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Regulatory process in financial services

A specific regulatory process for financial services was introduced with the Lamfalussy report and then upgraded after the financial crisis. The page includes an overview on level 2 measures in financial services regulation.

The Lamfalussy architecture

A specific regulatory process in financial services was first introduced in 2001, when the EU endorsed the proposals of the Lamfalussy Report. This report recommended the adoption of a new approach to improve the regulatory process in financial services in order to make it quicker and more effective.

The Lamfalussy regulatory approach involved four institutional levels:

  • At level 1 the European Parliament and Council adopt the basic laws proposed by the Commission, in the traditional co-decision procedure. As this procedure is usually complex and time-consuming, the Lamfalussy report recommends using it only for setting out framework principles.
  • At level 2 the Commission can adopt, adapt and update technical implementing measures with the help of consultative bodies composed mainly of EU countries representatives. This allows the Council and Parliament to focus on the key political decisions, while technical implementing details can be worked out afterwards by the Commission.
  • At level 3, committees of national supervisors are responsible for advising the Commission in the adoption of level 1 and 2 acts and for issuing guidelines on the implementation of the rules.
  • At level 4 the report advocates a stronger role for the Commission in ensuring the correct enforcement of EU rules by national governments.

The 4-level regulatory approach recommended by the Lamfalussy report was first adopted in the securities sector and then extended to banking, insurance, occupational pensions and asset management. It allowed for a more flexible decision-making process and resulted in an improvement in the quality of legislation.

Post-crisis reform: the European supervisory authorities

Following the financial crisis, the EU reformed its framework for financial supervision. It established a new European Systemic Risk Board (ESRB) for monitoring macro-prudential risks and transformed the level 3 Lamfalussy committees into independent authorities with enhanced powers.

The three European supervisory authorities (ESAs) which were set up in this process are:

  • the European Banking Authority (EBA)
  • the European Securities and Markets Authority (ESMA)
  • the European Insurance and Occupational Pensions Authority (EIOPA)

These authorities have taken over all of the functions of the previous level 3 committees, and have new competences. These include the responsibility of preparing the so-called ‘technical standards’ – a particular category of level 2 measures that they draft and submit to the Commission.

Level 2 measures

Many level 1 regulations and directives in the area of financial services (so called ‘basic acts’) contain empowerments for level 2 measures to be adopted by the Commission by means of delegated acts, implementing acts, or measures under the former comitology ‘regulatory procedure with scrutiny’. These measures are endorsed in accordance with different procedures set out in the relevant basic act and may be subject to formal committee decisions or provide for certain scrutiny rights of the European Parliament and the Council.

The Lisbon Treaty, which came into force in 2009, has created the current system of delegated and implementing acts. Delegated acts, as defined in article 290 of the Treaty, are acts supplementing or amending certain non-essential elements of a basic act. Implementing acts, as defined in article 291, are to be used where uniform conditions for implementing basic acts are required.

Where the level 2 measures require the expertise of supervisory experts, it can be determined in the basic act that these measures are technical standards based on drafts developed by the European supervisory authorities. There are two types of standards:

  • the regulatory technical standards (RTS), which are adopted by the Commission by means of a delegated act
  • the implementing technical standards (ITS), which are adopted by means of an implementing act.

In the table below you will find a list of all level 2 measures in preparation or adopted in the area of financial services. The table will be regularly updated.

The Commission’s interinstitutional register of delegated acts provides information to the various steps in the preparation, adoption, scrutiny and publication of delegated acts.

An overview of Directorate general for Financial stability, financial services and capital markets union’s level 2 empowerments that are in preparation or adopted in the area of financial services is provided in the table below. It is important to note that the information contained in this table does not necessarily reflect precisely the actual legislative situation as it is always subject to continuous changes and political validation. Neither the European Union institutions and bodies nor any person acting on their behalf may be held responsible for the use that may be made of the information contained therein.


2 AUGUST 2019
Overview table on existing empowerments in basic acts for level 2 measures