2025: A crucial year for European financial regulations

Key regulatory priorities for 2025

Among the most pressing matters, Antoine Kremer identifies three initiatives expected to reach a resolution by the summer of 2025:

• Retail Investment Strategy (RIS): This initiative seeks to protect retail investors by enhancing transparency and fairness in financial products. However, its complexity has raised concerns. Requirements such as the “value for money” tests are criticised for focusing on costs and performance while neglecting client needs. Kremer suggests reconsidering the approach: “The current text has become so complex and unsatisfactory that even the European authorities responsible for financial markets have criticised it in a letter to co-legislators.”
• Crisis management and deposit insurance (CMDI): The existing framework, initially designed for large banks, has proven inadequate for medium-sized institutions. Financing resolution funds and integrating medium-sized banks into a credible European system are contentious issues requiring urgent attention.
• Framework for financial data access (Fida): This regulation would mandate financial institutions to share specific data with third parties. Kremer highlights scepticism within the industry, particularly concerning the high costs and uncertain benefits for smaller banks.

Other significant reforms on the horizon

In addition to these priorities, 2025 will see advancements in several other areas:

• Payment Services Directive and Regulation (PSD/PSR): These reforms aim to enhance consumer protection and reduce fraud. However, debates continue on liability for fraud involving banks, telecom operators, and platforms.
• T+1 settlement time: This initiative proposes reducing settlement time for financial transactions to one working day by 2027. While already adopted in the United States, it poses challenges for Europe, particularly for globally distributed investment funds facing significant time differences.

Maintaining Europe’s competitiveness

European Commission President Ursula von der Leyen has identified competitiveness as a central focus of her mandate, urging a balance between consumer protection and economic efficiency. Kremer supports this ambition but stresses the need for concrete measures: “The strict implementation of Basel IV rules could widen the competitiveness gap between Europe and the United States, which is considering relaxing—or even abandoning—these requirements.”

Towards a capital markets union

To reinforce Europe’s financial attractiveness, Kremer outlines two key strategies: encouraging long-term investments, particularly for retirement, and reviving the securitisation of illiquid assets. These steps would enable banks to free up their balance sheets and mobilise private savings to support EU objectives.