On March 8, 2017 the European Parliament’s Economic and Monetary Affairs (ECON) Committee held a hearing on third-country equivalence in EU financial services regulation. The exchange of views with the European Commission and the Chairmen of the European Supervisory Authorities (ESAs) follows the publication of a Commission staff working document on the same topic at the end of February. Olivier Guersent, Director General of DG FISMA, reiterated that this paper was simply a stock-taking, factual exercise which highlights the need for further developments to improve the effectiveness of the equivalence framework. Such improvements may include an enhanced role for the ESAs. Nevertheless, Mr Guersent sought to clarify that this document cannot be considered an indication of the Commission’s future approach.
Despite previous calls from the ESAs and the Parliament to streamline the equivalence procedure, Mr Guersent defended the current approach explaining that the equivalence procedures have been designed to align with the specificities and objectives of each piece of legislation. Therefore, the flexibility in the system and the case-by-case approach is necessary and ensures a proportionate application. The Chairmen of the ESAs used their interventions to reiterate how resource intensive the procedure can be.
Notably, the Commission and ESAs failed to mention Brexit in their opening remarks which was later challenged by the Members of the European Parliament (MEPs). Mr Guersent divulged little information on the Commission’s thinking on equivalence for the UK post-Brexit other than to say that whilst the regulatory frameworks in the EU and UK are likely to be the same immediately after the UK leave the EU, the Commission will nevertheless have to undertake a careful analysis of whether the rules will garner the same outcome.
Finally, in response to prompting from MEPs, the Commission confirmed that progress has been made on equivalence decisions under MIFID II and they will be in place for the January 3, 2018 application date.