May brings the European Parliamentary elections where we vote for our new Members of European Parliament (MEPs) across the EU between 22-25 May. The new MEPs, particularly those appointed to the Economic and Monetary Affairs Committee (ECON) will have a tough act to follow. The last legislature brought increased powers for the European Parliament (EP) with the Lisbon Treaty which was implemented in December 2009. Faced with unprecedented challenges, through the financial crisis and the ensuing sovereign debt crisis, ECON has fought throughout the 2009-2014 term to ensure that these new powers were both used and respected. They negotiated over 60 legislative texts with the Council, often introducing radical amendments to the European Commission’s (EC’s) proposals and holding their ground to ensure key amendments were adopted in the face of sometimes strong opposition. ECON members participated in hundreds of workshops, hearings, coordinators meetings and trilogue negotiations and introduced something in the region of 35,000 amendments to proposals within their remit. Importantly, in spite of party differences, ECON members were able to work collaboratively building consensuses which put them in a strong position in most negotiations.
Complex legislative texts and intense negotiations led to countless late-night meetings and last minute agreements as MEPs took on the difficult task of re-shaping the financial industry. New prudential rules for banks (CRD IV) and insurers (Solvency II), a regulatory regime for hedge funds, real estate managers and private equity firms (AIFMD), rules to curb speculative trading and make financial markets more transparent (MiFID II), a clearing requirement for standardised OTC derivatives (EMIR) and rules to protect retail consumers (PRIIPs), are just some of the initiatives that have now either been implemented or agreed.
While many of the texts were anticipated well in advance, some were conceived as a response to the crises, notably the Banking Union package launched in June 2012, which saw the creation of the Single Supervisory Mechanism and the Single Resolution Mechanism in record time. The EP signed-off on the last three important elements of the plan during the last plenary on 15 April – Bank Recovery and Resolution Directive, the Single Resolution Mechanism and confirmation of the EU-wide guarantee scheme for deposits under €100,000.
The new MEPs will still be faced with a mountain of regulation when they take their seats in the new EP in July. Many reforms remain to be finalised, from shadow banking to anti-money laundering, from Money Market Funds to bank restructuring, while the ones just agreed or implemented still face many hurdles. In parallel, the EP has taken on a significant oversight role in respect of the economic reform process in Member States, including monitoring the European Semester process, which remains critical given tenuous financial recovery throughout the EU.
We have included two feature articles this month, recognising that were are entering an important phase in the regulatory reform process. The first feature article explores the Regulation on Packaged Retail Investment and Insurance-based Products (PRIIPs) and the new cross-financial sector key information document that firms will need to produce. The second highlights the significant work that consumer credit firms will need to do now that the FCA has taken control of the UK’s regulatory approach to consumer credit.
The way to read the document is to review the Table of Contents (page 2), click the relevant Sector section to identify the news of interest and then to directly go to the topic/article of interest by clicking in the active links within the Sector's table of contents.
The key to managing the continuous regulatory and accounting developments is understanding your requirements and assessing how this will affect you in the Channel Islands. Your PwC Channel Islands local contacts would be delighted to discuss how these developments could affect you.
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