Overview
The Commission President Ursula von der Leyen's political guidelines for the next European Commission, along with the mission letter for Ms Maria Luís Albuquerque, the Commissioner-designate for Financial Services and the Savings and Investments Union, provide a first insight into the new Commission's priorities in the financial services area. Additionally, recent reports on the future of European competitiveness (Draghi report) and the Single Market (Letta report) also contribute to understanding those priorities.
The likely initiatives in the next five years span across a wide range of topics, including unlocking financing and private capital in the EU, sustainable finance, digital finance, consumer/investor protection, and anti-money laundering.
European Savings and Investments Union
Building on the previous Commission's efforts, developing a European Savings and Investments Union (ESIU) to enhance banking and capital market integration across the EU is the top priority of the next Commission in the financial services area. It also serves as an indirect acknowledgement that the actions taken under the Capital Markets Union project since 2015 have not fully achieved the objectives.
The ESIU will encompass several specific initiatives including:
- Creation of simple and low-cost savings and investment products at the EU level (with a possible plan to create an auto-enrolment EU Long-Term Savings Product and the review of the Pan-European Pension Product (PEPP)).
- For the insurance industry, the ESIU could lead to a further review of Solvency II capital charges for long-term equity investments.
- The revival of securitisation may include changes to prudential requirements for securitised assets, the review of transparency and due diligence rules, and setting up a securitisation platform.
Sustainable Finance
Scaling up sustainable finance is another key priority for the new Commission, serving as a cornerstone of its strategy to align financial flows with climate neutrality objectives.
The mission letter suggests that the upcoming review of the Sustainable Finance Disclosure Regulation (SFDR) will be one of the main initiatives on the sustainable finance agenda of the new Commission. The preparatory work for the SFDR review has already started under the outgoing Commission and the European Supervisory Authorities (ESAs) have issued their review recommendations. The SFDR review should introduce a product classification system based on defined categories/sustainability indicator(s). The other possible review topics include the extension of the SFDR scope to additional financial products, the review of the definition of "sustainable investment," the simplification of the relevant documentation, etc.
Overall, after an intensive rule-making period in the last five years, the next Commission will likely focus more on the proper implementation of the existing sustainable finance framework.
Consumer and Retail Investor Protection
Successfully completing the negotiations over the legislative proposals within the Retail Investment Strategy (RIS) package will be the main short-term item on the consumer/investor protection agenda. Once the new legislation is adopted, the Commission, along with the ESAs, will work on further detailing the RIS requirements through level 2 measures.
In addition to the RIS, a comprehensive review of the Insurance Distribution Directive is expected to be another focus area for the new Commission.
Digital Finance and AI
The Commission has recognised the transformative potential of digital finance and the integration of artificial intelligence (AI) in revolutionising the financial sector. The new Commission will likely prioritise completing the legislative process on the proposed Financial Data Access Regulation (FiDA), which facilitates secure customer data sharing in the financial sector.
Additionally, the new Commission is also to provide guidance on the application of AI systems in the financial sector to support the implementation of the AI Act and the existing financial services legislation, following a recent public consultation with financial sector stakeholders. The guidance will be essential for identifying AI deployment strategies that minimize risks, maximize benefits, and tackle challenges within the financial sector.
Implementation and Enforcement of the New AML/CFT Package.
The fight against financial crime remains a top priority for the new Commission. As part of the comprehensive Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) legislative package, the Commission will work on adopting numerous regulatory technical standards (RTS) to complete the new AML Regulation. Additionally, the Commission will also oversee how the Member States implement the sixth AML Directive in their national laws.
Other Priorities
The new Commission is also expected to focus on further developing the EU's Banking Union. This includes potential reforms aimed at crisis management frameworks for failing banks and consolidating efforts towards establishing a European Deposit Insurance Scheme (EDIS).
