xv-73-87-comments3
Dieses Dokument ist Teil der Anfrage „Ergebnisse von Konsultationen“
Ref. Ares(2023)3725176 - 30/05/2023
FEDERATION BANCAIRE
DE LA COMMUNAUTE EUROPEENNE
P8709OB/MPI8/MacB
F 15
30.7.1987
PROPOSAL FOR A DIRECTIVE ON THE PROVISION
OF INVESTMENT SERVICES TO THE PUBLIC
COMMENTS ON WORKING DOCUMENT No 3(XV/73/87)
Exemptions from the scope of the directive (Article 3)
- . At first, the working party of the EC Commission responsible
for this draft aimed at a solution for financial intermediaries
only. At the last meeting the scope of application was extended
to all persons rendering investment services to the public on a
professional basis. However, the consequences of this extension
do not appear to have been sufficiently taken into account in
the draft. This failing affects various articles, as will be
seen below. More differentiated provisions would be necessary -
and perfectly feasible - given the special nature of banks and
their supervision.
2. The extent of the exemption concerning insurance business is
unclear. We presume that the provision means that the directive
will not apply to insurance business in the strict sense, as in
the case of non-life insurance, for instance, just as it does
not apply to bankers for the receiving of deposits or the
granting of credit. If so, this should be specified.
However, if this provision is to be interpreted as exempting
insurance companies when they provide investment advice or
portfolio management, as is commonly done in the field of life
insurance, it is quite unacceptable as it would create wholly
unjustified distortions of competition between the two sectors.
Banks and insurers compete in financial investment services.
This competition is already distorted in some countries by legal
provisions unilaterally favouring insurance business. Therefore,
any additional discriminatory provision puts a particular strain
on the banking industry. Nor is different treatment justified,
since employees of insurance companies necessarily give
investment advice when talking to their customers in order to
distinguish their services, (e.g. life insurance, itself common
ly linked to various types of investments) from other forms of
investment (e.g. investment in securities).
B-1150 Bruxelles - Avenue de Tervuren, 168 Tél. 02 - 762.83.03 Fax 02 - 763.20.27 Telex 23516fbancb
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3. The expression "bona fide newspapers" in the 2nd indent is
too vague. There is a provision in English law which could very
well be taken as a starting point for the definition of newspa
pers, the investment advice of which must not fall under the
scope of Article 2 of the proposal for a directive. This is § 25
(1) of Appendix 1 to the Financial Services Act, 1986, according
to which
"paragraph 15 above (activities constituting investment advice) does
not apply to advice given in a newspaper, journal, magazine or other
periodical publication if the principal purpose of the publication,
taken as a whole and including any advertisements contained in it,
is not to lead persons to invest in any particular investment."
4. The list of exemptions will probably have to be far more detail
ed. By comparison, the U.K. Financial Services Act devotes 8
pages to exemptions.
Authorisation and conduct of business (Articles 4 and 5)
5. With reference to Article 4, there is no justification for
imposing rules obliging banks to obtain special authorisation to
undertake this kind of activity as it is traditionally part of
the range of services provided by banks.
An authorisation procedure implies an a priori control which
does not seem necessary. It would be more appropriate to set up
an inscription procedure. Inscription would enable the pursuit
of those who did not take care to inscribe themselves, as well
as the supervision of those who are inscribed.
If, notwithstanding the above, the Commission remains con
vinced of the need for an authorisation procedure for banks,
then the following two points must be taken into account:
Pursuant to Article 4, para. 2, authorisation shall be tied
to the presentation of a document containing details of the
investment services proposed to be provided. In accordance
with Article 4, para. 5, authorisation is limited to
services contained in this document. This would hinder the
innovative capacities of credit, institutions, since each new
investment service would require a special authorisation.
Pursuant to Article 4, para. 4 of the draft, credit institut
ions must prove that their employees are fit to give invest
ment advice. This provision, practicable in the case of a
dealer in securities having a few employees, would create an
organisational burden for those institutions organised as
universal banks. It would be out of all proportion to the
perceived benefits, since these institutions, due to banking
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supervision, and also in their own interest, only employ
carefully skilled personnel in investment advice and manage
ment. The authorisation authorities would also find them
selves excessively burdened.
6. The drafting of Articles 4 and 6 is deficient in that they do
not make clear which State is the home State if an undertaking
has an establishment in more than one Member State. The text
needs a home State definiTTon on the lin'es''of that' contained in
the Proposal for a Directive on Mortgage Credit.
7. Pursuant to Article 5 of the draft, the authorities granting
authorisation shall draw up and publish conduct of business
rules which, inter alia, contain detailed information duties for
persons rendering investment services. As practical experience
has shown, it is extremely difficult to lay down, in an abstract
manner, standard information requirements for a variety of
investment possibilities. Such rules always have to be inter
preted according to each individual case. Therefore, the insec
urity already existing with regard to liability for inadequate
observation of these rules would be increased.
8. Article 5 will have to be particularly carefully drafted in view
of the fact that the range of regulators involved in investment
services supervision is wider than that in the insurance or
banking field. This point should also be kept in mind when
drafting Title V (which will deal with competent authorities).
9. Article 5.2 a) could be read as requiring a separate clients'
account for each client: this would be absurd. The provision
should read: "keep that person's own money and that of his
clients in separate bank accounts".
Provision of services without establishment (Article 6)
10. Freedom to provide cross-frontier services is almost automatic
(art. 6, point 1): provision is made simply for notification of
the host country authorities (point 2), who have only one month
(point 3) to oppose this, by establishing that the proposed
activity is "contrary to the public interest".
However, it is the working document itself which brings up
certain problems, such as the offer of dealing services in
respect of foreign and domestic securities (comments on
Title I, second part, pages 6 and 7) . These are very delicate
problems which are regulated almost everywhere by "public
interest" rules. In addition, distortions of competition and
different rules for access to securities markets exist in
several Member States.
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11. Also, the Commission should give careful consideration to the
consequences of the directive for matters such as stock exchange
admission rules.
12. Our previously stated criticisms of authorisation for banks
naturally apply also to Section 2, first indent and Section 8 of
Art icle 6.
13. The procedure in Article 6.2 could prevent one-off cross-
border transactions.
14. Does the "general good" provision in Article 6.4 cover
aspects of the conduct of business rules if these differ from
State to State?
Freedom of establishment (Article 9)
_5. Whereas the principle of mutual recognition is invoked for the
provision of cross-frontier services, the authorisation proce
dure is retained (art. 9, point 1) for setting up a bra, noh in
another Member State, even if simplifying the procedure is
recommended.
Art. 9, point 2 also lays down that the person (legal or
natural) "may be required to abide by the conduct of business
rules" locally enforced, which is obviously not the case for the
provision o_f cross-f rontier services. This would boil down to
saying that if two institutions in State A offer their services
in State B, one through a local office and the other using the
provision of cross-frontier services system, they will operate
one according to the rules of B and the other according to the
rules of A.
The distinction made in the second paragraph of the "Comments on
Sections III and IV" (page 18) does not provide a satisfactory
explanation on this matter or on those mentioned below.
Supervision by the home country
16. One of the fundamental principles of the White Paper - already
introduced in the concepts on which the Second Banking Coor
dination Directive is based - is that of supervision of the
branches established in another Member State by the home country
'authorities .
The present document does not mention this concept. On the
contrary, the reminder of the need for authorisation in the host
country and the requirement of compliance with their rules,
seems to imply carrying out of supervision by the local autho
rities .
This might be feasible for the conduct of business rules (Art
icle 5), especially if only minimal harmonisation is envisaged,
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but becomes less obvious for the fitness and propriety require
ments (Article 4.3). In particular, in the case of capital
adequacy (Article 4.4) , such a division of supervisory respons
ibility would not be acceptable: a bank with branches in other
Member States would be subject to home country control in
relation to its mainstream banking business - which would be
exempted under the third indent of Article 3 - but would be
subject to host country control in respect of the investment
services it provides.
Extraterritoriality
17. Finally, the financial services provided for in the proposal for
a directive may be supplied from States which are not members of
the E.C. Consideration should be given to the extent of the
liability of persons providing services in the Community but
having their registered head office outside it, and to the means
by which legal proceedings may be brought against them, bearing
in mind the very great practical difficulty of preventing the
supply of certain services.
At present, the directive appears to ignore "third country"
undertakings altogether: Article 1 would imply that they have to
be authorised whether doing business as an establishment or on a
cross-border services basis, but Articles 4 and 5 do not provide
for undertakings from outside the Community who wish to trade
without an establishment.
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