On 10 March the European Commission launched a consultation Driving European Recovery on major structural changes to European financial services and markets regulation. The Commission intends by the end of May 2009 to publish a Communication setting out its proposals on the future of the EU supervisory architecture followed by numerous specific legislative measures before Autumn 2009. At this stage, it is seeking the views of interested parties. The Commission requests the submission of comments by 10 April.

The Commission endorses the key principles set out in the recent de Larosière report and calls for a supervisory system combining stronger oversight at EU level with maintaining a key role for national supervisors. Its proposals here contrast with the de Larosière recommendations which focused on EU-level supervision.

The Commission will propose an ambitious new reform programme, designed to deliver “responsible and reliable financial markets for the future”. The reform programme will have five key objectives:

1. Provide the EU with a supervisory framework that detects potential risks early, deals with them effectively before they have an impact, and meets the challenge of complex international financial markets. The Commission will present a European financial supervision package before the end of May 2009. 

2. Fill gaps where European or national regulation is insufficient or incomplete, based on a ‘safety first’ approach. In particular, the Commission will propose: 

  • a comprehensive legislative instrument establishing regulatory and supervisory standards for hedge funds, private equity and other systemically important market players (April 2009); 
  • a white paper on tools for early intervention to prevent a crisis (June 2009); 
  • on the basis of a report on derivatives and other complex structured products (June 2009), appropriate initiatives to increase transparency and ensure financial stability; and 
  • legislative proposals to increase the quality and quantity of prudential capital for trading book activities and tackle complex securitisation (June 2009), and to address liquidity risk and excessive leverage (Autumn 2009). 

3. Ensure that European investors, consumers and SMEs can be confident about their savings, access to credit and their rights as concerns financial products. The Commission will come forward with: 

  • a Communication on retail investment products to strengthen the effectiveness of marketing safeguards (April 2009); 
  • further measures to reinforce bank depositor, investor and insurance policy holder protection (Autumn 2009); and 
  • measures on responsible lending and borrowing (Autumn 2009).

4. Improve risk management in financial firms and align pay incentives with sustainable performance. The Commission will:

  • strengthen its 2004 Recommendation on remuneration of directors (April 2009); and 
  • bring forward a new Recommendation on remuneration in the financial services sector (April 2009) followed by legislative proposals to include remuneration schemes within the scope of prudential oversight (Autumn 2009). 

5. Ensure more effective sanctions against market wrongdoing. The Commission intends to: 

  • review the Market Abuse Directive (Autumn 2009); and 
  • make proposals on how Sanctions could be strengthened in a harmonised manner and better enforced (Autumn 2009).

The de Larosière report can be found at:

Driving European Recovery can be found at:

More information on the consultation is available at: