I recently spent several days in Dublin for the Eurofi Financial Forum with my FIA colleagues Jean-Pierre Salendres and Adeshini (Desh) Naidoo. It also happened to be Desh’s first week at FIA, and throwing her straight into Eurofi was certainly one way to get started!
Desh has joined us to lead our European policy work, following roles at the European Commission, Financial Conduct Authority and Bank of England. Having that regulatory and policymaking experience on our team is hugely valuable, particularly at a time when Europe is asking some big questions about the future of its financial markets.
Spending those few days in Dublin was also a reminder of something simple: there is real value in policymakers, regulators and market participants sitting down and talking to one another.
Good engagement does not mean everyone agrees. We represent market participants, and policymakers and regulators have their own responsibilities and objectives. There will be differences of view, but the important thing is that both sides understand where the other is coming from.
For FIA and our members, a big part of our role is explaining how rules are likely to work in practice. Our members are the firms that will have to implement them, often across different businesses, systems, markets and jurisdictions. That experience can help identify any operational problems and unintended consequences.
At the same time, engagement works both ways. Our industry needs to understand what policymakers are trying to achieve, and the legal and political constraints they are working within. That context is essential to shape industry feedback in a credible and useful manner.
This is very much the thinking behind a paper FIA published during Eurofi, A Pathway to Smarter Regulation in Financial Services. It makes a series of recommendations for improving the way EU financial services rules are developed, drafted and implemented.
The underlying point is that process matters as much as substance. Better rulemaking is not just about the final text of a regulation; it is about whether the process allows the right expertise, evidence and practical experience to shape the rule before key decisions are locked in. When that happens, rules are more likely to be workable, durable and capable of supporting Europe’s broader competitiveness agenda.
Many of the suggestions in our paper are practical changes that could remove unnecessary complexity and allow predictability for market participants without requiring wholesale changes to the EU’s regulatory framework.
Transparency is an important part of that. If key texts in Council negotiations and trilogues only become visible once political agreement has been reached, it becomes much harder for those who will have to implement the rules to flag technical or practical problems while there is still an opportunity to address them.
We also believe there is a case for taking a more outcomes- and principles-based approach to Level 1 legislation, rather than putting too much technical detail into the primary legislation itself. Giving European supervisory authorities greater flexibility when developing the Level 2 technical requirements could produce rules that work better in practice. I think this deserves more attention.
Sequencing matters too. Firms should not find themselves having to implement Level 1 requirements before the Level 2 measures that tell them how to comply have been finalised. That creates uncertainty and can mean firms have to revisit work once the technical rules eventually arrive.
None of this is an argument for weaker regulation. Regulation has important objectives. The question is how we achieve those objectives in a way that is clear, workable and proportionate.
That matters as Europe looks to strengthen its competitiveness and develop deeper and more attractive capital markets. The debate should not only be about whether Europe has simpler or fewer rules, but about how those rules are made. A more transparent and predictable process can produce regulation that works better in practice and supports Europe’s ambitions for its capital markets.
For FIA, our job is to bring our members’ practical experience into these discussions and be clear about where we see potential issues. Good dialogue will not resolve every difference, but it can lead to better-informed decisions and rules that work as intended.
