- The European Commission has proposed several supportable actions to simplify EU regulation. Simplification is a key tool in improving the EU’s competitiveness.
- A regulatory review is essential for the EU to boost its competitive standing and fully leverage the opportunities created by the twin green and digital transition.
- Regulatory frameworks in dire need of review include sustainable finance regulation, investor protection regulation and the framework for financial data access (FIDA).
- In Finland, a comprehensive assessment of financial market regulation has stalled, even though it is included in the government programme. The EU is currently coming across as a much more active driver of economic growth and competitiveness than Finland.
The European Commission has published the Competitiveness Compass, a roadmap for boosting the EU’s competitiveness over the next five years. The compass sets out key actions for improving competitiveness. One of these is the simplification of regulation.
“EU regulation is rife with overlap. It is important to weed this out for the EU to be able to boost its competitive standing – especially in relation to China and the US – and fully leverage the opportunities presented by the twin green and digital transition”, says Finance Finland’s Director of EU Affairs Mari Pekonen-Ranta.
The simplification of regulation has already gotten off to a flying start. Existing regulation is currently being scrutinised to identify ways to rationalise it and reduce regulatory and administrative burden. The Commission’s first simplification package is coming out in a matter of weeks, in late February. It will cover simplification in the field of sustainable finance reporting, which has grown increasingly intricate in recent years.
Pekonen-Ranta says that this is a step in the right direction but that the Commission has many more areas to tackle. She takes the RIS proposal framework on retail investor protection as an example.
“It would still be possible to reassess the investor protection reform that is currently being negotiated. The proposed solutions presented so far are so complex that they are doing a disservice to everyone. The RIS proposals must be simplified and pared down considerably. The negotiations must not be rushed at the cost of quality.”
The French government has proposed reassessing or even burying another framework relevant to the financial sector, the Financial Data Access Regulation (FIDA). Its purpose is to enable customer data sharing and third-party access in the financial sector. Excessive haste in legislative drafting is undermining regulatory quality and fitness.
“It is easy to agree with the French government’s proposal. Rushing the framework’s implementation is threatening even the data protection of customers. Deciding to review the framework would be a wise call.”
Even the slowly moving dinosaur known as the EU is leaving Finland in the dust
In its programme, Prime Minister Petteri Orpo’s government committed to drawing up a growth strategy for the financial sector with the aim of exploring how the sector could better promote sustainable economic growth while creating more jobs and tax income in Finland.
It now seems like the growth strategy was nothing but fancy words on a piece of paper. The strategy is to build on a comprehensive assessment of financial market regulation, but this has not moved past the drawing board.
“The EU has often been called a slow and heavy dinosaur, but right now the EU is coming across as a much more active driver of economic growth and competitiveness than Finland. Finnish politicians should also have the nerve to revisit regulatory frameworks and carefully consider what is superfluous or overlapping”, Pekonen-Ranta sums up.
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