima supports the aims of the CMU and the direction of travel of the Commission.

But Aima also wants to see more research and debate on provisions for loan funds and hopes that the review of securitisation will result in non-bank originators and sponsors to participate in the market while also making it easier for asset managers to invest in securitisations.

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