The new EU financial framework has not been set up specifically to deal with or to forecast any future crises and was built primarily as a reaction to the most recent financial crisis, says the Wealth Management Association (WMA).
This conclusion forms part of the WMA’s response to the House of Lords EU Economic and Financial Affairs Sub Committee inquiry into the EU Financial Regulatory Framework.
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In their evidence, the WMA state that European institutions tend to be inflexible in their approach to issues and lack sufficient coordination procedures, especially at informal levels, to ensure a fully coherent view of outcomes to be achieved and how to get there.
For example, there has been evidence of tendencies to ignore the growth agenda, in deference to the pursuit of populist policies that do not achieve the EU’s wider objectives as efficiently as more balanced approaches.
The WMA also highlight:
- Many of the reforms implemented since the financial crisis have failed to differentiate between different financial sectors therefore affecting business areas that did not need reforming;
- The increasing use by EU legislators to use EU-wide Regulations rather than Directives can adversely impact local retail markets;
- There is not an appropriate balance between Member States and the EU in regulating and supervising parts of the financial sector;
- Legislators have failed to press for improvements to supervision, rather than more legislation, as a better approach.
Liz Field, CEO of the Wealth Management Association, says: "The current legislative proposals reflect the lessons learnt from the financial crisis but do not predict or deal with the causes of the next. The EU plays a very significant part in the regulation of the UK’s financial services sector."
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By GlobalData"It is therefore vital we are able to provide constructive feedback on how its output affects our industry and the challenges in the future. Given the number of reforms introduced since the financial crisis, it is imperative we allow these reforms time to work. We cannot continue to have a conveyor belt of new legislative proposals imposed, especially if the answer to a problem lies in better implementation of those already in place."
John Barrass, Deputy CEO of the Wealth Management Association, says: "While access to wider European markets creates opportunities for retail investors, we need to ensure we have a regulatory system that compliments and encourages such investment, not one that stifles it."
"When legislating on retail markets, we would like to see EU legislators use Directives, which are more appropriate to local markets, not Regulations which may turn out to be inappropriate and a method of applying an unsuitable ‘one-size-fits-all’ approach."
