A new report released by the European Banking Authority (EBA) has called upon the European Commission (EC) to concentrate its efforts on developing an operational cross-border framework.
The EBA calls for an update of “interpretative communications” on the cross-border provision of services, as well as “further harmonisation” of consumer protection.
This includes a focus on conduct of business and AML requirements which it deems a necessity to scale cross-border activity.
The statement read: “Digital solutions can increase choice by enabling consumers access to a wider population of providers of financial services.
“However, the full potential of these solutions has not yet been achieved in the EU, in part due to divergences in regulatory requirements and supervisory practices across the Member States.
“Identifying and resolving these issues is a necessary step to addressing barriers to market entry, supporting the scaling up of financial services across the EU, and improving the competitiveness of the EU Single Market.”
The regulatory body labelled two clear challenges; one concerns the identification of digital cross-border activity.
EBA believes authorities and firms “lack clear guidance” on how to classify cross-border activity under the freedom to provide services or right of establishment.
The second challenge stems from areas of EU law that are not “fully harmonised” or yet covered by the regulations.
These issues revolve around authorisations and licencing, consumer protection, conduct of business requirements and anti-money laundering (AML) and countering the financing of terrorism (CFT).
If these laws are left unchanged, firms wishing to provide cross-border services maybe handicapped due to the legacy legislations.
“The EBA recommends the European Commission take action, including the update of its interpretative communications to support the identification of cross-border services taking account of the digitisation of financial services and the development of legislative proposals to further harmonise requirements relating to consumer protection, conduct of business and AML/CFT,” concluded the statement.
