The European Commission’s overarching aims in all its work are to promote European competitiveness and simplify regulation. We consider these priorities well chosen.
At the moment, there is a pile-up of excessive and overlapping regulation, which restricts the EU’s economic growth and competitiveness. For the massive regulatory machine in Brussels, the cure-all for all sorts of problems seems to be churning out new rules.
In the financial sector, we have seen how detailed and multilayered regulatory frameworks have grown extremely complicated. The interactions and interrelations between regulations are so complex that they are hard to grasp, which has led to ambiguity and overlap.
This spring, the Commission has published several strategic programmes, action plans and policy initiatives that set the course of decisions and proposals to come.
The Commission’s initiatives include proposals to simplify EU rules, improve their implementation, invest in digital solutions and conduct evaluations and fitness checks on member state legislation. In addition, the Commission is aiming to kickstart a process to stress-test the stock of EU legislation.
In the area of financial sector regulation, sustainable finance regulation is currently subject to simplification, and regulation on reporting obligations is being rationalised. It is absolutely vital that other financial sector regulation will also be reviewed, but review proposals have so far been few and far apart. The financial sector would be more than happy to participate in addressing the issues.
The Commission has promised that going forward, it will be setting the bar higher when it considers the preparation of new proposals. This is the right course to take. With such a massive amount of existing regulation in place, the first step must be to carefully examine whether current rules could be made clearer or their implementation more effective. If new regulation is still considered necessary after a critical examination, it must be subjected to high-quality impact assessments.
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It is problematic if legislative level matters are
addressed through lower-level regulation.
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A much discussed topic in Europe is the ballooning of lower-level financial sector regulation. These rules and regulations are issued by European supervisory authorities in the banking, securities and insurance sectors.
The limits of the regulatory powers of supervisory authorities must not be excluded from critical examination. It is problematic also for legislators if legislative level matters are addressed through lower-level regulation. It might be time to revisit the regulation on European supervisory authorities’ powers and administration, even though the matter is delicate for many member states.
While the European Central Bank has extensive powers, its work as an issuer of new rules and regulations should also be reviewed critically.
We hope that the simplification and rationalisation of EU rules will be a long-standing priority in the work of officials. Simplification must come to more than just grand declarations in high-level speeches and action plans. Clearer and more coherent regulation means more effective regulation, which in turn helps achieve the important objectives of regulation. This is crucial for strengthening Europe’s competitiveness.
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