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Shaping a new regulatory and supervisory framework for the finance industry
 

Shaping a new regulatory and supervisory framework for the finance industry

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    Shaping a new regulatory and supervisory framework for the finance industry Shaping a new regulatory and supervisory framework for the finance industry Document Transcript

    • UNI Finance Global Union Version: Draft 1e Date: 20/11/2009 UNI Europa Finance Conference, Dublin, Ireland, 10-11 December 2009 Item 08: Shaping a new regulatory and supervisory framework for the finance industry European financial regulation UNI Europa Finance approach 1 Introduction With the culmination of the financial crisis in autumn 2008, financial markets have slowly found their feet again. The biggest financial crisis since 1929 has left taxpayers with a huge bill and global society with an economic crisis that has serious and damaging impact on economy and employment. To avoid mere return to ‘business as usual’, a profound reform and strengthening of the regulatory and supervisory system at European and world level is needed. UNI finance calls for a new business model to be developed, which is sustainable, long-term oriented and risk- conscious, one that empowers customers and staff. UNI Europa Finance will undertake a strong and focused approach to defend the interests of finance workers and achieve our objectives. Our policy is based on the UNI Europa Finance strategy for influencing financial regulation as adopted in 2004. UNI Europa Finance, together with the other parts of UNI Global Union, works together closely with the ETUC, TUAC and ITUC. The aim is to have a joint approach on the workers’ side. 2 Key legislation and positions A comprehensive framework of financial regulation and supervision should be created at world level to cover all financial products and players in the industry, stop ‘regime shopping’ and ensure that rules are strictly enforced. UNI Europa Finance has submitted its position to the EU Commission in a number of consultations. It has had formal and informal meetings with the Commission and with members of the European Parliament. The work to influence the EU institutions and other stakeholders will continue and focus on the key priorities outlined below. The UNI Finance positions are set out in detail in the ‘key issues’ paper adopted in March 2009. In particular at EU level, specific policies have been formulated and communicated to decision makers. (see: http://www.uniglobalunion.org/Apps/iportal.nsf/pages/20090324_flp3En). UNI Finance Conference 2009- 08 - Shaping a new regulatory and supervisory framework for the finance industry _____________________________________________________________________________ 1/4
    • The UNI Europa Finance Steering Group identified the following six legislative initiatives by the EU Commission as priorities. UNI Europa Finance will focus its lobbying efforts on these. 2.1 European supervisory architecture. The EU Commission introduced a package of legislative proposals to strengthen financial supervision in Europe. The proposed new supervisory structure includes a European Systemic Risk Board (ESRB) to look after macro-level supervision and a European System of Financial Supervisors (ESFS), which is to further integrate the micro-level supervision across Europe. The proposals are currently dealt with by the European Parliament and the ECOFIN Council, the Council constellation bring together the EU finance ministers. The Parliament is expected to vote on its proposed amendments (its opinion) in March 2010 (for the macro-level) and in June 2010 (for the micro-level). Key issues for UNI Europa Finance are that employees have a proper place in the new supervisory architecture, and that the reforms ensure strong, integrated and well-functioning supervision practices across Europe. The proposal includes consultative bodies (“stakeholder groups”) to each of the European Supervisory Authorities that would also include employee representatives. This is a step in the right direction, but key to UNI Europa Finance is that a balanced representation of stakeholders is ensured in the supervisory authorities. 2.2 Capital Requirements Directive (CRD) as regards supervisory review of remuneration structures In the EU Commission’s draft proposal, the supervisory authorities would have the power to impose capital 'sanctions' on financial institutions where the remuneration policies are found to generate unacceptable risk. In an annex to the Directive, principles for good remuneration policies are outlined (based on the Recommendation on remuneration in the finance sector adopted 29 April), with which companies will have to comply. The proposal is currently dealt with by the Parliament and the ECOFIN Council. The Parliament is expected to adopt its opinion in June 2010. Key issue for UNI Europa Finance is to ensure that remuneration structures do not hinder proper advice. At the same time, it must be ensured that the autonomy of the social partners and the primacy of collective agreements are respected. 2.3 Four regulatory dossiers on responsible sales of financial products It is key to UNI Europa Finance that proper sales practices are in place across Europe. Recent initiatives from the Commission regarding responsible sales of financial products address issues such as conflicts of interest in the sales situations, advice standards and information provisions. The proposals reflect rules already applying for most investment products (regulated by the Markets in Financial Instruments Directive, MiFID). The approach taken by the Commission suggests a move towards harmonisation of sales regulation in all retail areas of financial services based on MiFID. UNI Europa Finance is in favour of a single, harmonised approach, introducing the same advice standards for sales of all types of financial products in the EU. 2.3.1 Responsible lending Based on consultation earlier this year, the Commission is now considering what measures to put forward on the issue. A proposal is expected early 2010. UNI Finance Conference 2009- 08 - Shaping a new regulatory and supervisory framework for the finance industry _____________________________________________________________________________ 2/4
    • 2.3.2 Retail Investment Products The Commission’s Communication on Packaged Retail Investment Products aims at an effective and comprehensive legal framework for retail financial services. The Communication outlines proposals for a new, horizontal legislative approach, drawing on the best of existing requirements and applying these to all relevant products. The Commission will provide an orientation on the detailed legislative proposals by the end of 2009. 2.3.3 Transposition and implementation of the Consumer Credit Directive The Consumer Credit Directive was adopted in April 2008 and should be implemented by June 2010. It includes standards on information provision but not advice standards. It is part of the considerations regarding the responsible lending initiatives to revise this Directive to get it in line with the standards of MiFID. UNI Europa Finance is in favour of a revision. Furthermore, the transposition and implementation of the Directive should be more closely monitored at national level. 2.3.4 Review of the Markets in Financial Instruments Directive (MiFID) A review of the implementation of MiFID is expected early 2010. As mentioned earlier, MiFID regulates, among other things, advice standards within the investment area. For UNI Europa Finance, the review is important to gain experience on whether the legislation has had the intended effect in terms of improving responsible sales of products. It should be ensured that the advice standards are properly implemented and do not end up as a formality simply demanding a signature from the customer. A proper implementation is key to a real improvement of lending practices. A good dialogue with and involvement of finance employees in the review process is therefore important. 3 Internal roles and responsibilities 3.1 Steering Group and Presidium The Steering Group is the overall decision-making body to decide on policies and actions. It plays a key role in encouraging affiliates to act. The Presidium is the coordination group for financial crisis. It identifies political priorities and is the main driver behind action. 3.2 The coordination group for regulation The coordination group stays on top of what is on the regulatory agenda in the EU. It provides and coordinates input from affiliates to public consultations and meetings with DG Internal Market. It advises the Steering Group and coordinates the activities together with the Presidium and the Secretariat. It ensures information flow between the affiliates and the Secretariat. Together with the Secretariat, it drafts UNI Europa Finance positions on draft legislation. 3.3 Affiliates Affiliates are encouraged to use their contacts in the national administration to work with government positions. They are encouraged to : • participate actively in the development of UNI Europa Finance’s position – directly as well as through involvement in the ETUC-UNI Europa expert network (see below), UNI Finance Conference 2009- 08 - Shaping a new regulatory and supervisory framework for the finance industry _____________________________________________________________________________ 3/4
    • • identify contacts in the ‘working parties’ of the EU Council and in the Permanent Representatives Committee (COREPER) as well as among relevant members of the European Parliament (MEP) from their respective countries, • organise meetings with key actors, • keep the Secretariat informed of national developments and their activities. Affiliates are encouraged to follow up lobbying campaigns at national level and actively participate in the campaign “Europeans for Financial ReformSecretariat. 3.4 The Secretariat The Secretariat monitors the regulation and brings affiliates into the process and makes the link to the coordination group. It identifies targets and timeframes for each legislative proposal, organises meetings with key targets and addresses other relevant targets. 3.5 ETUC-UNI Europa expert network ETUC and UNI Europa work together, coordinate activities and pool expertises and resources. An ETUC-UNI Europa expert network has been formed. Its task is to develop counter-proposals to the regulatory proposals from the Commission from a technical perspective. The network consists of internal and external experts of the two organisations, in particular from UNI Europa Finance. Results will be fed into the UNI Europa Finance decisionmaking process. UNI Europa Finance and ETUC coordinate the work of the network. 3.5.1 Europeans for Financial Reform UNI Europa Finance is part of the campaign network Europeans for Financial Reform, which brings together a number of like-minded organisations in favour of financial reform. The main participants are Global Progressive Forum, UNI Europa, TUAC, ETUC, ITUC, and Solidar. The campaign is a joint effort between Europe and an established alliance of over 80 organisations in ‘Americans for Financial reform’ including many UNI US affiliates. The purpose is to develop a transatlantic alliance for financial reform. UNI Global Union is represented on the steering committee. The campaign was launched officially on 21 September 2009 in Brussels. UNI is now involved in promoting the campaign to affiliates and outside groups. UNI Finance Conference 2009- 08 - Shaping a new regulatory and supervisory framework for the finance industry _____________________________________________________________________________ 4/4