Variety of personal finance personal assets can be divided into species and varieties of personal debt, common foreign exchange, funds, stocks, bonds, deposits and life insurance and other varieties of personal assets; and personal housing mortgage loans, consumer credit is a matter of personal liability varieties.
LONDON INVESTMENT BANKING ASSOCIATION LIBA 6 Frederick's Place, London, EC2R 8BT T e l : 02 0 779 6 3 60 6 F a x : 02 0 7 7 96 4 3 45 e-mail: email@example.com website: www.liba.org.uk European Governance A response by the London Investment Banking Association to the European Commission’s White Paper (COM/2001/0428final) Introduction 1. The London Investment Banking Association (LIBA) is the trade association which represents the major European and international investment banks which base their European operations in London. A list of our Members is attached. 2. We welcome the opportunity to comment on the White Paper on European Governance, and the fact that the Commission is consulting about this vital issue. 3. The White Paper is particularly timely and particularly relevant for the financial services sector because many of the issues which it sets out are already being debated between European legislators and regulators and the financial services industry, in the context of the Financial Services Action Plan and the procedural reforms which were initiated by the Lamfalussy Committee of Wise Men. We believe that many of the benefits which the Commission envisages arising from the reform of European governance are already emerging in the financial services and capital markets area. These benefits can only be reinforced by the codification and extension to other areas of similar principles of good governance. 4. The Commission has a vital role as the initiator of legislative proposals and as the enforcer of Community law. The Commission has put forward a broad and welcome analysis of the principles of good governance in the White Paper. We suggest below a number of key themes which the Paper identifies, and which we think should be codified in the Commission’s procedures, so that their consistent application can improve the quality and stature of the work which the Commission does. 5. We welcome and agree with the following statements in the White Paper: ‘Policies must be effective and timely, delivering what is needed on the basis of clear objectives’. ‘proposals must be prepared on the basis of an effective analysis of whether it is appropriate to intervene at EU level and whether regulatory intervention is needed. If so, the analysis must also assess the potential economic, social and environmental impact, as well as the costs and benefits of that particular approach. A key element in such an assessment is ensuring that the objectives of any proposal are clearly identified.’ ‘policies must deliver what is needed on the basis of clear objectives, an evaluation of future impact and, where available, of past experience’ ‘before launching an initiative, it is essential to check systematically if public action is really necessary, if the European level is the most appropriate one, and if the measures chosen are proportionate to those objectives' the Commission’s commitment to ‘establish and publish minimum standards for consultation on EU policy’ the Commission’s commitment to ‘adopt before the end of 2001 minimum standards for consultation and publish them in a code of conduct’, ‘focusing on what to consult on, when, whom, and how to consult’. ‘A tension between faster decisions and better, but time-consuming consultation is not necessarily a problem: investment in good consultation ‘upstream’ may produce better legislation which is adopted more rapidly and easier to apply and enforce.’ ‘More effective enforcement of Community law is necessary not only for the efficiency of the internal market but also to strengthen the credibility of the Union and its institutions.’ Key themes of the White Paper, and their application to financial services and capital markets 6. From the statements quoted in the previous paragraph can be derived six key themes, which reinforce the emerging consensus about how policy should be developed in the financial services sector: A. The importance of basing European policy-making on clearly identified and defined public policy objectives. B. The importance of basing European policy-making on thorough, and as far as possible quantitative, analysis of problems, risks, and existing means of controlling them. C. The importance of assessing the impact, direct and indirect, of policy proposals. D. The importance of establishing, publishing, and applying minimum standards for consultation. E. The importance of legislating proportionately and only where demonstrably necessary. F. The importance of properly enforcing Member States’ implementation of Community law. 7. The six key themes should be consolidated into European legislative processes in as lasting a form as possible where this has not already been done. This could be done through the proposed code of practice. It would be helpful if the Commission could put forward its proposed codification for public discussion. Our experience in the financial services area is that the Commission has in practice already become more open and accessible, and is already reaping the benefits of abiding by the six key themes. This is evident, for example, in the Internal Market DG’s consultative approach to the review of the Investment Services Directive. Whilst these developments are very welcome, and should result in a very high quality of legislation, the application of procedures in particular cases cannot be a substitute for the predictability, now and for the future, which would result from codifying the general application of those procedures. The Statement of Consultation Practices which has been published by the Committee of European Securities Regulators provides a model for how the Commission could and should codify the six key themes. 8. It might be argued that such a statement by the Commission could undermine its right of initiative. We do not think it would do so. On the contrary, we believe that systematic access to market expertise and interested parties’ views would strengthen the Commission’s right of initiative by enabling it to propose legislation which it knows is technically sound and commands the broad commitment and support of the European citizens and businesses who will be affected by it. 9. A commitment to thorough analysis, defining legislative objectives, impact analysis, public consultation, and proportionate but properly enforced legislative intervention only when necessary, is entirely consistent with, and reinforces, the European legislative principles of proportionality and subsidiarity. Putting it into a lasting form will have a range of beneficial consequences: A commitment to background analysis and clearly defining legislative objectives will promote public confidence that the European legislative process is focusing appropriately and efficiently on clearly identified problems and risks, and not on ill-defined and generalised worries that ‘something must be done’. A commitment to impact analysis will promote confidence that European legislation is developed circumspectly and with full awareness of the possible consequences, both direct and indirect. In the context of financial services and capital markets, particular attention will need to be given where policy proposals might impose unnecessary costs on citizens or businesses, have a negative economic or public policy impact, reduce the efficiency with which markets can innovate and respond to their users’ needs, reduce choice or competition for market users, or reduce the competitiveness of European businesses or markets in the wider world. A commitment to appropriate minimum standards of public consultation will ensure that legislators have extensive access to additional resources with the best possible quality of technical expertise, thereby improving the quality and streamlining the adoption of legislation. This is particularly important in the highly complex and fast-moving field of capital markets and financial services. Constructive and responsive consultation will also build the commitment of citizens and businesses to the legislative process and the legislation which results from it, thereby enhancing the competitiveness and reputation of the European regulatory framework, encouraging compliance and assisting enforcement. A commitment to thorough analysis, defining legislative objectives, impact analysis, public consultation, and proportionate legislative intervention only when necessary, will mean that European legislators can make the best possible use of, and build on, the very substantial extent to which the market mechanism already achieves public policy objectives. In turn, this will build on that fact that the efficiency of the market mechanism has been significantly enhanced by recent developments in technology which have enormously improved users’ access to, and ability to make use of, markets and market information. A commitment to proper enforcement of Community law will prevent the retention or imposition of barriers to the internal market. It will provide sanctions against Member States which do not respect Community law. It will also ensure that repeated rewriting of legislation does not become a substitute for taking legitimate action against Member States which do not comply with existing legislation. The Lamfalussy Report 10. The six key themes are also consistent with the 2001 final Report of the Committee of Wise Men on the Regulation of European Securities Markets (the ‘Lamfalussy Report’), which contains a number of statements which parallel the points made by the White Paper quoted above (see the Annex to this paper). Next steps 11. Because of the importance of the six key themes to financial services legislation, we hope very much that the Commission will be able to carry them forward in specific actions. The recent agreement by the Commission, Council, and Parliament to implement the Lamfalussy recommendations provides an important opportunity for the European institutions to make a ‘quick win’ in the financial services area by moving forward quickly to codify the six key principles and put them into practice at all levels of the legislative process. London Investment Banking Association 28th March 2002 TMMB/Mar21/COM77G ANNEX: The Lamfalussy Report The Lamfalussy Report’s analysis of shortcomings in progress towards the cross- border integration of financial markets identified as ‘among the most important gaps’: ‘lack of commonly agreed guiding principles covering all financial services legislation’.1 The Lamfalussy Committee stated its belief that ‘all European financial services and securities legislation should be based around a conceptual framework of overarching principles’ and suggested that the following could be ‘among the most important’ overarching principles: ‘- to maintain confidence in European securities markets… - to ensure appropriate levels of consumer protection proportionate to the different degrees of risk involved… - to respect the subsidiarity and proportionality principles of the Treaty; - to promote competition and ensure that the Community’s competition rules are fully respected; - to ensure that regulation is efficient as well as encouraging, not discouraging, innovation; - to take account of the European, as well as the wider international dimension of, securities markets.’2 The Lamfalussy Report stressed the importance of consultation, particularly since capital markets are complex and fast-moving, and the contribution which experts can make to the quality of legislation is therefore substantial. The Report stressed the importance of analysing the impact of legislative proposals. The Report also identified the Commission’s enforcement role as an essential element of the legislative process. 1 Final Report of the Committee of Wise Men on the Regulation of European Securities Markets, 15th February 2001, Chapter I.4 2 Op cit, Chapter II.2 MEMBERS OF THE LONDON INVESTMENT BANKING ASSOCIATION Ansbacher & Co Limited ABN AMRO Bank N.V. Arbuthnot Latham & Co., Limited BNP Paribas Bank Insinger de Beaufort plc Barclays Capital Bear, Stearns International Limited Beeson Gregory Limited CIBC World Markets Plc Cazenove & Co. Ltd Close Brothers Corporate Finance Ltd Collins Stewart Limited Commerzbank AG Credit Suisse First Boston International Daiwa Securities SMBC Europe Limited Dawnay, Day & Co., Limited Deutsche Bank AG London Dresdner Kleinwort Wasserstein Goldman Sachs International Greenhill & Co. International LLP Hawkpoint Partners Limited HSBC Investment Bank plc ING Barings Instinet Europe Ltd Investec Bank (UK) Limited JPMorgan Chase Bank KBC Peel Hunt Knight Securities International Ltd Lazard Lehman Brothers Merrill Lynch Europe PLC Mizuho International plc Morgan Stanley International Ltd Nomura International plc N M Rothschild & Sons Limited Robert W. Baird Group Limited Schroder Salomon Smith Barney Singer & Friedlander Holdings Limited Société Générale 3i Group plc The Toronto Dominion Bank UBS Warburg Westdeutsche Landesbank Girozentrale
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