A comparative analysis of the US and EU retail banking markets - Wsbi

The European Parliament has to be kept fully
and regularly informed about all developments
throughout the procedure. The technical measures
defined under the second level of the process
should stay within the framework defined at the
first level.
- The third level concentrates on fine-tuning the
measures agreed upon in level 2. The goals of the
third level are to ensure the consistency of the
transposition and implementation of European
legislation and to increase regulatory and
supervisory convergence. In order to achieve these
goals, the “Level 3 Committees” (CESR, CEBS and
CEIOPS 135 ) can adopt non-binding texts, such as
standards, guidelines and recommendations.
- The fourth level of the Lamfalussy process is that
of enforcement: the European Commission has to
make sure that the adopted legislation is properly
enforced.
Important features of the Lamfalussy process are the
consultation with stakeholders as well as the high
level of transparency required. These requirements
should apply to all bodies involved, at all levels of
the process.
4.2.1.2.3 Delegation of powers
At the EU level, there is no delegation of powers to
independent agencies. If legislation originates at the
European level, it either has to be transposed into
national law (in the case of a Directive) or it can apply
directly at the national level (in the case of a
Regulation). In both cases, the result is a law that
applies at the national level and that has been
developed by the relevant (European and national)
law-making bodies.
At the national level however, there can be cases
where legislative power is granted to an agency.
This is for example the case in the UK, where the
Financial Services Authority (FSA) has rule-making
powers. This is a choice left to the individual Member
States, which however have to guarantee that the rules
at the national level are in line with the European
legal framework.
It should be noted here that the rules developed in
the financial services area by the newly-established
“Level 3” Committees cannot be regarded as a form
of delegation of power, for a number of reasons.
First, the guidelines developed by the “Level 3”
Committees have to stay within the strict framework
defined by European law, under the levels 1 and 2
(when they relate to issues covered by EU legislation).
In addition, while the rules defined under the levels 1
and 2 constitute European legislation, the guidelines
defined by the “Level 3” Committees do not. In order
to gain legal power, they have to be transposed into
national legislation or be integrated in the rules of
the national supervisory authorities. As explained
in greater detail below, the roles assigned to the
“Level 3” Committees include coordinating the
implementation of EU law and converging national
supervisory practices, but not the power to develop
legislation. While there is no formal delegation of
power to the “Level 3” Committees, it seems safe to
say, that the Commission has to some extent gained
power in the Lamfalussy process: After all, it is
the Commission who decides (on the basis of advice
provided by the “Level 3” Committees) the exact
content of the implementing measures of financial
services directives. These powers have been transferred
to the Commission and are currently subject to a
(limited) review process by the European Council and
the European Parliament, who monitor whether the
Commission stays within the remits described at level
1 of the Lamfalussy process.
4.2.1.2.4 Functional approach
In Europe, legislation in the financial services area
has been traditionally divided by sector. As such,
specific rules have been designed in the areas of
banking (which have been compiled in the
Consolidated Banking Directive 136 ), of securities,
insurance and asset management.
Currently, although the different financial services
sectors still feature different regulatory characteristics,
convergence can be noted on some aspects.
For example, there has been a willingness to apply
the same regulatory principles (such as for instance
the principle of home country supervision) in all
sectors, as will be explained in more detail in the
following sections.
135 A presentation of these committees will be provided in the next section on “responsible authorities / relevant bodies in the financial services area”.
136 The Consolidated Banking Directive (“Directive [2000/12/EC] relating to the taking up and pursuit of the business of credit institutions”), adopted on 20 March
2000, brought into one single document a series of EU directives related to the area of banking, such as the Second Banking Directive (89/646/EEC), the
Banking Supervision Directive (83/350/EEC), the Own Funds Directive (89/299/EEC), the Solvency Ratio Directive (89/647/EEC) and the Large Exposures
Directive (92/121/EEC). It is therefore the core legal text at EU level for the banking sector.
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