Wake up to Brussels briefing on developments in European financial services regulation

The ‘Wake up to Brussels’ briefing with EY’s Dr David Doyle focused on the tectonic changes which are happening with EU institutions in 2019: a new Commission; Parliamentary elections; a trend toward re-nationalisation in the Council; and the rise in populist, anti-EU and anti-immigration parties across the continent — not including the prolonged uncertainty with the ‘helter-skelter’ ride of the Brexit negotiations.

Given the remaining time before elections next year, the Commission’s regulatory agenda is unlikely to be delivered: the European Securities & Markets Authority (ESMA) is issuing guidance to national supervisors on delegation (to third countries); revision to the EU Equivalence Regime is in progress to give the European Supervisory Authorities (ESAs) more involvement in preparing equivalence decisions and monitoring developments in third countries; adjustments for third country investment firms should facilitate continuity of investments in Europe alongside equivalency certification.

Measures to address the potential systemic risk (and contribution to financial instability) from the trend for insurance investments in mainland Europe to shift to risk bonds and illiquid assets arise from a European Insurance & Occupational Pensions Authority (EIOPA) report published in September.

The EC Sustainable Finance action plan (published in May 2018) will incorporate environmental, social and governance factors into investment decision-making. Banks and asset managers will need to consider sustainability when making lending and investment decisions — including housing — which will be disclosed in the public domain.

Finally, although the Commission’s FinTech action plan (published in March 2018) identifies a number of opportunities and challenges for the sector, it is clear that the EC is not yet ready for legislative action.

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