EU: Harmonisation Of Financial Services

Question 1

Legal status EU directives and regulations

Financial services harmonisation in the EU occurred through FSAP - what are the three specific objectives of this?

Answer 1

FSAP: financial services action plan

1. Create a single EU wholesale market.
2. Achieve open and secure retail markets.
3. Create state-of-the-art Prudential rules and structures of supervision.

Question 2

Explain some concepts around Directives with regards to the EU programme of harmonisation

Answer 2

1. Consist mainly of a series of directives issued under article 58 of the European treaty
2. Requires EU member states to amend their law to comply with the directives.
3. Directives can be implemented by primary legislation or delegated legislation under 2(2) of European Community Act 1972

Question 3

What are two problems that can arise when a directive has not been implemented by the due date or implemented legislation doesn’t properly comply with the directive?

Answer 3

1. Vertical-direct effect: between an EU member state and a company/ individual, provisions of the directive must be given precedence over national laws of that state.
2. Horizontal-direct effect: between two companies/ individuals. Doesn’t apply directives. They should use national laws that implement the directive

Question 4

Briefly explain what a EU directive is

Answer 4

1. A type of law made by the European Union (EU) that sets goals for member countries to achieve, but it allows them to decide how to do it.

E.g. the EU says what the final dish should look like, but each country can choose its own ingredients and cooking method.

2. Each country must pass its own national laws to follow the directive within a set deadline. If they don’t, the EU can take legal action against them.

Question 5

What are Regulations?

Answer 5

1. Most direct form of EU law
2. As soon as they passed, they have a binding legal force throughout every EU member state.
3. They take effect immediately unlike directives (these need to be sent to national authorities and then, they’re made part of national laws)
4. Regulations are passed either jointly by the EU Council and European Parliament or by the European Commission.

Question 6

What is the name of the withdrawal agreement between the UK and the EU during Brexit?

Answer 6

EUWA: European Union (Withdrawal Agreement) Act 2020

This legislation implemented the withdrawal agreement negotiated between the UK and the EU

Question 7

Explain what “onshoring” means?

Answer 7

It is the process of retaining some laws after leaving the market

E.g. The UK adopted the EU legislation as part of “retain EU law” after leaving the EU

Question 8

Briefly explain the Temporary Permissions Regime (TPR)

Answer 8

1. Mitigate regulatory uncertainty in the UK.
2. Allows European Economic Area (EEA) -based financial services firms who were formally using a “passport” to continue to operate in the UK for a limited period of time after the transition period.
3. Includes EEA-based investment funds like UCITS (undertakings for the collective investment in transferable securities) that wish to still access the UK market.

Question 9

What is the full form of FSMA 2023

Answer 9

1. Financial Services and Markets Act 2023
2. It is the backbone of the government’s plans for repeal and replacement of legacy EU financial services legislation.
3. Also there to reform the UK system of financial regulation.