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Finance Watch

Finance Watch advocates for financial regulation that serves society by providing independent expertise to non-financial actors in policy debates.

Lobbying Activity

Meeting with Martin Schirdewan (Member of the European Parliament, Shadow rapporteur)

19 Jan 2026 · EU Securitisation Framework

Meeting with Emiliano Tornese (Head of Unit Financial Stability, Financial Services and Capital Markets Union)

5 Dec 2025 · Exchange of views regading NBFI and climate-related macroprudential policy

Finance Watch urges affordable financial services in anti-poverty strategy

23 Oct 2025
Topic — The consultation addresses multi-dimensional poverty and achieving EU 2030 reduction targets.
Message — They demand affordable bank accounts and strict AI regulation for insurance. They also call for an EU-wide framework for personal insolvency.123
Why — These measures reduce financial exclusion and prevent citizens from falling into poverty.4
Impact — Lenders and creditors would lose income due to shorter debt discharge periods.5
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Meeting with Damian Boeselager (Member of the European Parliament, Shadow rapporteur)

14 Oct 2025 · Single Currency Package

Meeting with Almoro Rubin De Cervin (Head of Unit Financial Stability, Financial Services and Capital Markets Union)

13 Oct 2025 · Banking policy

Meeting with Kira Marie Peter-Hansen (Member of the European Parliament)

2 Oct 2025 · Meeting with Finance Watch

Meeting with Maria Ohisalo (Member of the European Parliament, Shadow rapporteur)

30 Sept 2025 · AI in financial services

Meeting with Martin Schirdewan (Member of the European Parliament, Shadow rapporteur)

12 Sept 2025 · Nachhaltige Finanzen und die Definition von umstrittenen Waffen

Response to Delegated Regulation supplementing the review of prudential rules for the insurance and reinsurance sector (Solvency II)

5 Sept 2025

Finance Watch welcomes the opportunity to give feedback on the proposed amendments to the Solvency II Delegated Regulation. As a starting point Finance Watch supports retaining Solvency II as a risk-based framework. It is crucial to uphold risk-based capital standards for the market participants to support stability and resilience in the financial system as a foundation for its ability to provide essential services for the economy - citizens and businesses. Changing this approach risks having an impact on both the credibility of the framework and its ability to deliver its key objectives of financial stability and policyholder protection. It is particularly concerning that the European Commission is proposing to use the Review of the Delegated Regulation to go even further towards weakening capital requirements for insurers that the review of the Solvency II Directive. EIOPA had already raised serious concerns about unjustified reductions in capital requirements from a risk basis. One key area that should be addressed further in the review of the Delegated Regulation is the prudential treatment of sustainability risks. Whilst the adjustments to avoid overreliance on past data for climate risks and the references to consideration of sustainability risks in information for market professionals included are welcome there are still essential amendments to be made to the Delegated Regulation. As EIOPA Chair Petra Hielkma recently stated- competitiveness and sustainability must go together. She pointed to the need to make sure the Solvency II framework remains effective at addressing climate risks (https://www.eiopa.europa.eu/keynote-speech-petra-hielkema-eiopa-sustainable-finance-conference-2025-03-13_en). EIOPA has carefully analysed fossil fuel assets following a mandate from the co-legislators and found that they are currently underpriced (https://www.eiopa.europa.eu/publications/final-report-prudential-treatment-sustainability-risks-insurers_en). To address this EIOPAs recommendations to better capture the risks associated with fossil fuel assets through adjustments to the equity risk and spread risk sub-modules in the Delegated Regulation should be introduced through this review. The European Commission proposals on securitisation also raise serious concerns. The rationale for the proposed reductions recalibration of capital requirements refers to the need to facilitate banks lending and transfer of the risk. In 2024, Finance Watch has already highlighted the limits of securitisation to generate lending capacity, including lack of evidence of unsatisfied demand for credit and lack of conditionality for banks to redeploy the freed up leverage capacity (see the attachment). The continued ability of the financial sector to provide lending to the real economy rests, in the first place, on safety and soundness of the financial institutions. Capital requirements in the Solvency II Standard Formula should continue to reflect the inherent complexities and vulnerabilities of securitised assets in case of market and liquidity crises. Unlike banks, insurers are primarily liability-driven, with long-term commitments to policyholders that demand a high degree of asset-liability matching.The proposed relaxation of capital requirements for securitised assets in Solvency II could expose insurers and the broader financial system to elevated risks given the complexity, opacity, and lack of liquidity of many securitisations. One possible policy avenue to be explored further for insurers participation in the securitisation market is a development of the market for catastrophe bonds issued by European insurers and sold to qualified investors, in order to support the provision of insurance against extreme weather events in Europe and reduce the climate insurance protection gap.
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Finance Watch Urges Financial Reforms for Climate Resilience

3 Sept 2025
Topic — This initiative seeks an integrated framework to support EU states in managing accelerating climate risks.
Message — Finance Watch recommends implementing financial risk buffers to protect the economy from climate shocks. They seek standardized transition plans to prevent regulatory confusion and ensure corporate accountability. Furthermore, they demand increased public funding to meet Europe's climate investment needs.123
Why — These reforms would reduce the risk of future financial losses for the banking sector.45
Impact — High-emitting sectors face higher costs as capital is diverted away from environmentally harmful activities.67
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Meeting with Cristina Dias (Cabinet of Commissioner Maria Luís Albuquerque), Philippe Thill (Cabinet of Commissioner Maria Luís Albuquerque) and European Federation of Investors and Financial Services Users

6 Aug 2025 · Financing of both institutions.

Finance Watch demands stronger financial protection for vulnerable consumers

22 Jul 2025
Topic — The EU strategy defining consumer policy and Single Market priorities for 2025-2030.
Message — Finance Watch urges revising the Payment Accounts Directive to include AI classifications. They also demand a harmonized AI liability regime and updated mortgage rules.12
Why — The proposals would help achieve their mission of making finance serve society's interests.3
Impact — Banks and insurers would face stricter limits on using AI for vetting and pricing.4
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Meeting with Maria Ohisalo (Member of the European Parliament, Shadow rapporteur)

19 Jun 2025 · AI in financial services

Meeting with Sergey Lagodinsky (Member of the European Parliament)

11 Jun 2025 · Exchange of view

Meeting with Sirpa Pietikäinen (Member of the European Parliament)

5 Jun 2025 · Sustainable finance

Meeting with Jussi Saramo (Member of the European Parliament)

3 Jun 2025 · AI in financial services

Meeting with Fernando Navarrete Rojas (Member of the European Parliament)

14 May 2025 · Euro Digital

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament, Shadow rapporteur)

30 Apr 2025 · FIDA

Meeting with Alessandra Sgobbi (Head of Unit Climate Action)

10 Apr 2025 · Exchange of views on sustainability reporting and transition plans

Meeting with Cristina Dias (Cabinet of Commissioner Maria Luís Albuquerque), Elena Arveras (Cabinet of Commissioner Maria Luís Albuquerque), Larisa Dragomir (Cabinet of Commissioner Maria Luís Albuquerque)

31 Mar 2025 · Exchange on sustainability related aspects in insurance regulation

Meeting with Arba Kokalari (Member of the European Parliament, Rapporteur)

26 Mar 2025 · AI in Financial Services

Response to Savings and Investments Union

7 Mar 2025

Please refer to the attachment.
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Meeting with Fabio De Masi (Member of the European Parliament)

6 Mar 2025 · Digital Euro

Meeting with Aurore Lalucq (Member of the European Parliament, Rapporteur) and Euronext and Centre for European Policy Studies

18 Feb 2025 · Mobilising Private Investment and Building a Genuine Savings and Investment Union (SIU)

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament, Shadow rapporteur)

31 Jan 2025 · FIDA

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament)

29 Jan 2025 · Savings and Investment Union

Meeting with Aurore Lalucq (Member of the European Parliament)

23 Jan 2025 · Omnibus, Sustainable Finance

Meeting with Bas Eickhout (Member of the European Parliament)

22 Jan 2025 · Omnibus

Meeting with Pasquale Tridico (Member of the European Parliament)

16 Jan 2025 · Meeting with Peter Norwood, Senior Research and Advocacy Officer of Finance Watch

Meeting with Maria Luís Albuquerque (Commissioner) and

11 Dec 2024 · The Savings and Investment Union Sustainable Finance

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament)

11 Dec 2024 · Savings and Investments Union

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament) and Insurance Europe and

3 Dec 2024 · Savings and Investments Union

Meeting with Rasmus Andresen (Member of the European Parliament, Shadow rapporteur)

3 Dec 2024 · Framework for financial data access

Meeting with Gilles Boyer (Member of the European Parliament) and Insurance Europe and

3 Dec 2024 · CMU

Meeting with Gilles Boyer (Member of the European Parliament)

19 Nov 2024 · CRR, Securitisation + Sustainable Finance

Meeting with Arash Saeidi (Member of the European Parliament) and Airports Council International - European Region and European Regions Airline Association Ltd.

13 Nov 2024 · Échange de point de vue

Meeting with Fabio De Masi (Member of the European Parliament)

7 Nov 2024 · Sustainable finance

Meeting with Pascal Canfin (Member of the European Parliament)

4 Nov 2024 · CSRD

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament)

4 Nov 2024 · Savings and Investments Union

Meeting with Aurore Lalucq (Member of the European Parliament, Committee chair)

17 Oct 2024 · Financial Services (including retail), Banking, Securitization

Meeting with Jussi Saramo (Member of the European Parliament)

15 Oct 2024 · Talouspolitiikka

Meeting with Dirk Gotink (Member of the European Parliament)

2 Oct 2024 · banking reform and supervision

Meeting with Jonás Fernández (Member of the European Parliament)

26 Sept 2024 · Sustainable and inclusive EU financial system

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament, Rapporteur)

12 Sept 2024 · Retail Investment Strategy

Meeting with Aurore Lalucq (Member of the European Parliament, Committee chair)

5 Sept 2024 · Priorités de la mandature

Meeting with Katherine Power (Cabinet of Commissioner Mairead Mcguinness)

11 Mar 2024 · Sustainable Finance

Meeting with Martin Schirdewan (Member of the European Parliament, Shadow rapporteur)

6 Mar 2024 · Bankenkrisenmanagement

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

13 Dec 2023 · Retail financial services and financial inclusion, sustainable finance and financial Stability

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament, Rapporteur) and Bureau Européen des Unions de Consommateurs

7 Dec 2023 · Retail investment Strategy

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament, Shadow rapporteur)

16 Nov 2023 · Solvency II

Meeting with Eero Heinäluoma (Member of the European Parliament, Shadow rapporteur)

10 Nov 2023 · Solvency II

Meeting with Eero Heinäluoma (Member of the European Parliament, Shadow rapporteur)

6 Nov 2023 · Framework for Financial Data Access and amending Regulations (EU) No 1093/2010, (EU) No 1094/2010, (EU) No 1095/2010 and (EU) 2022/2554.

Meeting with José Gusmão (Member of the European Parliament)

23 Oct 2023 · CMDI: Revision of the bank crisis management and deposit insurance framework

Meeting with Martin Schirdewan (Member of the European Parliament, Shadow rapporteur)

23 Oct 2023 · Bankenkrisenmanagement

Meeting with Joachim Schuster (Member of the European Parliament)

18 Oct 2023 · CMDI (on staff level)

Meeting with Katherine Power (Cabinet of Commissioner Mairead Mcguinness) and Third Generation Environmentalism Ltd and Fairshare Educational Foundation (ShareAction)

17 Oct 2023 · Sustainable finance

Meeting with José Gusmão (Member of the European Parliament, Shadow rapporteur) and Dezernat Zukunft e.V.

10 Oct 2023 · New Economic Governance Rules

Meeting with Aurore Lalucq (Member of the European Parliament, Rapporteur)

27 Sept 2023 · ESG ratings

Meeting with Chris Macmanus (Member of the European Parliament, Shadow rapporteur)

20 Sept 2023 · Digital Euro Legislation (meeting taken by staff)

Meeting with Martin Schirdewan (Member of the European Parliament, Shadow rapporteur)

19 Sept 2023 · Reform of bank crisis management and deposit insurance framework

Meeting with Aurore Lalucq (Member of the European Parliament)

7 Sept 2023 · Gouvernance économique

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

6 Sept 2023 · Macroprudential framework, climate-related risks and open finance

Meeting with Esther De Lange (Member of the European Parliament, Rapporteur) and EUROPEAN TRADE UNION CONFEDERATION and European Environmental Bureau

6 Sept 2023 · Economic Governance Review - APA

Meeting with Aurore Lalucq (Member of the European Parliament, Rapporteur)

4 Sept 2023 · ESG rating

Meeting with Mairead McGuinness (Commissioner) and

18 Jul 2023 · Distribution of Retail financial products

Finance Watch Warns Against Diluting Sustainability Reporting Rules

7 Jul 2023
Topic — The consultation addresses the first set of mandatory European Sustainability Reporting Standards.
Message — The organization calls for reinstating mandatory indicators rather than allowing companies to decide what is material. They also advocate for removing voluntary status for data and stopping additional phase-in periods for smaller firms.123
Why — Mandatory standards would simplify reporting rules and provide better visibility for corporate planning.45
Impact — Financial market participants face higher workloads and risks of underestimating adverse investment impacts.67
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Meeting with Joachim Schuster (Member of the European Parliament)

23 May 2023 · Economic governance review

Meeting with Maria-Manuel Leitão-Marques (Member of the European Parliament, Shadow rapporteur)

4 May 2023 · DMFSD

Meeting with René Repasi (Member of the European Parliament, Rapporteur for opinion)

27 Apr 2023 · EU-Lieferkettengesetz/ Corporate Sustainability Due Diligence Directive - Staff Level

Meeting with Valeria Miceli (Cabinet of President Ursula von der Leyen) and Bureau Européen des Unions de Consommateurs and European Federation of Investors and Financial Services Users

25 Apr 2023 · Retail Investment Strategy with a particular focus on ban on inducements

Meeting with José Gusmão (Member of the European Parliament, Shadow rapporteur)

14 Feb 2023 · Banking Union - annual report 2022

Meeting with Lucrezia Busa (Cabinet of Commissioner Didier Reynders) and Fairshare Educational Foundation (ShareAction) and

17 Jan 2023 · Corporate Sustainability Due Diligence

Meeting with Claude Gruffat (Member of the European Parliament, Shadow rapporteur)

19 Dec 2022 · DMFSD

Meeting with Pascal Canfin (Member of the European Parliament)

8 Dec 2022 · Green finance

Meeting with Maria-Manuel Leitão-Marques (Member of the European Parliament, Shadow rapporteur) and Leaseurope

7 Dec 2022 · DMFSD

Meeting with Stéphanie Yon-Courtin (Member of the European Parliament, Shadow rapporteur)

1 Dec 2022 · Solvency II

Meeting with Margarida Marques (Member of the European Parliament) and Climate Action Network Europe

13 Oct 2022 · EU Economic Governance Review

Meeting with Gilles Boyer (Member of the European Parliament, Shadow rapporteur)

13 Oct 2022 · CRR3 (staff)

Meeting with René Repasi (Member of the European Parliament)

5 Oct 2022 · Austausch

Meeting with Jonás Fernández (Member of the European Parliament, Rapporteur) and The Bank of New York Mellon

5 Oct 2022 · EU Banking Package 2021

Meeting with Ville Niinistö (Member of the European Parliament, Shadow rapporteur)

16 Aug 2022 · CRR/CRD - staff level

Meeting with Pascal Canfin (Member of the European Parliament)

29 Jun 2022 · Green finance

Meeting with Henrike Hahn (Member of the European Parliament, Shadow rapporteur)

15 Jun 2022 · Solvency 2

Finance Watch urges EU to ban investment inducements and streamline disclosures

30 May 2022
Topic — European Commission's retail investment strategy evaluation and impact assessment on investor protection.
Message — The organization requests streamlined pre-contractual disclosures, robust rules on digital advertising including social media, regulation of online tools and dark patterns, and a complete ban on inducements in retail investment advice. They argue current disclosures are too long and complex, resulting in consumers not reading important information prior to purchasing investment products.123
Why — This would advance their mission to rebalance finance regulation in favor of public interest and society.45
Impact — Financial advisers and product providers lose commission income from inducement payments and simplified disclosure requirements.67
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Meeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness), Nicolo Brignoli (Cabinet of Commissioner Mairead Mcguinness)

19 May 2022 · sustainable finance retail investment

Meeting with Malte Gallée (Member of the European Parliament, Shadow rapporteur) and Federation of European National Collection Associations and EOS Holding GmbH

22 Apr 2022 · Discussing debt collection in the context of Consumer Credit Directive

Meeting with Gilles Boyer (Member of the European Parliament, Shadow rapporteur)

11 Mar 2022 · CRR (staff)

Meeting with Eero Heinäluoma (Member of the European Parliament, Rapporteur)

1 Mar 2022 · Anti-money laundering

Response to Alignment EU rules on capital requirements to international standards (prudential requirements and market discipline)

23 Feb 2022

Finance Watch welcomes the initiative of the EU co-legislators to proceed with the implementation of the final instalment of the Basel III standards. We note, however, that the primary and overarching objective of the Basel III process – to restore financial stability and protect EU citizens and society at large from excessive risk-taking in the banking sector – is no longer mentioned as a policy objective in the Commission’s list of trade-offs that shaped its legislative proposal, which merely commits, rather tersely, to “implement the Basel III agreement faithfully”. Judging by its content, the legislative proposal seeks to do justice, just about, to the letter rather than the spirit of the agreement. The largest EU banks, G-SIIs and major O-SIIs, would be allowed to continue operating with lower levels of capital, on average, than their global peers and with a competitive advantage over smaller and mid-sized banks in the EU domestic market. EU citizens, and society at large, would remain exposed to the systemic risk emanating from a poorly capitalised banking sector and liable to underwriting the losses of underperforming banks. It is worth noting that the Commission’s trade-offs, which inform the majority of the proposed deviations from Basel III standards, are (i) guided expressly by political rather than prudential and financial stability considerations; and (ii) reflect, for the most part, the concerns of the banking sector rather than those of European bank customers and citizens at large. Financial stability does no longer appear to be a priority – a reflection of the (questionable) assumption that EU banks are already adequately capitalised. In its legislative proposal, the Commission invokes its commitment to avoid any significant increase in capital requirements, particularly for the largest EU banking groups. That commitment was indeed made by the Basel Committee, upon instructions from the G 20 governments, but it was made at the global level, not at the level of individual jurisdictions or even institutions. The stated purpose of the final instalment of Basel III was to rebalance capital requirements, not to increase them. European G-/O-SIIs, traditionally among the most avid users of internal modelling, have long been beneficiaries of the variability in RWAs facilitated by flaws in the original design of the ’risk-sensitive’ internal ratings-based (IRB) approach to determining capital requirements. It is not surprising, therefore, that they should be more affected by the Basel Committee’s proposed realignment, too. In order to faithfully implement the Basel III framework, and achieve its original objectives, the EU co-legislators should, in particular, reconsider the proposed ‘EU-specific adjustments’ and - reject the so-called ‘transitional arrangements’ for the preferential treatment of certain exposures (unrated corporates and residential mortgages) and the review clauses in Art. 465 CRR, which pave the way for a permanent, material, and unjustified deviation from the Basel III standards; - apply the higher risk weights for equity exposures in accordance with the Basel III standards, in line with the original deadline and phasing-in arrangements agreed by the Basel Committee; - apply the ‘output floor’ to all elements of the capital stack, including Pillar 2 and the Combined Buffer Requirement, with adjustments strictly limited to the elimination of double-counting for ‘model risk’; - accelerate the adoption of a specific, and binding, prudential framework to address environmental, social and governance (ESG) risks in general, and climate-related risks in particular; and - respect the original implementation deadline of 01 January 2023, as it was agreed between the EU and its international partners on the Basel Committee, and the five-year transition period to 01 January 2028. More detailed onsiderations are available in the attached feedback document.
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Meeting with Isabelle Perignon (Cabinet of Commissioner Didier Reynders)

20 Jan 2022 · consumer protection when purchasing financial services in an increasingly digitalised world

Meeting with Damian Boeselager (Member of the European Parliament)

12 Jan 2022 · Green Bonds

Response to Review of measures on taking up and pursuit of the insurance and reinsurance business (Solvency II)

10 Jan 2022

The proposals for a review of the insurance sector’s prudential regulation feature a major inconsistency with respect to addressing the systemic risk dimension. On the one hand, they recognise the systemic nature of the sector by introducing, in a most welcome move, a directive establishing a framework for the recovery and resolution for insurance and reinsurance companies. At the same time, the proposals fail to impactfully address the insurance industry's climate-change related risks, which pose a major threat to financial stability. The proposals also lack ambition regarding macroprudential tools in the insurance sector. Financial risks related to climate change are a major threat to the stability of the insurance sector and the whole financial system. Yet the measures proposed to address climate-related financial risks fall short in terms of their impact and timeliness. In order to protect taxpayers from having to bail out too-big-to-fail insurance companies, we not only need a recovery and resolution framework but also an adequate level of capitalisation. However, the measures put forward by the Commission will not achieve this objective. Climate scenario analyses remain exploratory exercises with numerous limitations related to the radical uncertainty of climate risks and their forward-looking nature. These limitations render quantitative modelling unable to lead to meaningful conclusions about capital adequacy of insurers (see the attached Finance Watch reports for the discussion). Data availability, too, remains a significant obstacle to measuring climate-related financial risk overall and to reaching credible conclusions via scenario analysis conclusions specifically, as pointed out by the Financial Stability Board (FSB) in its report dated 7 July 2021. The proposal on prudential rules for natural catastrophes, as in the case of scenario analyses, relies on climate risk modelling and measurement as well, which, as stated above, is faced with challenges and uncertainties. Even climate scientists confirm that the recent climate-related events could not have been predicted by climate models. The Commission deferred any further measures to the EIOPA’s mandate on prudential treatment, due in 2023. This puts any potential regulatory changes years ahead, when climate-related physical and transition risks (delayed disorderly transition) will have increased significantly. Precautionary, timely and risk-based measures should be prioritised. The European Parliament and Council review offer an opportunity to implement an available feasible solution to address the biggest climate-related financial risks to the insurance sector. Specifically, Pillar I capital requirements for fossil fuel exposures should be adjusted to reflect the risks associated with such assets - differentiating between the existing fossil fuel assets and exploration and production of new fossil fuels (see the attached proposals). Fossil fuel exposures represent a clearly identifiable set of assets, which are at a high risk of stranding and which are also the main root cause of climate-related financial instability. Supervisory review process, including stress testing, can only be effective given strong Pillar I requirements, as only the application of “hard-coded” and thus consistent capital requirements across financial institutions can ensure their resilience and solvency in case of a financial crisis. Article 191 of the Treaty on the Functioning of the European Union (TFEU) sets out the Union’s policy on the precautionary principle and refers explicitly to the duty of combating climate change, requiring EU policy-makers to take preventive action in the case of risk. With respect to the proposed macroprudential tools, we welcome the inclusion of many of them in the Commission's proposal. However, more ambition is needed to implement the ESRB recommendations for liquidity and capital-based buffers (ESRB report from February 2020).
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Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

10 Dec 2021 · CMU, Sustainable Finance, Digital Finance

Meeting with Thierry Breton (Commissioner) and

8 Nov 2021 · Sustainable Corporate Governance

Meeting with Helena Dalli (Commissioner)

26 Oct 2021 · Ms Helena Dalli delivers a keynote speech via videoconference at “the Gender Perspective in Financial Inclusion: a Key to Social Inclusion and Equality for all EU Residents” conference, organized by Finance Watch

Meeting with Pascal Canfin (Member of the European Parliament) and AXA

8 Sept 2021 · Green finance

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

20 May 2021 · Prudential regulation and climate risk, Basel III implementation, and the Solvency II

Meeting with Tommy De Temmerman (Cabinet of Commissioner Mairead Mcguinness)

18 May 2021 · Basel III, Solvency II

Meeting with Pascal Canfin (Member of the European Parliament)

22 Apr 2021 · Green finance

Meeting with Salla Saastamoinen (Director-General Justice and Consumers)

14 Apr 2021 · Discussion on sustainable corporate governance

Meeting with Tommy De Temmerman (Cabinet of Commissioner Mairead Mcguinness)

8 Apr 2021 · CRR review & Climate Related Risks

Meeting with Lucrezia Busa (Cabinet of Commissioner Didier Reynders)

7 Apr 2021 · Sustainable Corporate Governance

Meeting with Isabelle Perignon (Cabinet of Commissioner Didier Reynders)

19 Mar 2021 · to discuss consumer credit issues in the EU, including the review of the Consumer Credit Directive (CCD)

Meeting with Mairead McGuinness (Commissioner) and

2 Feb 2021 · Sustainable Finance

Response to Climate change mitigation and adaptation taxonomy

18 Dec 2020

We acknowledge that the draft Delegated Acts on the climate taxonomy are largely based on the recommendations of the TEG. However, we regret that they fail to represent the same level of the climate and environmental ambition and scientific neutrality. Together with other 130 organisations representing millions of citizens in Europe and the global South, we are strongly advocating for an EU sustainable taxonomy rooted in climate and environmental science. In this respect, we are calling on the European Commission to: • Refrain from re-introducing the economic activities that were rightly excluded (fossil fuels, including gas and incineration). • Provide for more ambitious screening criteria for the economic activities that the following sectors must meet to qualify as Taxonomy compliant: 1) bioenergy, 2) hydropower, 3) forestry, 4) inland water transport, 5) biofuels and biogas in transport, and 6) hydrogen. • Remove sea and coastal water transport and livestock from the list of economic activities that can qualify as Taxonomy eligible. For more details, please see the joint civil society statement: “Ten Priorities for the Climate Taxonomy”, which we fully endorse. In addition, Finance Watch supports the recommendations of the Platform on Sustainable Finance on the Taxonomy Delegated Acts, and in particular to: • Ensure that the criteria for “substantial contribution” of the EU Taxonomy are sufficiently ambitious and aligned with the sustainability objectives of the European Union. The Platform notes that while aligning criteria to definitions and methodologies embedded in EU law is welcome in principle, existing EU law is not always sufficiently precise or ambitious to meet the “substantial contribution” requirements of the Taxonomy Regulation. Therefore, substantial contribution criteria of the EU Taxonomy should often go beyond existing regulatory minima within economic sectors. • Clarify conditions under which some economic activities not meeting the technical screening criteria can be considered as “transition activities” and therefore recognised as Taxonomy-aligned. This is of particular importance as transition activities are at the heart of the transformative power of the Taxonomy. • Tackle issues with regard to the application of NACE codes. This includes addressing lack of appropriate alignment of NACE codes with the EU Taxonomy and a need for some flexibility in the application of activity boundaries / codes in early deployment of the Taxonomy. The Platform recommends that the EU considers updating NACE codes to ensure an alignment with the Taxonomy and to better reflect market needs and, most importantly, that the activity description be the ultimate reference for identifying, and reporting on, Taxonomy-aligned activities. • Reformulate technical screening criteria to ensure their usability. This includes 1) better defining substantial contribution to climate change adaptation; 2) expanding the scope of enabling activities which can make a substantial contribution to climate change adaptation; 3) harmonising GHG emissions accounting methodologies across the Taxonomy, and assessing the suitability of existing methodologies for economic activity LCA calculations. The platform also makes important suggestions on how to better formulate technical screening criteria for several specific activities. • Ensure a proportional calibration of provisions regarding application of the Taxonomy to SMEs and households, especially in the context of developing the forthcoming Delegated Acts regarding on the content and presentation of Taxonomy disclosures under Article 8 of the Taxonomy Regulation. • In addition, we support the Platform’s recommendations for the Commission to consider while reviewing feedback on the Delegated Acts to ensure credibility, consistency and predictability of the technical screening criteria. Please see a full version of our feedback attached.
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Meeting with Katherine Power (Cabinet of Commissioner Mairead Mcguinness), Tommy De Temmerman (Cabinet of Commissioner Mairead Mcguinness)

18 Dec 2020 · Bank regulation and Climate change

Meeting with Katherine Power (Cabinet of Commissioner Mairead Mcguinness)

18 Dec 2020 · Bank prudential regulation and climate risk

Response to Consumer Credit Agreement – review of EU rules

31 Aug 2020

Finance Watch is generally very supportive of the document prepared by the Commission. In particular, we welcome the following points, which we consider to be very important: - The positive and important role that consumer protection plays in boosting consumer confidence in the use of credit; - The importance of a market from which dangerous products should be excluded, along with exploitative practices; - The particular and sometimes dangerous role played by certain types of credit used by consumers, but that are outside the scope of the CCD: credit of less than €200 and issues created by hire purchase credit (for a car for example); - The necessary consolidation and generalisation of responsible credit practices (no granting of credit if the ability to repay is not proven), at a time when the digitalisation of the credit offer is making it much easier to access; - The necessary adaptation of information and advice practices in the pre-contractual phase to improve their effectiveness, both for the consumer's online and off-line experience - in order to take into account the limits of "disclosures" and the findings from behavioural studies. Finance Watch is also very supportive of the objectives pursued, both economically and socially. In addition to the points mentioned in the inception report, however, we feel it is necessary to add the following points: Economic impact: in order for it to live up to the expectations expressed, it will be necessary for the revision of the directive to take account of the following points: - To eliminate credits that are risky by nature from the market, taking into account the entire value chain: marketing, cost, terms and conditions, default rates provided for in the business model and the overall business models themselves; - This objective is one of the only ways to reassure consumers that when a credit is placed on the market, its safety has been tested in advance and judged to be below a set threshold (default rate provided for in the business model); - To refuse the granting of credit when the ability to repay is not proven, which results from proper creditworthiness assessment; - Eliminate debt spirals by requiring lenders to detect debtors' financial difficulties at an early stage, accompanied by an obligation to provide support so that a balanced budget can be rapidly restored (practice implemented in French regulation); - Consider how to align the consumer protection measures applied to leasing credit and any other form of financing for private individuals not covered by the Directive. - Take into account the impact of increasing use of online, digital sales and advertising to ensure that consumers are not misled or inappropriately solicited. - To broaden the scope of EBA's role in consumer protection. EBA plays a role for credit granted by banks (credit institutions), this role should be extended to credit and financing arrangements offered by non-bank institutions to consumers. To this end, it would be necessary to review the mission of EBA and, where appropriate, the coordination of its action on this subject with the competent national authorities; - The broadening of the scope of EBA activity should be accompanied by a proportionate adjustment of its funding; - In order to develop a performance indicator for the directive (regarding the security of the credit market and the reduction of over-indebtedness) systemic collection and reporting of credit default rates should take place through a harmonised European template. These data will be able to identify practitioners with default rates that are above industry/sector averages, but also the credit products or types that have these high default rates.
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Meeting with Valdis Dombrovskis (Executive Vice-President) and

28 May 2020 · COVID-19 relief measures

Response to Action Plan on anti-money laundering

11 Mar 2020

Please refer to the attached submission document, which is based on evidence collected as part of the Finance Watch report on groups of citizens that are at particular risk of financial exclusion and discrimination - https://www.finance-watch.org/wp-content/uploads/2020/03/FW-Report_Vulnerable_Groups_March2020.pdf The submission raises the specific issue of overlaps in the requirements in the 5th EU anti-money laundering directive (Directive 2018/843/EU) and the payment accounts directive (Directive 2014/92/EU) that should be addressed in the action plan. It also highlights the need for proper impact assessment to be undertaken, to ensure that current relevant national initiatives in this area can inform the policy proposals made.
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Meeting with Valdis Dombrovskis (Vice-President) and

26 Sept 2019 · Banking Union, CMU, Sustainable Finance, Financial inclusion

Response to Evaluation of the Distance Marketing of Financial Services Directive

4 Jan 2019

Finance Watch supports the evaluation of the directive on distance marketing of financial services and in particular on the consumer experience related to consumer and mortgage credit, as well as investment products and insurance. How does online credit advertisement include correct information? How can qualitative information, necessary advice and creditworthiness assessment be guaranteed together with a strong compliance with GDPR? With regards to the legitimate concern over irresponsible lending and its impact on the EU NPL situation, a specific focus should be implemented in the evaluation process on consumer credits.
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Response to Institutional investors' and asset managers' duties regarding sustainability

3 Aug 2018

Finance Watch welcomes the proposal for a Regulation on the establishment of a framework to facilitate sustainable investment. We would like to point out that the message in the recital number 28 should be further clarified. It is important for the Commission to clarify how the consideration of stranded asset risk is going to impact the choice of the criteria for environmentally sustainably activities. Recital 9 states that: “offering financial products which pursue environmentally sustainable objectives is an effective way of channelling private investments into sustainable activities”. We believe that the effectiveness of the taxonomy should be empirically assessed over time and therefore, we suggest that the Commission conducts an ex-post assessment of the effectiveness of the taxonomy under article 17. We believe that the following article on the use of the criteria needs to be further clarified. “The Commission shall adopt delegated acts in accordance with Article 16 to supplement paragraph 2 to specify the information required to comply with that paragraph, taking into account the technical screening criteria set out in accordance with this Regulation. That information shall enable investors to identify: (a) the percentage of holdings pertaining to companies carrying out environmentally sustainable economic activities; (b) the share of the investment funding environmentally sustainable economic activities as a percentage of all economic activities.” In particular, we note that only by looking at the sustainability profile of the entire balance sheet of the investee entity it is possible to assess the sustainability profile of the financial products. Unfortunately, in the current framing there is lack of a classification for “brown” activities. This raises the risk that, as a result of the taxonomy, green assets will be added onto the generally brown economy, without promoting the needed capital shift from unsustainable to sustainable investments. With regard to article 15, we would suggest that representatives from civil society are included among the members of the platform on sustainable finance in order to have a balanced representation of interests of different stakeholders.
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Response to Institutional investors' and asset managers' duties regarding sustainability

3 Aug 2018

Finance Watch welcomes the EC proposal for a Regulation on disclosure relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341. Climate change is the greatest threat to the global financial stability, given its double nature as idiosyncratic and systematic risk. We therefore welcome the European Commission initiative to improve the transparency on the ways financial market participants integrate sustainability risk into the investment decision making process and investment advice. Nevertheless, we note the following: 1. The proposal does not include a definition of “sustainability risk”. The articles 4(1)(b) and 4(2)(b) implicitly provide a narrow interpretation of sustainability risk, but a clear definition of sustainability risk under article 2 is necessary to provide legal certainty on the objective of the proposal, which should not be limited to the financial risk. 2. On the other hand, the definition of sustainable investment is too broad and should be reviewed, given that the article 2 (o) (iii) implies that to be considered sustainable it is sufficient for an investment to be made in companies following good governance practice. It should be made clear that an investment cannot be considered as sustainable only because it is done in companies following good governance practice. Any sustainable investment should target at least one environment or social goal. 3. Moreover, it should be explicitly stated that financial actors must have policies in place to integrate sustainability risk and must disclose those policies in line with articles 3, 4 and 5. In other words, having in place policies for integrating sustainability risk is a pre-condition for the companies for being able to comply with the disclosure requirements, indicated in articles 4(1) and 4(2). Put otherwise, it needs to be made explicit that financial actors which do not have in place policies to integrate sustainability risk cannot be in compliance with the articles 4(1) and 4(2). With regard to specific comments on the proposal: 1. Article 4 should explicitly state that it covers all the financial products, independently of whether they target a specific sustainability goal. 2. In art. 4(2), the word “extent” should be replaced with “analysis showing the extent”, because it is important that financial market participants conduct a thorough analysis before concluding on the extent to which the sustainability risks are expected to have an impact on the returns of the financial products. 3. EBA, EIOPA and ESMA should develop draft regulatory standards for the purpose of art 4 and not only for the purpose of the article 5 as indicated in the article 5(5).
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Response to Institutional investors' and asset managers' duties regarding sustainability

3 Aug 2018

Finance Watch is glad to provide the following contribution to the public consultation on the EC proposal for a regulation amending Regulation (EU) 2016/1011 aimed at defining low carbon benchmarks and positive carbon impact benchmarks.  First and foremost, we consider that the proposed review of the Regulation (EU) 2016/1011 cannot support the transition to low carbon economy, because the indices are used only to measure the financial performance of an investment theme and not broader environmental goals. For this reason, we consider the contribution of this proposal to the objectives of the sustainable finance agenda to be highly questionable. Moreover, the current proposal fails to include any definition of ESG benchmark. Notwithstanding this,  With regard to the following article (23a) on low-carbon benchmarks: “(23a) ‘low-carbon benchmark’ means a benchmark where the underlying assets, for the purposes of point 1(b)(ii) of this paragraph, are selected so that the resulting benchmark portfolio has less carbon emissions when compared to the assets that comprise a standard capital-weighted benchmark and which is constructed in accordance with the standards laid down in the delegated acts referred to in Article 19a(2);” The wording in the article 23(a) is not more ambitious than index providers’ current approach and therefore simply confirms current industry practices. Moreover, the wording in the article 23(a) should clarify what “less” means and what emissions are considered. At the very least the article should specify that the resulting benchmark portfolio should have significantly less carbon emissions when compared to a standard capital-weighted benchmark and that when calculating carbon emissions, it is critical to consider a life-cycle perspective. In any case whether an index has less carbon emissions than the parent index says nothing about constituents’ alignment with Paris Agreement goals. Finally, it is important to remember that many companies doing green activities (like reforestation) are not listed.  With regard to article (23,b): “‘positive carbon impact benchmark’ means a benchmark where the underlying assets, for the purposes of point 1(b)(ii) of this paragraph, are selected on the basis that their carbon emissions savings exceed the asset's carbon footprint and which is constructed in accordance with the standards laid down in the delegated acts referred to in Article 19 a (2)”. We would like to highlight that the legislator should consider the real life-cycle reductions in emissions and not the virtual emission savings.  We are particularly concerned with the following definition of: ‘emission saving’ included in the point (iv), of the paragraph (h) of the Article 1 of the Annex to the proposed Regulation: “emissions which would continue to exist if the company's products or services would be replaced by more carbon emitting substitutes ('emission savings')’. The estimation of emission saving implies the construction of the counterfactual scenario and this might be a major source of uncertainty, given that the counterfactual scenario might be modelled in such a way to show the highest possible virtual savings with the sole objective achieving a carbon impact ratio higher than 1. Moreover, the legislator should create as many as possible incentives for supporting the transition to the low carbon economy instead of asking companies to assess which products are more polluting. In this sense, the proposed definition is – in our view - fully inconsistent with the sustainable finance agenda objectives.
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Response to Evaluation of the Consumer Credit Directive

26 Jul 2018

Finance-Watch members has provided a set of comments on the CCD, that has been compiled in the document attached. Comments and remarks are globally related to the following issues: A) Responsible lending: which includes - A.1. Dangerous / toxic credits restriction; CCD should provide objective criteria to qualify what make a credit “toxic” in order to ban them; - A.2. Improvement should be made about the definition of the unfair terms clause to make it more effective; - A.3. Larger scope: all credit used by consumers should be regulated by the CCD with no exception (amount / duration / interest rate …). Too many times, payday lenders have entered a national market because of restrictions in the scope; - A.4. Stronger regulation on credit advertisement; - A.5. Stronger restriction on unsolicited direct sale contact and doorstep practices; - A.6. Stronger restriction on cross-selling practices (credit + payment protection insurances) to allow competition and transparency; - A.7. Pre-contractual obligations:  Transparency on the terms and conditions, the costs;  Qualitative, fair and personalized information and advice to be provided;  Creditworthiness assessment: adequate personal budget analysis (income and expenditures), on going credit and debts that should lead to an adjusted offer (in amount and in duration) to the need of the borrower or to a refusal when the financial capacity is not sufficient;  A clear difference should be defined in the DIR about creditworthiness assessment and credit risk assessment;  The liability of intermediaries (at least, the significant one in the market, weather or not credit is an accessory activity) should be equivalent as the one of credit providers.  The remuneration of intermediary should be design in a way it does not contradict with responsible lending principles;  Credit decision should be transparent and should allow consumer to learn what improvement in their budget and budgeting practices should improve their credit access, if the demand has been denied; - A.7. Contractual obligations:  The credit provider should develop “financial difficulties” early detection tool to reduce the level of defaulted credit. The early detection should allow credit providers to adjust the credit (monthly instalment, duration, amount, …) to the up-dated financial situation of the borrowers when changes have occurred; - A.8. Responsible principles should apply to the all chain of credit providers (when re-financing happens, for example; B. CCD impact indicator necessity
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Response to Institutional investors' and asset managers' duties regarding sustainability

21 Jun 2018

The concept of “best interest” should be defined at the EU level to include both financial and non-financial benefits. In other words, we believe that it should be made clear that the utility of investors can depend on both financial and non-financial returns. This is particularly critical if we think about the long-term impacts of climate change on future generations and the weaknesses in the current environmental legislations, which do not adequately price the negative externalities (CO2 emissions in first place). However, our contribution is focused on the articles that are in the scope of this consultation and our feedback to is as follows: a. The definitions of ESG preference under the article 2 (7) of the Delegated Regulation 2017/565, should be further clarified and expanded. We would like to highlight that using the same words to explain what is trying to be defined is risking to be a major source of legal uncertainty. In particular we believe that in the definition of “ESG preference”, the word “preference” should be avoided. Moreover, we think that the definition of “preference” should imply the existence of different options being offered to the clients. We would suggest to the Commission to further expand the definition to clearly state that the ESG preference cannot be assessed unless the clients are informed about the trade-offs associated with an adequate number of financial instruments (risk, return and ESG profile of the investment). b. It should also be made clear that ESG factors shall be systematically taken into account for two reasons: i. Because they offer risk and opportunities to clients (from a purely financial perspective) and ii. Because their consideration might be critical, on the basis of the additional non-financial objectives of the clients. 2) It should also be made clear that insurance undertakings and intermediaries shall proactively investigate clients’ ESG preferences. We believe that the wording under 9 and 14 should be more explicit on this point. If the requirement to proactively investigate clients’ ESG preference is not made obligatory, there is the risk that clients that have specific ESG preferences will not invest according to their objectives, because they are not aware of the possibility to do so. In line with the proposed definition of preference, a proactive investigation implies the requirement for the insurance undertakings and intermediaries to inform the clients about the trade-offs associated with an adequate number of financial instruments (risk, return and ESG profile of the investment), when conducting suitability assessment. 3) We would like also to highlight that insurance undertakings and intermediaries, when assessing ESG preferences, should, whenever possible, rely on the upcoming EU sustainability taxonomy. If the clients know that they have the possibility to invest in assets considered sustainable according to the EU taxonomy, they might be more incentivised to invest in those assets. Since the main purpose of the upcoming EU taxonomy is to create a common language about what is sustainable, we believe that it is important to make most of its use to further create the confidence among the investors and stimulate the demand for sustainable assets. 4) We also believe that the information related to the environmental investment objective should also refer to the EU low carbon and positive carbon benchmark, whenever possible and relevant. 5) We believe that insurance undertakings and intermediaries should also be required to offer an adequate number of financial instruments from which it is possible to understand clients’ ESG preferences (which - as indicated above - should be defined as greater liking for one alternative over another).
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Response to Institutional investors' and asset managers' duties regarding sustainability

21 Jun 2018

The concept of “best interest” - as mentioned in the art. 24 (paragraph 1) of MIFID II and art. 54 of Delegated Regulation (EU) 2017/565, should be defined at the EU level to include both financial and non-financial benefits. In other words, we believe that it should be made clear that the utility of investors can depend on both financial and non-financial returns. This is particularly critical if we think about the long-term impacts of climate change on future generations and the weaknesses in the current environmental legislations, which do not adequately price the negative externalities (CO2 emissions in first place). However, our contribution is focused on the articles that are in the scope of this consultation and our feedback to is as follows: 1) The definitions of ESG preference (point 7) and ESG considerations (point 8) under the article 2, should be further clarified and expanded. We would like to highlight that using the same words to explain what is trying to be defined is risking to be a major source of legal uncertainty. In particular we believe that: a. In the definition of “ESG preference”, the word “preference” should be avoided. Moreover, we think that the definition of “preference” should imply the existence of different options being offered to the clients. We would suggest to the Commission to further expand the definition to clearly state that the ESG preference cannot be assessed unless the clients are informed about the trade-offs associated with an adequate number of financial instruments (risk, return and ESG profile of the investment). b. In the definition of “ESG consideration”, the word consideration should be avoided for the same reason indicated above. It should be made clear that ESG factors shall be systematically taken into account for two reasons: i. Because they can offer risk and opportunities to clients (from a purely financial perspective) and ii. Because their consideration might be critical, on the basis of the additional non-financial objectives of the clients. 2) It should also be made clear that the investment firms shall proactively investigate clients’ ESG preferences. We believe that the wording under 54 should be more explicit on this point. If the requirement to proactively investigate clients’ ESG preference is not made obligatory, there is the risk that clients that have specific ESG preferences will not invest according to their objectives, because they are not aware of the possibility to do so. In line with the proposed definition of preference, a proactive investigation implies the requirement for the investments’ firms to inform the clients about the trade-offs associated with an adequate number of financial instruments (risk, return and ESG profile of the investment), when conducting suitability assessment. 3) We would like also to highlight that investment firms, when assessing ESG preferences, should, whenever possible, rely on the upcoming EU sustainability taxonomy. If the clients know that they have the possibility to invest in assets considered sustainable according to the EU taxonomy, they might be more incentivised to invest in those assets. Since the main purpose of the upcoming EU taxonomy is to create a common language about what is sustainable, we believe that it is important to make most of its use to further create the confidence among the investors and stimulate the demand for sustainable assets. 4) We also believe that the information related to the environmental investment objective should also refer to the EU low carbon and positive carbon benchmark,
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Response to Development of secondary markets for non-performing loans

8 Jun 2018

Policy brief summary: - Tighter rules on the recognition of non-performing loans have been long overdue. By imposing a legal backstop on banks, forcing them to acknowledge – and provision for – problem assets, the Commission’s proposed amendment to the CRR could play a role in preventing the excessive build-up of NPLs in the future. - The extent of under-provisioning identified by the Commission and the ECB highlights the need to hurry along the adoption of IFRS 9 provisioning rules and confirms that the generous transition arrangements currently granted to EU banks by the legislators leave Europe exposed to a known, substantial risk to financial stability. - The NPL crisis should serve as a reminder that European banks’ capitalisation levels are, in many cases, still not sufficient to absorb the effects of a lengthy economic downturn. Bank capital levels need to be further strengthened and banks that cannot be restored to health should be allowed to exit the market, either by way of a merger or sale or under the BRRD framework. - Finance Watch cautions against promoting solutions that allow banks to solve their NPL problems once again at taxpayers’ expense, e.g. by selling them to taxpayer-funded vehicles, possibly at inflated valuations, or by passing on their risk to capital market investors in a non-transparent and unsafe way through structured debt transactions (securitisation). - We agree that a well-functioning, transparent and professional secondary market for NPLs could be an important part of the solution provided it does not undermine credit standards or lead to aggressive and inappropriate enforcement actions. Harmonised rules for NPL investors and credit servicers should be conducive to this effort. This market, and all actors in it, need to be properly supervised, however. There is no need to create yet another regulatory regime for (non-bank) credit purchasers and credit servicers. Entities that buy and manage NPLs (or other loan portfolios) for their own account are conducting investment business and should be regulated under existing frameworks, i.e. MiFID II, AIFMD or Solvency II. Entities that manage NPLs on behalf of credit purchasers should be considered as providing ‘ancillary services’ under MiFID II. We are concerned about the impact that a single EU secondary market for consumer NPLs could have on distressed borrowers. It is therefore essential that high levels of consumer protection in debt collection practices are included in the proposal to expand the secondary market for NPLs. - Legislators should consider the Directive’s impact on bank competition and culture to ensure that it does not harm relationship banking, weaken underwriting standards, or distort competition between different types of credit provider. Member States’ legal regimes for the enforcement of contracts, in general, and loan debts, in particular, need to be harmonised and strengthened to reduce the duration and cost of proceedings while preserving high levels of protection for debtors, in particular vulnerable groups such as private households and micro-enterprises. Both should be exempted from the proposed accelerated extrajudicial enforcement of collateral. Proposed legislation to harmonise insolvency rules and introduce debt restructuring procedures (‘second chance’) for businesses, particularly SMEs, should be advanced. - There are currently no common minimum standards in the EU for dealing with the over indebtedness of individuals and households: personal bankruptcy and ‘second chance’ procedures are not available in all member state and few countries have data on successful second chance proceedings. Finance Watch would encourage the EU legislators to extend their ongoing initiative on the harmonisation of insolvency proceedings and ‘second chance’ to introduce common principles for personal bankruptcy and ensure that the proposed directive is implemented together with this extended ‘second chance’ package.
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Response to Legislative proposal for an EU framework on crowd and peer to peer finance

11 May 2018

Finance Watch very much welcomes the EU initiative to create a uniform European regulation for crowdfunding. It can provide financial service platforms and their users with the necessary legal certainty to expand their activities freely in the EU without national legal barriers. An EU-wide regulation would open market opportunities and promote the development of non-banking financial businesses. This applies in particular to web-based business platforms, which need large markets and a high number of users to become economically successful. It is also relevant for national borrowers like start-up companies, which often have to choose between a limited number of uncompetitive local banks. It can also provide retail investors with the necessary legal certainty for cross-border investments. A single European legal framework would put an end to the widespread practice of legal arbitrage of financial platforms. Several peer-to-peer (P2P)-lenders located in the Netherlands, where regulatory requirements are lower, offer their services cross-border to German or French clients without having national licenses in these countries. An EU regulation in the area of crowdfunding would ensure uniform regulatory standards. However, Finance Watch has a number of areas of concern with the European Commission’s proposal as it stands: • A complementary service-based solution means no harmonisation of existing national legislations and therefore strong possibility of regulatory arbitrage. • The EBA is better placed to authorise crowd funders than ESMA. • The proposal ignores significant differences in the risks posed to investors between in-vestment-based crowdfunding and lending-based crowdfunding. • The proposal excludes consumer lending-based crowdfunding. • There is an issue with transferable securities of investment-based crowdfunding as no secondary market exists, which means there is no fair pricing of securities when investors wish to exit. • Institutional investors should be kept out of the crowdfunding market, as they may try to exploit lower regulatory requirements. The involvement of institutional investors at scale may also have implications for aggregate debt levels and the financial interconnectedness of market players. • Special purpose vehicles are part of the world of institutional financing and should not be part of crowd-funding. • Crowdfunding service providers should operate as neutral intermediaries between clients on their crowdfunding platform. The proposal should explicitly address the plat-forms' liability to investors for false or missing information. • A lack of disclosure standards means that is not possible to compare investments. Dis-closure standards are needed for publishing risk-adjusted yields and statistics on non-performing loans. Key standard information documents should also be subject to approval from supervisory authorities and should be translated to the investor’s language. • ESMA’s regulatory costs should not be covered by the crowdfunding industry. There is a natural conflict of objectives here. Regulatory costs should not be paid by the market participants that are regulated. • Platform insolvency risk is not covered by the proposal and needs to be addressed by setting standards for platform resolution to ensure that it does not harm the investor. • There should be a requirement for P2P lending platforms to disclose how software models and algorithms process borrower information for credit risk assessments and lending decisions, in order for borrower to understand how decisions on their credit have been taken. This should include disclosure of decision making models and data used to inform decisions. • ESMA must have the technical expertise to regularly monitor the algorithms of the crowdfunding platforms to ensure that the applicant for a loan is not discriminated against on the basis of personal characteristics unrelated to their creditworthiness.
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Meeting with Elina Melngaile (Cabinet of Vice-President Valdis Dombrovskis)

23 May 2017 · PSD2 and CMU mid term review

Meeting with Jyrki Katainen (Vice-President) and WWF European Policy Programme and

3 Apr 2017 · Sustainability finance in the mid-term review of the Capital Markets Union

Meeting with Valdis Dombrovskis (Vice-President) and

22 Apr 2016 · Introduction of Finance Watch; Financial regulatroy issues; Financial Markets reform

Meeting with Jan Ceyssens (Cabinet of Vice-President Valdis Dombrovskis)

3 Feb 2016 · multiannual financing, CMU and retail financial services

Meeting with Olivier Guersent (Director-General Financial Stability, Financial Services and Capital Markets Union)

3 Feb 2016 · Le place d'un cadre juridique pour le possible financement futur de vos organisations.

Meeting with Olivier Guersent (Director-General Financial Stability, Financial Services and Capital Markets Union)

14 Jan 2016 · Future plans of DG FISMA

Meeting with Riccardo Maggi (Cabinet of First Vice-President Frans Timmermans)

19 Nov 2015 · Better Regulation

Meeting with Jack Schickler (Cabinet of Commissioner Jonathan Hill)

23 Jul 2015 · Non-bank resolution and Capital Markets Union

Meeting with Michelle Sutton (Cabinet of First Vice-President Frans Timmermans)

20 Jan 2015 · Better Regulation, Transparency, Financial Services