EC presented with plan for capital markets union ‘game-changers’

first_imgThomas Wieser, chair of the Forum, speaking from Wien during a Twitter live event about the reportWelcoming the final report, Matti Leppälä, general secretary at PensionsEurope, said the attention paid to pensions in the report was “remarkable”, and that it “shows that sustainable and adequate pensions are key for reaching the CMU objectives”.In the report, the pensions recommendations come under the heading of the “fostering retail investments in capital markets”. Patrice Bergé-Vincent, managing director at ICI Global, said it was “right” that the report included a focus on retail investors.ICI Global carries out the international work of the Investment Company Institute, a US-based association representing regulated funds globally.“Retail investors could play an important role in revitalising and strengthening European economies and the next round of CMU reforms should encourage this,” said Bergé-Vincent.“As the report notes, in many cases simplification is the solution.“Investor documents should be digital, engaging, and reader-friendly. Additional private retirement savings should be encouraged through steps including financial education and auto-enrolment.”At fellow interest group Better Finance, managing director Guillaume Prache, a member of the HLF, said it was positive that “EU citizens as savers are discreetly finding their rightful place at the heart of the CMU,” but that it was “too early to declare victory”.“Restoring much-needed trust amongst individual investors will only be possible if policymakers take this report into account and seriously engage with its ‘game changing’ proposals,” he said.From auto-enrolment to withholding taxThe pensions-specific recommendations in the report include that the Commission develop a dashboard to monitor the state of play in member states, and “consider ways to support the introduction of auto-enrolment”.According to the report, the HLF is recommending that the Commission table a legislative proposal to require auto-enrolment into default occupational pension schemes at the level of member states. In those countries that did not currently have active eligible pillar two providers (IORPs), necessary rules for them and other institutions would need to be introduced, it added.PensionsEurope noted that it agreed with the HLF that member states with the most developed market-based pension systems also had the highest pensions adequacy and the most developed capital markets.It said it supported any initiatives aimed at increasing occupational pension coverage and pension savings, and that auto-enrolment had proven to be a very viable policy option in some countries.However, Leppälä told IPE there should not be a push for a binding legal EU framework on auto-enrolment, as this was a matter of social and labour law and hence a member state competency.  The other pension-specific recommendation encouraged the development of pension tracking systems for individuals, with the HLF also calling on industry to support and contribute to financing the full roll-out of the European Tracking System (ETS).The report also put forward recommendations that were not specifically on pensions, but still “relevant for PensionsEurope and our members,” said Leppälä.One of these is on withholding tax.To tackle “the currently inefficient and cumbersome WHT refund procedures”, the group recommended that the Commission put forward a legislative proposal introducing a standardised system for relief at source of withholding tax based on authorised information agents and withholding agents.“This is very much in line with what PensionsEurope has stressed over the past years,” said Leppälä, telling IPE that withholding tax had been on its agenda since the 1960s.Data portal sustainable finance linksThere are elements in the HLF’s report that appear relevant from the point of view of the sustainable finance agenda, although few references are made to the concept, or to environmental, social and governance (ESG) factors or investing.In his preface to the report, chair Weiser said climate change “remains at the forefront of our concerns”, suggesting that making a success out of the CMU project would benefit the fight against climate change.“With a deep and dynamic capital market, the joint financing capacity will facilitate a green transition that works for our citizens,” he said.“Recent regulatory developments create an urgent need for publicly available and affordable ESG data and the establishment of an EU Single Access Point would be a good improvement”Matti Leppälä, general secretary at PensionsEuropeOne recommendation in the report that has links to EU sustainable finance regulation is the first one, which is on creating a EU “single access point”. This is described as an EU-wide digital platform for access to companies’ public financial and non-financial information, freely accessible to the public and free of fees or licence use.According to the HLF, the recommendation is aimed at addressing the problems of a lack of comparable, usable and easily accessible public information about companies, which was first and foremost to the detriment of smaller companies.“Comparable, usable and easily accessible public information is not only essential for investors, but also for financial intermediaries, who need such data to help investors to make informed investment decisions,” it added.PensionsEurope welcomed the Single Access Point recommendation, drawing out its link to sustainable finance regulation.“Market forces and regulatory developments have increased the need for data on investee companies and other market data,” said Leppälä.“Recent regulatory developments in the context of the EU sustainable finance agenda create an urgent need for publicly available and affordable ESG data and the establishment of an EU Single Access Point would be a good improvement.”The Single Access Point recommendation has echoes of a common database of ESG metrics that is referred to in the Commission’s consultation for a renewed sustainable finance strategy. PensionsEurope was one of a group of financial services trade associations that today called for the creation of a centralised public register for ESG data in the EU.Next stepsThe Commission has said it would be seeking feedback on the report between today and the end of the month.In early autumn it is due to present its next CMU “action plan”, with Valdis Dombrovskis, executive vice-president of the Commission and in charge of financial services and CMU, saying it would “carefully consider” each of the HLF’s recommendations.“The capital markets union is a major element of our post-coronavirus recovery strategy,” he said. ”The Capital Markets Union can be a game changer provided we now make meaningful progress – the High-Level Expert Group has provided valuable input to make this happen.”PensionsEurope’s Leppälä said: “I’m convinced the European Commission will take this seriously.”To read the digital edition of IPE’s latest magazine click here. The European Commission has been presented with a plan for “game-changer” measures to take to realise the creation of a capital markets union (CMU) in the EU, according to the High-Level Forum (HLF) behind the recommendations, with “remarkable” attention seen being paid to pensions in the group’s report.Established by the European Commission last year, the HLF on the CMU today set out 17 clusters of recommendations in its final report, describing them as “the game-changers”, because they were “what the EU needs to implement urgently in order to tackle the most serious barriers in its capital markets”.The recommendations span the full spectrum of capital market activities, grouped by the HLF under the headings of: financing business; market infrastructure; individual investors’ engagement; and obstacles to cross-border investment.“The report does not contain abstract ideas or high level principles that should be achieved,” said Thomas Wieser, chair of the Forum. “Rather, it has very precise and clear recommendations on what should be done in order to move Europe forward. “We emphasise that this is not a menu from which one can order two or three courses, and go home satisfied. The clusters of measures are mutually reinforcing, and dependent on each other.”Establishing a single capital market in the EU is a long-established policy goal, but in the report Wieser said a functioning capital market was even more important now in the context of the economic recovery from the COVID-19 crisis.#*#*Show Fullscreen*#*#last_img read more