The horizon scanner identifies and summarises key EU legislative and non-legislative initiatives that are likely to impact firms providing financial services in the EU, which are grouped thematically.

It also sets out projected timelines for the finalisation and implementation of relevant legislative initiatives, covering approximately the next 18 months to two years.

This horizon scanner has been prepared as of October 2020. It does not constitute legal advice and is not intended to provide an exhaustive list of all provisions or requirements applicable to such firms during this period.

Today’s regulatory landscape

Following the financial crisis and resulting G20 commitments, the EU embarked on an unprecedented and wide-ranging set of regulatory reforms, including new rules to strengthen financial supervision, tools for bank recovery and resolution, more effective deposit protection and an improved regulatory framework for banks, insurance, securities markets and other sectors.

Just over a decade later, this project is now largely complete, with the last major legislative measure of the post-crisis regulatory agenda, MiFID2, which started to apply in early 2018. More recently, attention has turned to fine-tuning the EU financial services regulatory framework with scheduled reviews of existing regulation resulting in adoption of targeted follow-up actions, ensuring that regulation keeps pace with technological development and completion of the Banking Union and Capital Markets Union.

Regulatory responses to COVID-19

The coronavirus (COVID-19) pandemic is having a wide-ranging impact on financial market participants. From a regulatory perspective, policy makers and supervisors have taken a range of steps that seek to mitigate the impacts of the outbreak on the financial system, including temporary easing of regulatory capital requirements and other prudential measures, guidance on regulatory expectations with respect to operational resilience and business continuity planning, as well as how firms are expected to comply with conduct of business requirements in practice in the current environment.

These announcements also include forbearance measures, delays to application of new regulatory requirements and ‘quick fix amendments to existing regulation, in recognition of the practical challenges posed by remote working and the need for both firms and regulators to prioritise their responses to the coronavirus at this time.  Similarly, some scheduled reviews of existing legislation and consultations on proposed legislative changes have been extended or delayed. Looking further ahead, EU policy makers are considering how further legislative and regulatory initiatives may assist economic recovery from the crisis whilst also progressing key policy priorities for the EU.

European Commission work on financial services

The new European Commission took office in December 2020, headed by President von der Leyen. Executive Vice President Dombrovskis is responsible for the Commission’s financial services agenda and has made a number of policy commitments, identifying areas of focus where the Commission intends to propose new legislation. These policy priorities include:

• an invigorated effort to build a Capital Markets Union and to complete the Banking Union, through:
  • exploring ways to make cross-border investments easier and to better harmonise tax and insolvency proceedings;
  • development of a new public-private fund for SME IPOs;
  • finalising the common backstop to the Single Resolution Fund; and
  • agreeing on a European Deposit Insurance Scheme.
• development of a green financing strategy and other actions under the under the EU Sustainable Finance Action Plan to direct investment and financing towards the transition to a climate-neutral economy.
• development of a FinTech strategy to support digital technologies in the financial system, publication of a digital finance strategy during 2020 (including in relation to payments) and new legislative proposals on cryptoassets and on digital resilience in the financial sector and ensure a common approach to cryptocurrencies across Member States.
• development of a new, comprehensive approach to AML, CTF and sanctions, focusing on better enforcement of legislation and better supervision, adapting to risks linked to new technologies and a stronger role in setting international AML/CTF standards, as well as ensuring Europe is more resilient to extraterritorial sanctions imposed by third countries.