The Challenge of Integration of Regulation: Sub-sets of Financial Services

Abstract

This article will look at the growth of regulation in the financial services industry in the EU. It will show how from fragmentation, there has been a move towards integration of EU financial services regulation. There are several sub-sectors in financial services and most commentators will analyse these sub-sets separately. This article is not seeking to conduct any such analysis; rather it will look at the general overview of how the regulation of financial services has evolved, relying on those common themes that emerge from the sector whilst recognising that in certain sub-sectors, regulatory activity has been more intense than in others. However whether one looks at general banking, capital markets, securities, insurance services, consumer services or others, the growth of integration and EU regulatory activity has followed a similar pattern, one that has seen domestic regulation exist in parallel with increased EU activity. Moloney et al, (2015) observe that this multidimensional regulation of financial services is a clear example of the multilevel governance which has conceptual challenges. Some of the challenges include the need to accommodate capital flows and supporting data and information across and between member-states. The EU and member-states have also had to figure out how to manage the different interactions between states and their regulators and between states and supranational regulators at EU level which Moloney et al (2015) argue make integration, harmonisation and convergence more desirable but yet more difficult. In this debate, one must also recognise that there are tensions too between state regulators as they each ascribe their own subjectivity to the application of EU law, an occurrence which materialises rather prominently in the data protection arena through the application of Directive 95/46/EC. It is accepted that there is inconsistency in how national regulators enforce data protection laws plus the general ineffectiveness of the WP29 when it sometimes fails to coordinate investigations and processes across the EU.