The ESAs to review the EU's regulatory and supervisory framework

The proposals put forward aim at maintaining a high level of consumer protection and addressing risks arising from the transformation of value chains, platformisation, and the emergence of new ‘mixed-activity groups’ ie groups combining financial and non-financial activities. 

The ESAs note that the use of innovative technologies in the EU financial sector is facilitating changes to value chains, that dependencies on digital platforms are increasing rapidly, and that new mixed-activity groups are emerging. These trends open up a range of opportunities for both EU consumers and financial institutions, but also pose new risks. 

Therefore, the ESAs recommend rapid action to ensure that the EU’s financial services regulatory and supervisory framework remains fit-for-purpose in the digital age. 

The proposals include: 

The European Commission’s September 2020 Digital Finance Strategy sets out the European Commission’s intention to review the existing financial services legislative frameworks in order to protect consumers, safeguard financial stability, protect the integrity of the EU financial sectors and ensure a level playing field. 

As part of this review, in February 2021 the European Commission issued a Request to EBA, EIOPA and ESMA for technical advice on digital finance and related issues. In particular, the European Commission called on the ESAs to provide advice on the regulation and supervision of more fragmented or non-integrated value chains (section 3.1), platforms and bundling of various financial services (section 3.2), and groups combining different activities (section 3.3). 

In accordance with the Call for Advice, the ESAs have carried out an analysis of market developments as well as the risks and opportunities posed by digitalisation in finance and set out their findings and advice in the report to the European Commission.