Our success in EU financial legislation
As a response to the financial crisis, the finance sector has experienced a wave of regulation. Strengthened capital requirements, liquidity ratios, solvency etc. have been necessary regulatory initiatives for the confidence in the financial sector. For UNI Europa Finance’s members, the amount of regulation directly affecting their day to day-working life has meant that we have had to step up our work on influencing the decision-making agenda.
Last week the European Parliament voted through several EU legislative texts. This was the last plenary in Strasburg for this legislative term and before the European elections in May. UNI Europa Finance has followed several of these. Of specific importance are the Banking Union elements, with a focus on the Single Resolution Mechanism (SRM), and the Bank Recovery and Resolution Directive (BRRD).
The aim of the SRM, being part of the Banking Union, is to ensure that bank creditors and investors will pay their share of a failing banks’ liabilities through a single bank resolution fund, instead of the bank being supported by national governments (the so-called “bail in” mechanism). The Regulation will enter into force in January 2015, with the resolution fund and resolution functions becoming operative from January 2016 onwards.
The aim of the BRRD is to ensure powers so that bank failures across the EU are managed in a way which avoids financial instability and minimises costs for taxpayers. Creating a level playing field, future authorities will have the means to intervene both before problems occur and early on in the process if they do. The directive is foreseen to be implemented by January 2015.
Other directives and regulations on financial services have also been concluded lately. These include the Markets in Financial Instruments Directive (MiFID II), regulating the sales and advice of financial products, the Market Abuse Directive and Regulation (MAD/MAR), addressing insider dealing and market manipulation for personal gain, and the Capital Requirements Directive (CRD IV), strengthening the capital and liquidity ratio rules.
Throughout this process, the trade union voice and our assembled efforts have proven successful. We have managed to pass the majority of our amendments in the legislative texts, which both safeguard and improve rights of bank and insurance employees within the EU internal market. A strong measure of success is when we now see the Commission using our wording in their new legislative proposals, aligning these with the employee protection parts that we have passed in previous legal texts. To give some examples, improvements of the directives and regulations include that:
- Employers are to provide sufficient training to their staff as an appropriate level of knowledge and competence in relation to the products offered must be ensured.
- Secure structures for reporting breaches are set up and whistleblowing protection ensures anonymity all through the process.
- Trade union officials are guaranteed the right to discuss company events with their union representatives without facing the risk of being held liable for breaches.
- Adequate time and resources are given to employees to be able to provide all relevant information to clients.
- An employer should not make any arrangement by way of sales targets that could incentivise its staff to recommend a particular financial instrument to a retail client when a different financial instrument would better meet that client’s needs.
- Bank resolution plans are to include an analysis of the impact on the employees, including a description of envisaged procedures to consult with staff, taking into account national systems for dialogue with social partners.
- The provisions on remuneration should be without prejudice to the full exercise of fundamental rights guaranteed by Article 153(5) of the treaty regarding the rights of the social partners to conclude and enforce collective agreements, in accordance with national law and customs.
These are important concerns which have built on what we set out as priorities in our key issues paper For a responsible and sustainable finance industry: From financial crisis to reforming the financial system in 2009 for re-shaping the financial system. We will continue to push for these all the way through until all the new rules are implemented in the EU Member States.