Brussels Pauses Financial Regulations
Brussels has granted the financial sector a breathing space in the welter of Regulations after the huge number than that have been imposed over the last very few years. Many planned items are "paused"
Charlie McCreevy had promised to spare Europe's financial services a fresh spate of legislation from Brussels in a Green paper earlier in 2005, and now in a white paper, which has a more definitive status, this is confirmed. This potential pause will be a major relief to the financial services sector that has been struggling to digest the new Basel capital adequacy regime and the markets in financial instruments directive (Mifid), as well as absorbing many earlier regulatory changes.
Brussels still has some projects in hand, though. One is the promotion of cross-border mortgage lending on which the Commission recently issued a green paper. The Financial Times said then "what can be done for mortgage borrowers in terms of providing them with information has largely been done through a code of conduct, and what remains to be done for lenders in terms of harmonising cross-border access to land registries and credit rating data may be undoable."
The Commission says it is also looking at action to try to ease the opening of bank accounts and to promote investment funds so that the latter can play their part in solving the pension crisis.
Focus on Correct Operation of Existing Legislation
Wisely, the Commission is focusing much more on making the new legislation work properly. The first stage involves ensuring that member states accurately transpose the legislation, and neither weaken it nor reinforce it with gold plating. The Commission created some confusion in its earlier green paper by talking of a "single European rule book", which gave the impression that Brussels was aiming at creeping centralisation.
Not so. Instead the EU executive states that what it wants to do is to institute an overall legal "consistency check" so as to remove any overlaps, conflicts and duplications between national regulators. The first of these is to be made in the securities sector.
Yield Jurisdiction Back to "HQ Nation"
Achieving consistency in regulating a multinational financial services company may involve some member state supervisors ceding jurisdiction to the regulator where the company is headquartered. A first sign of this is the German and Italian regulators striking a formal agreement on how to supervise Italy's UniCredito following its takeover of Germany's HVB bank.