Changes to the European financial supervisory agencies’ soft law powers : legitimacy problems solved or new puzzles created?

Abstract

Important changes to the legislative framework of the three European Supervisory Authorities (ESAs) – the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA), and the European Insurance and Occupational Pensions Authority (EIOPA) – have recently taken effect. The ESA review, which is regarded as an important step to ensure a fully functioning Capital Markets Union and Banking Union, reinforces the role and powers of the ESAs. This article focuses on the most significant changes which apply from 1 January 2020 and their impact on the legitimacy of the ESAs’ soft law powers. These changes include the introduction of ‘no-action letters’, modifications to the ESAs’ non-binding opinions and Q&As, and a possibility for market participants to address possible ultra vires problems at the European Commission. Altogether, the ESA review addresses several previous legitimacy issues, but at the same time brings to light new legitimacy concerns.