European Commission Calls for Advice on Digital Finance from European Supervisory Authorities02/02/2021The European Commission has published a call for advice on digital finance and related issues from the three European Supervisory Authorities (the European Securities and Markets Authority, the European Insurance and Occupational Pensions Authority and the European Banking Authority). The call for advice is in line with the Commission's 2020 digital finance strategy, which set out the Commission's intention to review existing financial services frameworks to protect consumers and the integrity of EU financial sectors.
In particular, the Commission seeks advice on:
- Regulation and supervision of more fragmented "value chains" in finance which are being facilitated by technological developments, for instance BigTech companies partnering with financial institutions to offer services such as cloud technology or payment services, or the rise in innovative payment services that involve third-party providers; the ESAs are expected to advise on new material developments in this area and any growing risks;
- Regulation and supervision of platforms that offer access to multiple financial services and financial services providers that use digital channels to bundle financial services; the ESAs are expected to advise whether any modifications to existing regulation or supervisory practices are required;
- The risks of groups combining different activities, for instance technology companies conducting banking activities outside the regulatory perimeter, or utilizing their customer data pools to support the provision of financial services; the ESAs are expected to assess current approaches to group supervision and to analyze new emerging risks arising from mixed-activity groups.
An interim report on these issues is due by October 31, 2021 and a final report by January 31, 2022.
The Commission is also seeking advice from the EBA on large-scale lending by firms outside the EU financial services perimeter, which are taking advantage of technology to reach new customers. The EBA is asked to assess the extent of such lending, any risk management issues and any need to adjust the EU regulatory perimeter. The EBA's interim report on these issues is due on December 31, 2021 and the final report on March 31, 2022.
In addition, the Commission is seeking advice from the EBA (in consultation with ESMA) on the emerging practice of banks offering deposit-like services to financial services providers that operate electronic platforms and to clarify the treatment of any such deposits for deposit guarantee scheme purposes. The EBA's interim report is due by July 31, 2021, with the final report due on October 31, 2021.
View the European Commission's call for advice on digital finance and the associated cover letter.
View details of the European Commission's digital finance strategy.
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