Local view for "http://purl.org/linkedpolitics/eu/plenary/2011-07-04-Speech-1-097-000"
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"en.20110704.22.1-097-000"2
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Madam President, I would firstly like to extend warm thanks to Mr Schmidt, and also to the Committee on Economic and Monetary Affairs and its Chair Sharon Bowles, for the very ambitious and, may I say Mr Schmidt, very clear signal being sent out in regard to this important piece of work by Parliament.
Moreover, the proposed reduction in pre-funding to 0.3% should be carefully assessed if you genuinely want to increase cover to EUR 100 000. Honourable Members, there is no secret here, increasing cover while also reducing funding could, potentially, bring the system into difficulty or under stress.
Finally, I have several reservations as regards introducing an amendment aimed at covering what is known as ‘bad advice’. I share your objective: finance is a complex discipline and there are a number of charlatans who readily deceive the least informed consumers. However, this situation comes under the rules of conduct of the Markets in Financial Instruments Directive (MiFID), the breach of which opens up the right to take liability action.
Moreover, providing cover for ‘bad advice’ would be difficult to implement. It could lead to a considerable increase in the number of situations in which we would be driven to activate compensation funds without funding being revised accordingly. Therefore, Mr Schmidt, quite frankly, as it stands, this ‘bad advice’ concept is rather dubious in our view, and could lead to significant differences in interpretation, from one country to another, and to renewed market fragmentation. That is why we find it difficult to accept the inclusion of this concept in the text.
However, overall, Mr Schmidt, as well as generally renewing my thanks for the excellent work which has been done by yourself, the shadow rapporteurs and the coordinators, I can say – and this is the important point in my view – that Parliament and the Commission clearly share a common vision on this issue. This is an ambitious solution and a Europe-wide solution, and the Council should take that into account. That is the signal you are sending out to Member States, so that they can approve an overall approach quickly. I am also counting on the Polish Presidency to do all it can and to convince the countries that have still not done so to adopt this more Europe-wide approach, which is more favourable to retail investors. At the end of the day, any credible agreement must include a sufficiently high level of cover, a credible level of pre-funding and easy access to compensation. These are the lines along which we are working, Mr Schmidt, and I would like to thank you for that.
Strengthening investor-compensation schemes is just one of the components of a consistent package which – may I remind you – also includes Deposit Guarantees and the White Paper on Insurance Guarantee Schemes. This comprehensive package was adopted by the Commission a year ago now.
What we have here today is an important proposal in terms of our response to the crisis. Consumers, or retail investors, are some of the financial system’s most vulnerable stakeholders and they are also the main victims of the crisis. Not only is it fair to protect them, it is also logical. Moreover, our fellow citizens would not understand if we failed to protect them. A trouble-free investment requires the guarantee of being properly compensated in extreme circumstances, such as fraud or operational mistakes leading to the loss of securities. Compensating investors therefore helps to restore confidence in the financial system – that is one of the lessons of the crisis – and also to establish a genuine internal market for financial services.
This is the rationale which led the co-legislators to adopt the very first directive on investor compensation, on the basis of a 1997 Commission proposal. This 1997 directive has been helpful, but it needs improving; that is what we are doing here together today.
Honourable Members, I have for a very long time now been in favour of what we call in French a ‘providential’ policy, that is to say a preventive policy; prevention always costs less than repair, and I have, in my own country, devised preventive mechanisms in other fields such as ecology. That is why I would like to see this guarantee scheme mechanism implemented.
First of all, Mr Schmidt, I share the ambitious approach outlined in your report. Parliament’s agreement on the pre-funding principle is a very positive point. As far as we in the Commission are concerned, pre-funding is a prerequisite for a credible system. Indeed, what is the point of planning a high level of cover if there is not enough money available for it? To say that we could raise the money on an ad hoc basis is rather unrealistic in these times of tension.
Secondly, Mr Schmidt, I am also well disposed to bringing the level of cover on Deposit Guarantees into line at EUR 100 000, as you proposed. We in the Commission proposed EUR 50 000, that is to say a lower level than Deposit Guarantees in the banking sector, because we feel that the risks to financial stability are greater in this latter sector than in the investment sector. The bank run phenomenon that we experienced with Northern Rock, in 2008, particularly comes to mind. I am, however, willing to consider your proposal, which is more ambitious.
Finally, I welcome the fact that Parliament is maintaining the mutual lending mechanism between schemes. I see this as a further demonstration of your commitment to developing a more harmonised and a more shared approach, which is crucial to overcoming the challenges of the crisis.
There are, of course, several points, here and there, which are subjects for debate or which diverge from the Commission’s initial proposal. I believe, for example – as you pointed out in your speech – that extending the cover to UCITS, considering how attractive this product is to retail investors, is a natural step. You have called for this measure to be postponed. That said, I have taken good note of your wish for it to be re-examined under the revision of the UCITS Directive in a few months’ time. You can count on the Commission to concur with that, Mr Schmidt."@en1
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