On April 21, the European Commission (EC) published a keynote speech delivered by Commissioner Jonathan Hill in which he reported on progress towards the EU’s proposed Capital Markets Union (CMU) and responses received as part of the EC’s call for evidence (Call for Evidence) on the European Union’s (EU) regulatory framework for financial services.

The Call for Evidence sought feedback in the form of empirical evidence on the cumulative functioning of financial services rules and whether there are unnecessary regulatory burdens, overlaps, inconsistencies or gaps under the framework. Notably, Commissioner Hill reported that responses received to the Call for Evidence have highlighted that (1) legislation is not always proportionate, (2) in certain areas, legislation is impeding financing available to the economy, and (3) that the compliance burden on businesses is too high.

Commissioner Hill expressed his concerns with these findings, and set out initiatives he would like to pursue in response. Notably, he wants to simplify reporting and disclosure requirements for smaller banks under the Capital Requirements Regulation. He discussed calls for more proportionality under the European Markets Infrastructure Regulation (EMIR) and claims by smaller companies that capital requirements are preventing banks from providing clearing services to them. He noted concerns raised by asset managers that the EU passporting system is not working, due to challenges of national gold-plating, fees and differing requirements for marketing materials. Commissioner Hill announced that the EC plans to launch a consultation in May 2016 to identify barriers to EU cross-border distribution of investment funds. He concluded by noting concerns raised by businesses that they face duplicative reporting requirements. He conceded that it was unclear whether all of the reporting data is essential, and that efforts would be made to see how reporting could be simplified and streamlined.

Commissioner Hill reported that the EC expects to publish a summary of its responses to the Call for Evidence in April 2016, and plans to hold a public hearing on issues raised in May 2016.

A copy of Commissioner Hill’s speech is available here.