EIOPA chair links horizontal legislation to complexity, reporting burden

Wide-ranging horizontal legislation can lead to a large reporting load for in-scope entities, according to the chair of EIOPA.

Speaking at the insurance and occupational pension supervisor’s annual conference in Frankfurt this week, Petra Hielkema said EIOPA was actively working to reduce the reporting burden for the sectors under its supervision, but that efforts to do so “should go beyond piecemeal cuts”.

“We need to address the root causes of complexity in regulations, which often result from trying to accommodate too many interests or from combining too many activities under horizontal legislation,” she said.

She added that reducing the regulatory burden must be done without compromising the quality or utility of data collected.

“Smart regulation must consider both implementation and enforcement from the outset, balancing EU and national perspectives while ensuring clarity and consistency,” the EIOPA chair said.

Horizontal legislation or regulation refers to rules on a specific theme that apply to a range of different sectors or actors. It has become a key concern for the European pension fund industry, for example in relation to the European Union’s sustainable finance disclosure regulation (SFDR).

The SFDR applies to pension funds just as it does asset managers, insurance companies and other “financial market participants”. According to PensionsEurope, this reflects an incorrect understanding of pension funds as providing products sold to consumers or customers, a point it reiterated in a recent paper on recommendations to overhaul the SFDR.

Speaking on a panel about the pensions gap later during the EIOPA conference, Matti Leppäla, managing director of PensionsEurope, said pension funds, although active in the financial markets, are social institutions.

“It is important to respect that they are different,” he said.

Hielkema did not name any specific set of rules when referring to the problems caused by some horizontal legislation. The Digital Operational Resilience Act (DORA), which also affects the pension funds industry, is another example of such law-making.

Cutting reporting requirements is a key theme for the next EU political cycle, with incoming commissioners having been asked to focus on simplifying legislation and contributing to reducing reporting obligations by at least 25%.

Speaking during a supervision panel, Ugo Bassi, the new director of the Commission financial services department, sought to manage expectations. He said the new Commission’s focus would indeed be on implementation, “but that’s what we always say at the beginning of a new mandate”.

Explaining that he was sharing his personal take, he said there was also a clear request for the commissioners to improve matters and “even if you want to simply we have to work with legislation”.

“We will do our best but at the same time do not expect too much or for us to do nothing,” he added.

Commission president Ursula von der Leyen’s second term is on schedule to start on 1 December after members of the European Parliament this week approved the individuals she had put forward for different commissioner positions.

Von der Leyen is reportedly planning to propose so-called omnibus legislation to merge the Corporate Sustainability Due Diligence Directive (CS3D), the Corporate Sustainability Reporting Directive (CSRD) and the Taxonomy.

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