EC letter to AMLA & ESAs on the de-prioritisation of certain Level 2 financial services acts

The European Commission (EC) has published a letter dated 1 October, with accompanying Annex, addressed to the Anti-Money Laundering Authority (AMLA) and the European Supervisory Authorities (namely, the European Banking Authority, European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority) concerning the de-prioritisation of 430 Level 2 acts in financial services legislation. The EC states that this approach is consistent with its broader objective to improve the effectiveness and efficiency of EU policy implementation, as set out in its Communication on Implementation and Simplification.

It categorises the 430 empowerments granted under Level 1 legislation adopted between 2019 and 2024 into three types: (i) empowerments where it is legally required to act within a specified timeframe; (ii) empowerments where it is legally required to act without a specified timeframe; and (iii) empowerments where it is not legally required to act. Following consultation with the European Parliament and the Council of the EU, and taking into account comments received, the EC identifies 115 empowerments as non-essential for the effective functioning of Level 1 legislation and the achievement of EU policy objectives. These include empowerments under the Capital Requirements Regulation and Directive, the European Market Infrastructure Regulation, the Markets in Financial Instruments Regulation and Directive, the Prospectus Regulation and the Sustainable Finance Disclosure Regulation, and are listed in full in the Annex to the letter.

Going forward, the EC confirms it will follow a two-step approach: (i) non-essential measures set out in the Annex will not be adopted before 1 October 2027; and (ii) where legal deadlines apply, it proposes to amend or repeal the relevant empowerments for the non-essential Level 2 acts, in the context of any ongoing amendments to Level 1 acts. A substantial number of the relevant Level 1 acts are also expected to undergo review within the next two years.

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