Laws and Regulations

The EU’s top financial markets authority on Thursday invited the European Commission to clarify new sustainability reporting requirements for European companies and to make its legislation for non-financial reporting standards more consistent with other pieces of EU legislation.

When it comes to EU financial regulation it won’t surprise anyone to hear that more is in store for the year ahead. Investment Officer looks ahead together with Vincent Ingham, director of regulatory policy at the European Fund and Asset Management Association in Brussels.

A lack of financial literacy and unfamiliarity with digital technologies are key drivers of financial vulnerability and exclusion, Europe’s three financial sector supervisors said in a collective report.

Access to digital channels and digital infrastructure has become a prerequisite for consumers to make use of financial services, the report said, adding that a lack of digital financial skills also makes consumers more prone to be targets of digital scams and fraud.

Perhaps the most contentious development in Luxembourg’s fund management ecosystem this year was the order to management firms, issued by supervisor CSSF, to report back on the costs of investment funds and look at becoming more efficient.

Investment fund managers of Ucits funds in Luxembourg, home to about a third of all such funds in Europe, were ordered to review, and if necessary correct, the way they calculate the costs and fees of their investment funds and report back to the CSSF before April 1 next year.

The EU Packaged Retail Investment and Insurance Products (Priips) regulation is set to take effect across the EU from January, requiring the production of a paper-based Key Investor Document (KID) for all products sold to European retail investors. The UK, meanwhile, has started to explore a new digital retail disclosure system.

The first of January marks a significant milestone in the European Union’s efforts to promote sustainable and responsible investing. The EU introduces the level 2 Regulatory Technical Standards for the Sustainable Finance Disclosure Regulation, known as SFDR. This requires sustainable investment funds to make a bigger effort to explain how they seek to achieve a positive impact.

The EU court ruling ending public access to European ultimate beneficial owner registries lays bare a long-standing political-legal dispute in society over what sorts of interests should be paramount: jurisprudence or morality. As Luxembourg awaits a solution on restoring access for professionals, Investment Officer spoke to a number of legal specialists about the case.

Ministers of the 27 EU member states have backed a proposal that makes it possible for countries to exempt banks and investment funds from planned EU rules that will require companies to report their impact on human rights and the environment. 

Luxembourg’s financial supervisor CSSF has made clear that it expects investment funds that commit to sustainability objectives will stick to these commitments. If a fund defines thresholds for specific ESG or sustainability investments, then it should consider these as a “binding commitments”.

BOS Wealth Management SA, the Luxembourg-based European wealth management arm of Bank of Singapore, has been handed a 210,000 euro fine by Luxembourg’s financial regulator CSSF for non-compliance with laws designed to fight money laundering and terrorist financing.