The short answer is: yes, they do.
EU legislation makes up for the bulk of financial services legislation in Luxembourg. Although there is no readily identifiable percentage available, a rough estimate might put it between 70 and 80%. And with the EU moving increasingly from directives that by their essence still need to be transposed into Luxembourg law to regulations that are directly applicable in the Member States, the trend goes to less and less national flexibility.
Furthermore, for over two decades now the European Parliament has been legislating on an equal footing with the Council of the European Union and deciding the shape of EU law in financial services. Suffice to think about the 1999-2005 Financial Services Action Plan and its 40 something legislative acts, the similarly voluminous response to the 2008 financial crisis as well as the numerous current initiatives.
In the next term Members of the European Parliament will be confronted with big legislative projects like the transposition of Basel 4 into EU law, the finalization of the Banking Union (i.e. the European Deposit Insurance Scheme), ongoing and new legislative initiatives regarding consumer and investor protection, sustainable finance or Fintech in the broadest sense not to mention the relationship with the City of London (new agreement and redefining third country equivalence). Even more numerous will be already scheduled legislative reviews of 37 (!) EU legislations that we have identified as relevant for the Luxembourg banking and investment funds community. These reviews include among others the CRD/R, BRRD, the ESAs regulations, personal accounts directive, the consumer and the mortgage credit directives, various newly agreed sustainable finance acts, six investment funds legislations, prominent tax legislations (e.g. DAC, ATAD) and the AML directive.
It definitely matters who sits in the European Parliament’s Economic and Monetary Committee and who holds the pen on legislative reports there.
That is why European elections matter for the Luxembourg financial center in general and its banks in particular.
By Antoine Kremer, ABBL & ALFI Head of European Affairs