The three European Supervisory Authorities (EBA, EIOPA and ESMA) have made a joint list of proposals to keep the EU’s regulatory and supervisory framework fit-for-purpose in the digital age.
This comes as a response to the European Commission’s February 2021 Call for Advice on Digital Finance.
Its proposals are aimed at keeping a high level of consumer protection and address risks around transformation of value chains, “plartformisation”, and the emergence of new ‘mixed-activity groups’ i.e. groups combining financial and non-financial activities.
These rising trends are opening new opportunities but also pose new risks, ESA claimed.
One of the proposals is to take a holistic approach to regulation and supervision around the financial services value chain.
The ESA also suggested a stronger level of consumer protection in a digital context. This includes enhanced disclosures, complaints handling mechanisms, measures aimed at preventing the mis-selling of tied/bundled products and improved digital and financial literacy.
It also called for bolstered supervisory resources and cooperation between financial and other relevant authorities, including on a cross-border and multi-disciplinary basis.
Other proposals include further convergence in the classification of cross-border services, as well as addressing money laundering/financing of terrorism risks in digital environments, and effective regulation and supervision of ‘mixed-activity groups’, including a review of prudential consolidation requirements.
Finally, the proposals include a request for active monitoring of the use of social media in financial services.
The Digital Finance Strategy outlines a review of existing financial services legislative frameworks to better protect consumers and financial stability.
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