Nordic FSA chiefs urge EU regulators to simplify financial rulebook

Nordic national financial watchdogs have told European Union financial supervisory authorities (FSAs) they must simplify financial regulation from the union, and make it more risk-based rather than take the form of box-ticking exercises.

In a joint letter to the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA), the chiefs of the financial supervisory authorities in Denmark, Sweden, Iceland, Finland and Norway said there was a need for a simplification of the financial regulation.

The head of the FSAs said that as the current European Commission came to the end of its institutional mandate, it was apt to reflect on the last five years.

Since the financial crisis, financial markets had seen a plethora of regulation, globally, and not least in the EU, they said in the letter, dated July this year but first made public by the Norwegian FSA last week.

“Moving into the next legislative mandate, we believe it is crucial to start transforming the single rulebook into also being a simpler rulebook,” they wrote.

“Moving into the next legislative mandate, we believe it is crucial to start transforming the single rulebook into also being a simpler rulebook”

“The EU rulebook should be more simple, proportionate, and entail the least possible number of burdens while at the same time underpin financial stability and a high level of consumer and investor protection,” the Nordic FSAs said.

A simpler rulebook should be enforced by “risk-based supervision with strong discretionary tools also creates a better balance in supporting a stable, diverse, and well-functioning financial sector”, they said.

The national supervisors said simpler rules were what was expected of them from politicians and the public, adding that there was an increased focus on resources and reducing burdens for companies.

“We as national and European supervisors should work together to navigate this landscape and ensure that our resources are used most efficiently on those institutions and market participants with the highest risks,” they said.

They said they also had to avoid rigid ‘check-the-box’ compliance checks, which they said did not significantly reduce or address risks.

“This will require a continued focus on a risk-based approach on all levels,” they noted.

Supervisors at national or EU-level also had a shared responsibility to continue to emphasise the need for continued and better impact assessments from the Commission, they said.

“This will help ensure that new regulation achieves the stated objectives and has the intended impact and implications both for the private and public sector,” the Nordic FSAs continued.

The letter is signed by four directors general – Louise Caroline Mogensen, of the Danish FSA; Tero Kurenmaa, of the Finnish FSA; Per Mathis Kongsrud of Norway’s FSA; and Daniel Barr of the Swedish FSA, alongside Ásgeir Jónsson, governor of the Central Bank of Iceland.

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