EACB Monthly Newsletter

In the past years, the European regulatory landscape has reached unprecedented levels of complexity. While well-intentioned, layers of overlapping rules and evolving mandates have created a system that developed into a heavy burden – for banks, but also for supervisors. Today, the need for simplification is perceived by market participants and authorities alike. In the current geopolitical context, in which enhancing European competitiveness is becoming a political priority, simplification and reform have gained momentum.  The goal must be to make our regulatory framework work better, not to dismantle the necessary safeguards.   

The Less is More report is both a diagnosis and a program. It offers a clear-eyed view of how the EU’s current rule-making process has reached its limits and created inefficiencies, and outlines a constructive path forward: simplifying legislation, rebalancing institutional powers, improving oversight, and respecting diversity within the banking sector, including the unique role of cooperative banks. This is a call for smart, sustainable governance built on clarity, accountability, and proportionality.

The report arrives at a pivotal moment, aligned with broader reflections at the highest levels on European competitiveness, which include European rulemaking. This has resulted in unprecedented efforts toward streamlining of the regulatory framework in all policy fields. The European Commission’s pledge to reduce unnecessary burdens and to embrace more effective, forward-looking and clear regulation at all levels, addressing directives and regulations, implementing and technical stands, but also guidelines and soft law, is therefore very encouraging.

The EACB and its members, by engaging in this work, hope to spark meaningful conversations and inspire the simplification our financial system truly needs. 

Ms Anne-Claire Rouaud is Professor of Law at the Sorbonne Law School (Paris 1 Panthéon-Sorbonne University) where she teaches French and European business, banking and financial law.  She is co-director of the Sorbonne Business & Financial Law Research Center (Sorbonne Affaires/Finance). She has published numerous books and articles with respect to business, banking and financial law. She is a member of the scientific council of the Less is more Report. 

1. Given the complex and evolving nature of the European financial regulatory landscape, what do you believe are the most urgent reforms needed for both financial institutions and citizens in the coming years? 

For one thing, from a lawyer’s point of view, I would say that it is urgent to reform the rule-making process in the EU financial services sector. For it is not only the content of the rules that is complex, but also the process by which they are made - and of course one and the other are linked. As pointed out in the Less is more report, this rule-making process, with its tiered system of legislation, is extremely complex and the system has reached saturation point. EU law in the financial services sector has become a huge, multi-layered and ever-changing mass. 

In particular, the proliferation of mandates conferred on the European Commission and on the European Supervisory Authorities (ESAs), with minimal oversight, results in a de facto shift of normative power from the EU’s co-legislators to the European Commission and even more so to the ESAs. When, as is often the case, issues that imply policy choices and fall within the responsibilities of the EU legislature are dealt with at Level 2 (or even 3), the institutional balance of the Union and the democratic principle are undermined. ESAs' technical expertise is invaluable, but just because an issue is technical doesn't mean it doesn't involve political choices – look at the issues concerning central clearing or crypto-assets for instance.

Also, when a power is delegated, it is crucial to monitor the exercise of that power. In this respect, the Less is more report stresses the need to strengthen the accountability of the Commission and of the ESAs in the adoption of Level 2 and 3 acts, as well as judicial review of soft law acts. All in all, it is necessary to return to a better institutional balance. 

It is also crucial to ensure a more uniform application of EU law and a more uniform supervision in the different Member States and in this respect we have reached the limit of what is possible with the current architecture of European supervision concerning financial markets, where supervision is exercised mainly at national level with ESMA coordinating the action of national competent authorities mainly through soft law instruments. A more integrated supervision of EU financial markets is needed to move on to the next stage. 

2. The report touches on the growing complexity of EU financial regulations. How can policymakers strike a balance between addressing new challenges, such as digitalization, while avoiding over-regulation? 

It seems to me that it is key to anticipate and better assess the impact of any new piece of legislation. There are numerous examples in the last few years where a proposal to amend a Level 1 text (such as EMIR, with respect to the clearing obligation, or lately CSRD) is presented when some of the obligations set out in the latter have only just come into force, or even have not yet come into force, because important operational difficulties arise or it appears that these obligations are too burdensome or not proportionate enough after all. This gives the impression of trial and error. 

This “trial and error” approach is also to some extent embodied in review clauses provided for in Level 1 texts. Without disputing the benefits of ex-post evaluation, it should not lead to dispensing with a serious ex-ante evaluation, to legislating on sight and correct later, because in the meantime, implementation is not without cost for the players concerned.   

Of course, legislating with 27 Member States is a complex exercise. But improving the quality of impact studies, improving the dialogue with stakeholders and having a more effective consultation process would, at least to some extent, enable better to anticipate and prevent such difficulties.  

It is also crucial to take account of the interdependence between different pieces of Level 1 legislation (particularly regarding sustainability, but not only), with a holistic approach of EU legislation in the financial services sector.  

As regards the implementation at national level, as mentioned earlier, some limits arise from the current architecture of European supervision. In this respect, by giving ESMA direct supervisory powers over a wider circle of regulated entities, this Authority would be better equipped to deal effectively with implementation issues. This would probably require to diversify the governance of ESAs and in particular of ESMA. This would also require to ensure an effective control of the action of these agencies: with great(er) powers should come great(er) accountability. 

Ms Elisabeth Delahousse is the Chairwoman of the EACB Corporate Governance and Company Law working group. After many years at the Legal Department of Crédit Agricole SA, Elisabeth joined the Fédération Nationale de Crédit Agricole as Head EU Affairs. She has been proactively participating in the elaboration of new European regulations, with a particular interest in the defense of the cooperative model and values and the respect for the principles of European legislative method.

As the initiator and coordinator of the Less is more project, and as a cooperative banking expert, what are in your view the most striking issues and more promising reforms likely to benefit cooperative banks in particular? 

In addition to proposals to improve European rule-making and controls in the financial services sector, the Less is more report proposes to simplify the body of rules and standards, which would benefit all financial institutions, cooperative banks in particular but also consumers and supervisors.  

The Less is more report, the fruit of work begun more than two years ago, coincides with the conclusions of the Letta and Draghi reports and the reflections of Member States, MEPs, Central Banks and supervisors in a momentum that is conducive to change. The European Commission has made regulatory simplification one of the priorities of its new mandate, in particular reducing reporting obligations by at least 25%. This is essential, especially as it would take greater account of the principle of proportionality, which is particularly important for cooperative banks.  

However, this will not be enough. As the German, Spanish, French and Italian Central Banks stated on 17 January 2025: ‘We need to step back and ensure that the complexity of the cumulative levels of regulation in Europe does not constitute an obstacle to achieving our objectives’.  We have reached the end of a cycle with Basel III. What is needed now is an overall assessment of the existing Level 1, 2 and 3 texts and a simplification to ensure that the rules are better understood and applied, that there is greater legal certainty, that the competitiveness criterion is genuinely considered and also to insure better supervision.  

Greater account should also be taken of specific governance organisations, particularly cooperatives, to allow for diversity, which is a guarantee of financial stability. The draft ECB guide to governance and risk culture, which adds obligations to the CRD, is worrying notably in this respect. 

The report in no way advocates for the deregulation of the financial sector. It proposes a range of solutions, a toolbox for institutions and authorities to use to improve the existing and future framework. They will be discussed at a conference at the European Parliament on 30 April 2025 in Brussels. 

Ms Priscille Szeradzki currently serves as the Deputy CEO of Confédération Nationale du Crédit Mutuel (CNCM), the central body of Crédit Mutuel group. Before joining the group, she worked in the field of international relations, for the French agency in charge of granting asylum, and as a diplomat for the Ministry of Foreign Affairs. She then joined the Ministry of Economy and Finance, where she led significant projects and negotiations at the international, European, and national levels. Notably, during the COVID-19 crisis, Ms Szeradzki was in charge of formulating restructuring plans for major companies facing challenges. 

The “Less is More” report offers a timely and well-argued analysis of the growing complexity within the EU’s financial regulatory landscape. Cooperative banks welcome this work as, for years, the EU’s regulatory framework has become increasingly dense and layered. The proliferation of Level 1, 2, and 3 regulatory texts has created a system that is not only difficult to navigate, but also resource-intensive. The message of this report is clear: regulation should serve the economy, not weigh it down. 

While the recommendations set out in this report provide a strong foundation for reform and urge policymakers to take action, this conversation needs to remain grounded. Simplification is not deregulation – the 2008 financial crisis taught us the high cost of insufficient oversight. Therefore, the challenge today is not to dismantle the regulatory architecture that safeguards our financial system, but to ensure that it evolves intelligently to be relevant to tackle contemporary stakes. Some rules are essential, while others have become outdated, duplicated or unnecessarily rigid. The key is to identify what must remain.

One of the most significant concerns raised by the report is an important shift in regulatory power from the EU’s co-legislators to the European Commission and Supervisory Authorities, often without sufficient democratic oversight. But regulation, however technical, should never escape debate, exchange of views between people applying it and people writing it. Too often, those implementing the rules are brought in too late, when the margin for meaningful dialogue has already closed. Ensuring more predictable consultation will produce regulations that are not only better understood, but also more likely to be effective in practice. The report’s findings and recommendations - such as improving parliamentary scrutiny over Level 2 and 3 acts, refining the consultation process and enhancing judicial review— are essential steps toward a more transparent and fair regulatory system. 

The European Commission’s efforts to simplify and rationalize financial services regulation – particularly under the Better Regulation Agenda – are a step in the right direction. But now is the time to go further, as “better” regulation must also mean more measured, more risk-sensitive and more future-oriented policymaking. By embracing the “Less is More" philosophy, we can ensure that new legislations are targeted, consistent and aligned with Europe’s broader ambitions. As financial markets undergo rapid transformation – with digitalization, sustainability and geopolitical tensions reshaping priorities – regulatory frameworks must be agile enough to support change without becoming a barrier to it. 

The Savings and Investment Union, which is a key priority for the 2024-2029 Commission, offers a concrete opportunity to apply these principles. In particular, a risk-based and proportional approach is critical to ensure that smaller institutions are not disproportionately impacted. Cooperative banks, rooted in local economies, play a vital role in financing households and SMEs. They must therefore not be sidelined by one-size-fits-all requirements that overlook their specificities. 

The “Less is More” report is not a call to dismantle safeguards. It is an invitation to focus on financial regulation core goals. If we get it right, we will not only lighten the burden weighing on institutions. We will strengthen the credibility, resilience and relevance of the entire European financial system.

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