On the 13th and 14th September, an informal ECOFIN reunion discussed the “Union’s priorities in the field of the capital markets union for the next institutional cycle” based on the Finnish Presidency’s issues note on the matter.
Put simply, the Finnish Presidency identified hurdles to the development of the Capital Markets Union and proposed priority areas to be worked on. These included:
- Retail investor engagement, trust and confidence in financial markets;
- Funding sources for SMEs;
- Digitalisation; and
- Enforcement and integrity.
While we couldn’t be happier to see these notes almost quoting BETTER FINANCE’s advocacy speech (“households and other retail savers are the main source of long-term funding for the European economy”, “addressing the pressure on pension schemes”, or “financial literacy is a fundamental precondition for building up citizens’ capability and confidence to use financial services”), we cannot but wonder whether we are once again looking at the right policy iteration with the wrong implementation.
For instance, speaking about pre-contractual information disclosure, the notes mention “comparing and interpreting fees across […] products can still be very difficult, even for well-informed investors”. Yet BETTER FINANCE’s unrelenting efforts to obtain redress for consumers and investors for the detriment caused by the disastrous PRIIPs costs disclosure, lack support and action by decision makers. Moreover, we couldn’t agree more that “excessive information may obscure rather than help”, but the new PEPP Key Information Document (KID) will be considerably longer than both the UCITS KIID and PRIIPs KID, and much more complex. This shouldn’t be the case and we stress the importance of the “KISS” principle in this regard: keep it simple and short.
On enforcement, BETTER FINANCE continuously asked the Council and the Parliament to grant the European Supervisory Authorities (ESAs) increased consumer protection and product intervention powers, but this happened only to a limited extent . On the private enforcement side, we advocate for an effective collective redress mechanism for consumers, but Member States seem to agree only in principle with this idea. In fact, when it comes to making a pan-EU consumer collective redress instrument a reality, Council Members not only question the legal basis, but also even whether financial services users are consumers (verbatim!).
The list continues.
We welcome these draft priorities set by the Finnish Presidency, but we urge all decision makers involved to live up to the promises and display much more political ambition in walking the talk.