Deputy Chairman of FECIF
Are the regulators finally showing common sense?
During FECIF´s prestigious conference last week in Brussels, I started seriously thinking that after all, European regulators might be gaining some common sense in their thinking. Quite a heretical thought for a classical liberal, is it not? But when I heard MEP Mr. Markus Ferber talking about the PRIIPs KID being wrong, I could not help myself. He did not use these very words, of course, but the sheer positive effect from him being able to admit that it was not fit for purpose overwhelmed me.
It needs to be said that most of the regulators´ speeches that we hear all the time are not so amenable to my thinking. An example would be the speaker from the Commission itself, who rather vigorously defended recent regulatory developments. His main argument was that “the market is better than before”. Well, one could hardly find a better example of post hoc fallacy. Is the market really better "after regulation, and therefore because of regulation", as the translation from Latin states? How about the enormous efforts of firms, innovators and clients to make products cheaper, more transparent, flexible and more suitable for demanding and changing consumer needs? In my opinion, no regulation ever led to an innovation on its own. To be fair, on the other hand, he did not claim that all regulation was successful and also inferred that the KID was not fit for purpose.
Furthermore, this thesis of mine was indirectly supported by Guillaume Prache (Better Finance) in the second event panel, on pensions. His comments left me with the impression that the current Pan-European Pension Product (PEPP) proposal is far from being perfect. Have consumers finally realised that the over-regulation practised by Brussels will harm them as well? By higher fees, less flexibility, financial exclusion? That would be a very pleasing conclusion from our event, although – we have to say – rather adventurous.
But the reality is that the momentum is indeed slowly changing. Brexit and raising scepticism against Brussels’ policies are finally bearing some fruit. Optimists among us speak about the course of direction finally changing after the 2019 elections, which will put an end to “consumer protection” populists. The key question: is it already too late? The European Union is a great project after all and it would be an incredible pity if it dies due to a bunch of bureaucrats and their excessive red tape. But as I said, more promising trends have been flashing out recently. So hopefully, whilst we are not poised for wild revolution, we can hope for rather calm and smooth evolution. Including our badly mauled advisory sector.