At the end of each month, the SAFE Regulatory Radar highlights a selection of important news and developments on financial regulation at the national and EU level.
PEPP: Proposed reform of the Pan-European Pension Product
The Pan-European Pension Product (PEPP) is a voluntary personal pension scheme governed by Regulation 2019/1238 designed to complement public and occupational pension system and national private pension schemes. It aims to provide savers with a wider choice of personal pension products while enhancing consumer protection, transparency, flexibility and cost-efficiency. The PEPP Regulation establishes a unified pan-European personal pension market.
On 11 September 2024, the European Insurance and Occupational Pensions Authority (EIOPA) has released a Staff Paper on the future of the PEPP, proposing a broad reform of the PEPP to address the pension gap and support both the digital and green transition.
While acknowledging the limited uptake of the PEPP, EIOPA observes key trends across Europe, such as the large amount of savings in current accounts, an ageing population increasing the strain on state pension systems and a declining labor force. In light of these challenges, EIOPA suggests several design improvements to help PEPP fulfill its potential, which it has yet to achieve.
To overcome supply-side limitations, EIOPA proposes expanding the potential market by combining inter alia occupational and personal PEPP into a single product, allowing funds transfers from other personal pension products into the PEPP, and reducing administrative burdens.
On the demand side, EIOPA underscores the importance of leveraging the three pillars of pensions: state, occupational and personal. To strengthen demand, EIOPA proposes the development of pension tracking systems and the introduction of auto-enrolment at the EU level for personal pension schemes like the PEPP.
Finally, to address structural barriers, EIOPA calls for both national and EU-wide initiatives. At the national level, EIOPA recommends that PEPPs receive the same favorable tax treatment as national personal pension products, while at the EU level, it advocates for tax harmonization to ensure the effectiveness of PEPP reforms.
OFF: European Central Bank publishes opinion on the Commission’s Proposal for a regulation on a framework for Financial Data Access
On 30 August 2024, the European Central Bank (ECB) has published an opinion on the Commission's legislative proposal for a framework for financial data access, also known as Open Finance Framework (OFF), which represents a significant step in the ongoing legislative process.
The Commission’s legislative proposal which was adopted on 28 June 2023 aims to establish clear rights and obligations to manage customer data sharing in the financial sector beyond payment accounts. The framework seeks to foster innovation in financial products and services for users, while promoting competition within the financial sector.
The Commission’s proposal includes a comprehensive set of rules governing access to financial data. Key elements include ensuring that customers maintain full control over who can access their data and for what purpose, standardizing customer data formats and technical interfaces, aligning with GDPR requirements, and introducing clear liability regimes for data breaches.
In its opinion, the ECB expressed overall support for the proposed regulation on financial data access, recognizing its potential to foster innovation, enhance consumer control over data, and welcomed its objectives, as well as its contribution to the Capital Markets Union. However, the ECB raised concerns about its assigned supervisory role, particularly in areas related to consumer protection, which traditionally fall outside the ECB's prudential supervision mandate under EU law. The ECB stressed that its primary responsibility lies in safeguarding the safety and soundness of credit institutions, not consumer protection.
To address these concerns, the ECB called for a clearer legal basis for cooperation, including provisions to facilitate information sharing between the ECB and the relevant authorities tasked with enforcing the regulation. It also recommended amendments to the proposal, suggesting that the responsibility for designating consumer protection authorities should lie elsewhere, that its own role should remain focused solely on prudential supervision, and that legal provisions for information sharing between national authorities and the ECB be clarified.
Updates:
Commission Implementing Regulation (EU) 2024/2494: On 24 September 2024 the European Commission has adopted its implementing technical standards for the application of MiCA Regulation on standard forms, templates and procedures for the cooperation and exchange of information between competent authorities and EBA and ESMA.
Revised list of validation rules in EBA’s Implementing Technical Standards: On 12 September 2024, the EBA has issued a revised list of validation rules in its Implementing Technical Standards on supervisory reporting, highlighting those, which have been deactivated either for incorrectness or for triggering IT problems.
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Pietro Chiarelli is Financial Policy Analyst at the SAFE Policy Center.
