European economies cannot afford to wait until 2019 | KPMG | UK

European economies cannot afford to wait until 2019 for Capital Markets Union benefits

European economies cannot afford to wait until 2019

Giles Williams', regulatory partner at KPMG, response to the publication of the European Commission’s action plan for the Capital Markets Union.


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In response to the publication of the European Commission’s action plan for the Capital Markets Union, Giles Williams, regulatory partner at KPMG, said:

“We welcome today’s publication of the Capital Markets Union’s action plan. There should be clear benefits for businesses and investors.

“However, the Commission must push ahead with key elements to boost Europe’s economic recovery before the 2019 deadline. These include reviving the EU’s securitisation market and recalibration of capital treatments to incentivise banks to lend and insurers to invest.

“When progressing the various initiatives, we encourage the Commission to take into account the broader international context of capital markets.  The EU is not an island.

“One of the big prizes of this action plan will be more choice for retail investors. The review of the distribution and advice market in the digital age, an EU market for personal pensions and the removal of remaining barriers to cross border fund distribution will increase choice for EU citizens.

“Policy makers and the industry now need to work together to ensure that CMU delivers the benefits it seeks. The financial services industry must seize the opportunity and play an active part.”

Julie Patterson, EMA head of regulatory change, investment management at KPMG, added:

“The investment management industry should welcome the action plan as it plays to the fundamental role of the industry – to direct the flow of capital from those individuals and institutions with money to invest to enterprises seeking funding. The introduction of an EU framework for loan–originating funds is just one example of the potential benefits of CMU.

“The removal of remaining barriers to cross-border distribution of funds - such as local marketing rules, fees and additional requirements imposed by host countries, and tax issues – will provide greater choice for investors and enable efficiencies for fund managers.

“Given the demographic challenge and low yields, a pan-European personal pensions market will offer EU citizens new choices for retirement savings products from across Europe.  It will provide new opportunities for both fund managers and insurers. Given the national factors at play, especially differing tax treatments, the Commission will need to be ambitious and committed to secure real change.

“A quick win we recommended in our response to the Commission’s Green Paper was an alignment of the different investor protection thresholds across the different EU fund regimes. These may be creating unnecessary disincentives for retail and ‘semi-professional’ investors in higher risk investment opportunities.”


Notes to editors:

About the Capital Markets Union’s action plan

On 30th September the European Commission published its action plan for Capital Markets Union (CMU), the first substantive set of proposals from Commissioner Hill’s new unit responsible for financial stability, financial services and capital markets (DG FISMA).

CMU is about strengthening Europe’s capital markets to boost levels of investment and support alternatives forms of finance for businesses to complement bank lending.

The drivers for change highlighted by the Commission include: SMEs in the US are five times more likely to receive funding from the capital markets than those in the EU; €100 billion of additional bank lending would be available if securitisation markets were able to safely return to pre-crisis levels; €200 billion of investment is required per year to meet low-carbon economy targets across the EU.

The action plan builds on a Green Paper from earlier this year where the Commission asked for comments and ideas on its initial objectives and approach; it received over 700 responses (read KPMG’s response here), almost all supportive and positive, in particular for the Commission’s preference to mix legislation with market-led initiatives.

Key implications to financial institutions beyond investment management:


  • Those concerned that CMU is a direct challenge to the primary role of bank lending will see that the tone and language of the action plan is carefully worded to emphasise the need for complementary forms of finance in addition to bank lending.
  • Banks will be pleased with elements of the proposal to revise securitisations but may think that changes still don’t go far enough to remove disincentives to package block of business off balance sheets in a way that is attractive enough for potential investors.


  • The commitment to recalibrate Solvency II to reduce disincentives to infrastructure and long term investment will be welcomed, as will an assessment of Solvency II treatments for private equity and privately held debt.
  • The inclusion of insurance in a review of retail financial services that will seek to increase cross-border competition should be good for firms seeking to increase a pan-European customer base.

For further information please contact:

Simon Chan, PR Assistant Manager, KPMG

T: +44 (0) 207 694 2024

M: +44 (0) 7747 564 737


KPMG Press Office: 020 7694 8773

About KPMG

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