Opinion of the European Economic and Social Committee on the ‘proposal for a Directive of the European Parliament and of the Council amending Council Directives 73/239/EEC, 85/611/EEC, 91/675/EEC, 93/6/EEC and 94/19/EC and Directives 2000/12/EC, 2002/83/EC and 2002/87/EC of the European Parliament and of the Council, in order to establish a new financial services committee organisational structure’ (COM(2003) 659 final – 2003/0263 (COD))
Date: 2004-03-31
Institutions: European Economic and Social Committee
Subjects: advisory committee (EU), comitology, financial market, insurance law, law of banking, market supervision, regulation of investments

30.4.2004

EN

Official Journal of the European Union

C 112/21

Opinion of the European Economic and Social Committee on the ‘proposal for a Directive of the
European Parliament and of the Council amending Council Directives 73/239/EEC, 85/611/EEC,
91/675/EEC, 93/6/EEC and 94/19/EC and Directives 2000/12/EC, 2002/83/EC and 2002/87/EC of the
European Parliament and of the Council, in order to establish a new financial services committee
organisational structure’

(COM(2003) 659 final – 2003/0263 (COD))

(2004/C 112/06)

On 18 November 2003, the Council decided to consult the European Economic and Social Committee,
under Article 95 of the Treaty establishing the European Community, on the above-metioned proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 10 March 2004. The rapporteur was Mrs Fusco.

At its 407th plenary session of 31 March and 1 April 2004 (meeting of 31 March), the European Economic
and Social Committee adopted the present opinion by 95 votes with two abstentions.

1. Gist of the Commission proposal

1.2 Essential elements

1.1 Context and objectives

1.1.1
In 1999, the Commission adopted an Action Plan for
Financial Services (1) that identified a series of actions required
to construct a single European financial market. At its meeting
in Lisbon in March 2000, the European Council called for the
implementation of this Action Plan by 2005.

1.2.1
The proposal establishes a new ‘comitology’ system by
both setting up new committees and abolishing existing ones,
thereby shaping a new regulatory framework for financial
services in the European Union.

1.1.2 On 17 July 2000, the Council set up a Committee of
Wise Men on the Regulation of European Securities Markets.
The Committee's final report published in February 2001
recommended regulating these markets on four levels in order
to make Community legislation more flexible, effective and
transparent.

As regards credit institutions, the European Banking
1.2.2
Committee – established under the Commission Decision of 5
November 2003 (4) - will therefore take over most of the func-
tions of the Banking Advisory Committee, which will cease to
exist (5). That is to say, essentially it will play an advisory role
at the request of the Commission concerning legislative acts
adopted in co-decision by the Council and the Parliament, and
a regulatory ‘comitology’ role.

1.1.3
In the light of these developments, the Commission
adopted Decisions 2001/527/EC (2) and 2001/528/EC (3) setting
up, respectively, the Committee of European Securities Regula-
tors (CESR) and the European Securities Committee (ESC).

1.1.4 On 3 December 2002,
the Council called on the
Commission to implement arrangements for the remaining
financial services sectors based upon the Final Report of the
Committee of Wise Men.

The proposal

1.1.5
approach of
insurance and occupational pensions, and investment
sectors.

‘comitology’
extends
the aforementioned decisions to the banking,
fund

therefore

the

(1) COM(1999) 232 final.
(2) OJ L 191, 13.7.2001.
(3) OJ L 19, 13.7.2001.

1.2.3 Meanwhile,
the Committee of European Banking
Supervisors (CEBS), established under the Commission Decision
of 5 November 2003 (6), will enhance supervisory cooperation
and contribute to the convergence of Member States' supervi-
sory practices and the consistent application of Community
legislation. It will also advise the Commission, at the latter's
request, on issues relating to banking legislation.

(4) OJ L 3, 7.1.2004. Regarding its composition, the Committee will be
chaired by the Commission with each Member State sending a high-
level representative. The Chairperson of the Committee of European
Banking Supervisors and a European Central Bank representative
will participate as observers.

(5) Articles 57-59 of Directive 2000/12/EC of the European Parliament

and of the Council of 20 March 2000, OJ L 126, 26.5.2000.

(6) OJ L 3, 7.1.2004. The Committee will be composed of high-level
representatives from the national public authorities competent for
the supervision of credit institutions, national central banks, the
European Central Bank and the Commission. The Committee will
elect a chairperson from among the representatives of the compe-
tent supervisory authorities.

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1.2.4
As regards insurance and occupational pensions, the
Insurance Committee established under Council Directive
91/675/EEC of 19 December 1991 (1) will become the Euro-
pean Insurance and Occupational Pensions Committee (2),
essentially playing an advisory role at
the
Commission and a regulatory ‘comitology’ role.

the request of

2.2
The EESC therefore welcomes the proposed directive,
which aims to harmonise the European financial regulatory
framework by adapting the current regulatory approach in
accordance with the principles of subsidiarity, proportionality
and adequate resources.

The establishment of

1.2.5
the Committee of European
Insurance and Occupational Pensions Supervisors (3), mean-
while, will contribute to the convergence of the supervisory
practices of the competent national authorities,
improve the
information on specific supervised
exchange of confidential
institutions, and facilitate the provision of technical advice to
the Commission, in particular on draft implementing measures
that the Commission may wish to propose.

1.2.6
Finally, as regards the securities market - and to ensure
compliance with, among other relevant legislation, Directive
2003/6/EC of the European Parliament and of the Council of
28 January 2003 (4) – the functions of the Contact Committee
on undertakings for collective investment in transferable securi-
ties (UCITS) (5) are transferred as follows: its ‘comitology’ role
and role of advising the European Commission, at the latter's
request, on legislation being drafted are transferred to the Euro-
pean Securities Committee (6), while its role of advising the
Commission on the preparation of draft
implementing
measures for relevant legislation in this area and promoting
enhanced co-operation and networking among EU securities
regulators are transferred to the Committee of European Securi-
ties Regulators (7).

3. Specific comments

The proposed directive extends the structure and role of
3.1
advisory and regulatory committees, already applied in the
securities sector, to the sectors of banking, insurance and occu-
pational pensions and UCITS.

3.2
In accordance with the aforementioned objectives and
content of the proposal, four main elements can be identified:
(i) the establishment and composition of new committees; (ii)
the different consultative role assigned to them; (iii) the regula-
tory or ‘comitology’ role given to each of the new committees;
and (iv) the supervisory and follow-up role vis-à-vis implemen-
tation of relevant Community legislation in this area.

2. General comments

2.1
The urgent need to respond quickly and effectively to
technological change and financial market developments in the
global economy calls for the reform of the European Union's
legislative and ‘comitology’ structure currently regulating this
area.

(1) OJ L 374, 31.12.1991.
(2) Commission Decision of 5 November 2003. OJ L 3, 7.1.2004. The
Committee will be composed of high-level representatives from the
Member States and chaired by a Commission representative.

(3) Commission Decision of 5 November 2003. OJ L 3, 7.1.2004. The
Committee will be composed of high-level representatives from the
national public authorities competent in the field of supervision of
insurance, reinsurance and occupational pensions. The Commission
will have one high-level representative, but the Committee will be
chaired by a representative from the Member States.

(4) OJ L 96, 12.4.2003.
(5) Established under Council Directive 85/611/EEC of 20 December
1985. OJ L 375, 31.12.1985. This Committee initially played an
advisory role, assisting the Commission in the implementation of
the Directive, facilitating consultation between the Member States
and advising the Commission on amendments that should be made
to the aforementioned Directive. In the event of technical amend-
ments, the Committee acted as a ‘comitology’ committee. Directive
2001/108/EC (OJ L 41, 13.2.2002) strengthened this ‘comitology’
role with regard to the technical regulation of
investments of
UCITS.

(6) Established under Commission Decision 2001/528/EC (OJ L 191,
13.7.2001) amended by Commission Decision of 5 November 2003
(OJ L 3, 7.12.2004).

(7) Established under Commission Decision 2001/527/EC (OJ L 191,
13.7.2001) amended by Commission Decision of 5 November 2003
(OJ L 3, 7.1.2004).

3.3
According to the Commission, the establishment of four
new committees – i.e. the European Banking Committee, the
Committee of European Banking Supervisors,
the European
Insurance and Occupational Pensions Committee and the
Committee of European Insurance and Occupational Pensions
Supervisors – to replace the three existing committees – i.e. the
Banking Advisory Committee, the Insurance Committee and
the UCITS Contact Committee – avoids the risk of complexity
and duplication due to overlap between existing committees.

In quantitative terms alone, the number of new commit-
3.4
tees is nonetheless twice the number of existing committees,
giving rise to a long list of committees which becomes even
longer if we include the Financial Services Committee, estab-
lished a few months before the committees listed above and
the role of which would seem to overlap a priori with theirs (8).
Unless this situation is justified by the reasons of legislative
techniques outlined above, it would in principle seem to run
counter to the demands for transparency and simplification via
a drastic reduction in the huge number of existing EU commit-
tees (9).

(8) See point 2 of the Council Decision of 18 February 2003, OJ L 67,

12.3.2003.

(9) See the answer given by Commissioner Schreyer on behalf of the
Commission to written question E-1070/01 by M. Ferber (OJ C 318
E, 13.11.2001) and the Poos report on reform of the Council (A5-
0308/2001 final) adopted by European Parliament Resolution of
25.10.2001, in particular recital M and point 13 of the Resolution.

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3.5 On the other hand, as regards the composition of the
four new committees, the EESC welcomes the fact that the
European Banking Committee will be composed of only one
high-level representative per Member State – as opposed to the
national delegations to the Banking Advisory Committee which
are currently allowed up to three members – and that it will be
chaired by the Commission - as opposed to the latter which is
chaired by a representative from a Member State. Though the
proposed Directive does not explicitly refer to this, it can be
deduced from the executive summary.

3.12
Thirdly, the European Banking Committee, the Euro-
pean Insurance and Occupational Pensions Committee and the
European Securities Committee will each play an exclusive
regulatory or ‘comitology’ role in their respective areas of
competence. No new committee procedures are created here,
nor are the committees assigned any new roles in addition to
those already played by the existing committees.

3.6 However, no provision is made for representatives from
the securities markets to participate in the committees respon-
sible for
regulating them. Given that all European stock
exchanges are private entities operating under the supervision
of public regulators, at least one national representative from
the securities market should be allowed to participate as an
observer.

3.7
As regards the advisory role of the new committees, the
proposal suggests simultaneously reassigning and splitting the
tasks currently carried out by the existing committees in the
sectors of banking,
in
transferable securities.

insurance and collective investment

3.13 However, we wish to make a number of comments on
this subject given that a ‘comitology’ system has until now
been almost non-existent in the finance sector (1). On the one
hand, with regard to the decision-making procedure, financial
is governed by the provisions of Article 5 of
‘comitology’
Council Decision 1999/468/EC of 28 June 1999 (2),
in
accordance with the regulatory procedure. This procedure
establishes a right of revision which can be exercised only by
the Council (3) and a right of examination which can be exer-
cised by the European Parliament (4), which gives the two insti-
tutions similar but not equal weight
in cases where they
consider that their prerogatives have been infringed through a
regulatory procedure based on a Community legal act adopted
under the co-decision procedure (5).

i.e.

3.8
According to point 1.2 above, the European Banking
Committee, the European Insurance and Occupational Pensions
Committee and the European Securities Committee will
together play a key advisory role during the drafting and imple-
mentation of relevant legislation in this area.

3.9
In other words, they will play an advisory role at Level 1
of the EU's current four-level regulatory approach to securities
legislation.

3.10
The Committee of European Banking Supervisors, the
Committee of European Insurance and Occupational Pensions
Supervisors and the Committee of European Securities Regula-
tors, meanwhile, will play an advisory role with regard to the
consistent and timely implementation of relevant legislation in
this area – including implementing technical measures – and
enhanced cooperation among regulators in the Member States.
In other words, they will play an advisory role at Level 3 of the
aforementioned regulatory approach.

is positive, providing that

3.11 No new advisory roles are therefore created in addition
to those that already exist. Whatever the likely impact of the
entry into force of the new advisory system, the initial assess-
ment
improves the technical
quality of the legislation in question and that doubling the
number of committees does not adversely affect the flexibility
and transparency of any advisory procedures initiated by the
Commission.

it

the European Parliament,

3.14
This situation needs to be treated with a degree of
caution with regard to the proposal which concerns us here, as
in its Resolution of 5
in effect
February 2002 on the implementation of
financial services
legislation (6), accepted the four-level regulation recommended
in the report of the Committee of Wise Men, referred to above,
provided that the Parliament received equal treatment in Level
2 (‘comitology’ procedures), as guaranteed to the Council
in
accordance with the Resolution of the Stockholm European
Council (7). The European Economic and Social Committee
urges the competent institutions to resolve the conflict over
supervision of implementing powers as a matter of urgency.

(1) Thus, since ‘comitology’ functions were assigned to them in 1989
(Article 9 of Council Directive 89/647/EEC on the solvency ratio),
the Banking Advisory Committee has acted in this capacity on only
four occasions, and the Insurance Committee and the UCITS
Contact Committee have never done so.

(2) OJ L 184, 17.7.1999.
(3) To date less than 0.25 % of legal acts following this procedure have
been referred by the Commission to the Council. See point 1.4 of
Report COM(2003) 530 final, OJ C 223 E, 19.9.2003.

(4) To date the European Parliament has never exercised this preroga-

tive. See Report COM(2003) 530 final, ibid.

(5) A discrepancy to be corrected by a joint Parliament-Council scrutiny
procedure, as provided for in proposal COM(2002) 719 final of
11.12.2002. For
this proposal see C.J. Moreiro
González, Änderungen des normativen Rahmens der Komitologie,
Zeitschrift für Europarechtliche Studien 4, 2003, pp. 561-588, and
584 et seq.

the scope of

(6) Resolution A5-0011/2002.
(7) Equally, it its Resolution B5-0578/2002, the European Parliament
the
questioned the urgency of restructuring the architecture of
committees in the financial area, making its approval of
the
proposal conditional on an unequivocal commitment by the
Council to correct the legislative discrepancy with regard to the
supervision of the exercise by the Commission of its implementing
powers.

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3.15 On the other hand, echoing the previous comment,
there is a worrying inconsistency in the proposal, in that the
proposal is difficult to reconcile with some of the provisions of
the proposed amendment to the Treaties establishing the Euro-
pean Community currently under negotiation. Thus, Article I-
35 of the draft Treaty establishing a Constitution for Europe (1)
would require revision of the regulatory procedure, assigning
to the European Parliament and the Council of Ministers
equally the power to reject the power delegated to the Commis-
sion.

3.16
In its turn, Annex 8 to the document of the Naples
ministerial conclave on the 2003 IGC (2), amends point 6 of
Article III-77 of the draft Treaty, creating a twofold conflict
with the proposal under consideration. First because, by
providing that a European law could grant
the European
Central Bank the power of prudential supervision of credit
institutions and other financial institutions, with the exception
of insurance undertakings, it would undermine the consultative
Banking
and

‘comitology’

European

functions

the

of

Brussels, 31 March 2004.

Committee, as well as
Committee of European Banking Supervisors (3).

the consultative functions of

the

Secondly because it would spark off a new conflict
3.17
with the European Parliament, by providing that the Council
would effect such a transfer of powers by unanimity, after
consulting the Parliament, whereas Article 105(6) of the EC
Treaty, as currently in force, allows the Council to do this only
after receiving the assent of the Parliament. Although Commis-
sion proposals do not have to take account of draft legislation
which has not entered into force, the above comments stem
from the fact that the Committee is bound to look ahead when
exercising its consultative functions.

3.18
Finally, the power to supervise and monitor the appli-
cation of Community law in this area would enable the
committees to reinforce the current mechanism under which
the Commission detects obstacles and deploys the appropriate
means for eliminating them in the legal systems of the Member
States (4).

The President

of the European Economic and Social Committee

Roger BRIESCH

(1) Brussels, 18 July 2003, CONV 850/03.
(2) Brussels, 25 November 2003, CIG 52/03 ADD1, p. 12.

(3) Although majority opinion in the Member States is in favour (see
M. G. Dassesse, D. Isaac: ‘Financial services in the Era of the Euro
and E-Commerce: Does home country control work?’- General
Report, in F.I.D.E., XX Congress, BIICL, London, 2003, pp 433-446,
esp. points 38-56. ECOFIN, meeting in Oviedo on 12-13.4.2002,
expressed reservations with regard to this possibility, particularly in
the light of the manifest opposition of the German and British dele-
gations.

(4) See, respectively, the 18th Report on monitoring the application of
Community law, COM(2003) 309 final, and the 19th Report,
COM(2002) 324 final.