EUROPEAN COMMISSION
PUBLIC CONSULTATION ON THE EUROPE 2020 STRATEGY
Name:
AFG – Association Française de la Gestion financière
Contact details:
PIERRE BOLLON
Address:
31 rue de Miromesnil
75008 PARIS
FRANCE
Phone number:
+33.1.44.94.94.00
E-mail:
[email protected]
Country of residence:
FRANCE
Language of your contribution: ENGLISH
Type of organisation:
Member State
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Main area(s) covered by your contribution:
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Economic and financial affairs
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Competitiveness
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Single market
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Employment
Research, development and innovation
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Digital economy
Climate, energy and resource efficiency
Education
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Register ID number (if your organisation is registered in the Transparency
register): 5975679180-97
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A) Background for the public consultation:
The Europe 2020 strategy was launched in March 2010 as the EU's strategy for promoting
smart, sustainable and inclusive growth. It aims to achieve a knowledge-based, competitive
European economy while preserving the EU's social market economy model and improving
resource efficiency. It was thus conceived as a partnership between the EU and its Member
States driven by the promotion of growth and jobs.
The Europe 2020 strategy is built around five headline targets in the areas of employment,
research and development, climate and energy1, education and the fight against poverty and
social exclusion. The strategy also set out a series of action programmes, called "flagship
initiatives", in seven fields considered to be key drivers for growth, namely innovation, the
digital economy, employment and youth, industrial policy, poverty and resource efficiency.
The objectives of the strategy are also supported by action at EU level in areas such as the
single market, the EU budget and the EU external agenda.
The Europe 2020 strategy is implemented and monitored in the context of the European
Semester, the yearly cycle of coordination of economic and budgetary policies at EU level.
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In January 2014 the Commission launched a framework for energy and climate policies up to 2030. A
reduction in greenhouse gas emissions by 40% below the 1990 level, an EU-wide binding target for
renewable energy of at least 27% and renewed ambitions for energy efficiency policies are among the
main objectives of the new framework.
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The European Semester involves discussion among EU institutions on broad priorities,
annual commitments by the Member States and country-specific recommendations prepared
by the Commission and endorsed at the highest level by leaders in the European Council.
These recommendations should then be taken on board in the Member States' policies and
budgets. As such, together with the EU budget, the country-specific recommendations are
key instruments for the implementation of the Europe 2020 strategy.
After four years, the Commission has proposed, and the European Council of 20-21 March
2014 has agreed, to initiate a review of the Europe 2020 strategy. On 5 March 2014, the
Commission adopted a Communication "Taking stock of the Europe 2020 strategy for smart,
sustainable and inclusive growth" (Communication and Annexes ). drawing preliminary
lessons on the first years of implementation of the strategy. Building on these first outcomes
and in a context of a gradual recovery of the European economies, it is time to reflect on the
design of the strategy for the coming years.
Through these questions, we are seeking your views on the lessons learned from the early
years of the Europe 2020 strategy and on the elements to be taken into account in its further
development, in order to build the post-crisis growth strategy of the EU.
B) Questions:
1) Taking stock: the Europe 2020 strategy over 2010-2014
Content and implementation

For you, what does the Europe 2020 strategy mean? What are the main elements that
you associate with the strategy?
For financial services and in particular the French asset management industry, Europe
2020 means moving towards a post crisis agenda.
The 2020 strategy should strive at enhancing the competitiveness of the EU players and
products vis-à-vis their non-EU competitors. In particular, it should as far as possible both
include a regulatory pause in order to curb compliance cost inflation and aim at opening
up third country markets - as the EU often is too many times open to the latter with no
real condition of reciprocity.
In addition, the 2020 strategy should aim at facilitating an appropriate financing of the
economy and at providing both institutional and retail investors with efficient investment
solutions.
Finally, the 2020 strategy should ensure a real level playing field among Member States
as well as among products and players. European rules should be implemented and
enforced in the same way across all Member States, and sectorial tax and regulatory
barriers within the Single Market should be reduced.

Overall, do you think that the Europe 2020 strategy has made a difference? Please
explain.
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As far as the asset management industry is concerned, we have not yet noticed any
improvement related to the Europe 2020 strategy. On the contrary, in particular regarding
the international competitiveness of European financial players such as asset
management companies, since 2010 we have only noted an increasingly repressive
regulation and opening to third countries with no real requirement for reciprocity (in the
context of the Alternative Investment Fund Managers Directive - AIFMD - and Markets in
Financial Instruments Directive – MIFID - for instance, through the delivery of so-called
‘third country passports’ which allow third country competitors and financial products to
benefit from the Single Market without any legal domiciliation in Europe - while the
reciprocity of access to such third country markets in the same conditions is not at all
ensured).

Has the knowledge of what other EU countries are doing in Europe 2020 areas impacted
on the approach followed in your country? Please give examples.
The main issue regarding the other Member States is the uneven implementation and
enforcement of existing EU regulations across Europe: some position themselves as
doing ‘regulatory window dressing’ (if not dumping) in order both to attract unfairly some
EU players and products in Member States where the EU legislation is less enforced and
to attract non-EU players and financial products when they wish to choose a single EU
legal domicile in the EU in order to disseminate their services and financial products
afterwards across the whole Single Market. We do not think it should be accepted by the
European Commission.
We consider that the principle of the Single Market should apply only between Member
States which enforce the existing EU legislation in a fair way and fully comply with the
general principles applicable to financial markets (e.g. compliance with the anti-money
laundering principles, or the prohibition of State aides under the form of individual tax
rebates to the benefit of third country players in order to attract them unfairly on their
territories). Otherwise, the cross-border investor protection within the EU will not be
ensured.
In the specific area of financial markets, the so-called Lamfalussy Report adopted more
than 10 years ago the principle of ensuring a fair enforcement of EU legislation across
Europe (‘Level 4’) through the action of the European Commission and the European
financial market authority (CESR at that time, replaced by ESMA since then) has never
been fully implemented in reality yet.
Regarding our country, i.e. France, the regulatory window dressing/dumping ensured by
other Member States had no effect at political and regulatory levels as French authorities
do not wish – rightly – to play such a game. But then it puts French players and products
at a competitive disadvantage vis-à-vis competitors based in Member States which are
more complacent.

Has there been sufficient involvement of stakeholders in the Europe 2020 strategy? Are
you involved in the Europe 2020 strategy? Would you like to be more involved? If yes,
how?
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We feel that there has not been sufficient involvement of stakeholders in the Europe 2020
strategy. We have not been much involved in the Europe 2020 strategy and would like to
be more involved for the future, through for example the present consultation and through
possible industry expert groups that might be set up by the Commission in the future (we
would be happy to be among the representatives working in such groups).
Tools

Do the current targets for 2020 respond to the strategy's objectives of fostering growth
and jobs? [Targets: to have at least 75% of people aged 20-64 in employment; to invest
3% of GDP in research and development; to cut greenhouse gas emissions by at least
20%, increase the share of renewables to 20% and improve energy efficiency by 20%; to
reduce school drop-out rates to below 10% and increase the share of young people with
a third-level degree or diploma to at least 40%; to ensure at least 20 million fewer people
are at risk of poverty or social exclusion].
In the area of financial services and in particular asset management, the Commission’s
initiatives to encourage investment in social entrepreneurship funds and venture capital
funds as well as in long term funds were launched without significant consultation with
stake-holders.
For instance, the European Commission provided for a proposal regarding social
entrepreneurship funds which was a mere copy of the one on venture capital funds: did it
make sense to paste the scheme of venture capital funds – which aim at getting the
highest return from restructuring performing SMEs – on social entrepreneurship funds –
which aim at helping social housing for instance? And did it make sense to allow the legal
domiciliation of so-called social entrepreneurship funds in worldwide tax heavens such as
Cayman Islands or Bermudas for instance?
Another example relies in the wish to introduce a Financial Transaction Tax (FFT). While
it might be legitimate at worldwide level in order to maintain a level playing field among
players and regions, the current proposal would only apply to Europe, and even in
Europe only in some Member States and not in other ones. If adopted, the FTT as
currently envisaged in its geographical scope of application would just contribute to
create an unlevelled playing field among Member States, and also between some
Member States and the rest of the world as well. All in all, it would mechanically impact
negatively growth and jobs in Europe, in particular in the Member States which might
apply it in the future.

Among current targets, do you consider that some are more important than others?
Please explain.
To us, the financing of the real economy should be among the prime objectives. Related
to that objective are growth and employment.
Investor education should also be an important target as citizens will increasingly have to
make their pension plans privately.
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
Do you find it useful that EU-level targets are broken down into national targets? If so,
what is, in your view, the best way to set national targets? So far, have the national
targets been set appropriately/too ambitiously/not ambitiously enough?

What has been the added value of the seven action programmes for growth? Do you
have concrete examples of the impact of such programmes? ["Flagship initiatives":
"Digital agenda for Europe", "Innovation Union", "Youth on the move", "Resource efficient
Europe", "An industrial policy for the globalisation era", "Agenda for new skills and jobs",
"European platform against poverty"].
These principles seem nice, but they were – to our knowledge – never applied to our
economic sector yet.
2) Adapting the Europe 2020 strategy: the growth strategy for a post-crisis Europe
Content and implementation

Does the EU need a comprehensive and overarching medium-term strategy for growth
and jobs for the coming years?
Yes. The EU needs a strategy including a role for asset management which is key in the
market financing of the economy - companies, infrastructures and governments.

What are the most important and relevant areas to be addressed in order to achieve
smart, sustainable and inclusive growth?
As described previously, the market financing of the real economy - companies,
infrastructures and governments - should be a prime objective.

What new challenges should be taken into account in the future?
The role of asset management should be enhanced, as banks will probably not be able
by themselves to provide for the needs for financing of institutional and private investors.
Another challenge will be to stop always cumulating new EU regulatory constraints as far
as possible, in order to concentrate on the enforcement of the existing EU legislation and
to make sure in particular that all Member States enforce it in practice – in order to stop
the growing regulatory dumping from some marketplaces within the EU.
Another challenge relies in the wish to introduce a Financial Transaction Tax (FFT).
While it might be legitimate at worldwide level in order to maintain a level playing field
among players and regions, the current proposal would only apply to Europe, and even in
Europe only in some Member States and not in other ones. If adopted, the FTT as
currently envisaged in its geographical scope of application would just contribute to
create an unlevelled playing field among Member States, and also between some
Member States and the rest of the world as well. All in all, it would mechanically impact
negatively growth and jobs in Europe, in particular in the Member States which might
apply it in the future.
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The last challenge will be to change the way of thinking of some parts of the European
Commission: building a Single Market through its opening to third country financial
players and products is great. But currently the existing ‘Single Market passports’
afforded to third country financial players and products do not require and guarantee a
real reciprocity of access to third country markets.
From a European competitiveness perspective, it does not make sense at all and should
be immediately revised – or otherwise we take the risk of seeing the existing EU financial
players and products relocate themselves in third countries in order to re-access the
Single Market from more friendly third countries. If the European institutions do not react,
ultimately financial jobs and key investment decision makers will move out of Europe.

How could the strategy best be linked to other EU policies?
Regulation on so-called ‘shadow banking’ should be carefully designed so as not to
undermine the role of asset management, considering its key position in contributing to
the financing of the real economy and considering that it is not all ‘shadow’, being already
today highly regulated with a really comprehensive set of EU legislations (in particular
through the UCITS Directive, the AIFM Directive and the MiFID Directive).

What would improve stakeholder involvement in a post-crisis growth strategy for Europe?
What could be done to increase awareness, support and better implementation of this
strategy in your country?
As described previously, financial services and in particular asset management have
experienced a regulatory stiffening since the outbreak of the crisis. It is now time for a
regulatory pause which would allow a proper implementation and if appropriate a
streamlining of the new regulations. In addition, such a pause would allow keeping
compliance costs under control and help EU managers enhance their competitiveness
vis-à-vis their competitors, both in Europe (as the European market is increasingly open
to third country players and products) and outside Europe.
In order to improve stakeholder involvement, the best way would be to set up more
expert groups as compared to today – and AFG members (i.e. more than 400 asset
management companies based in France) would be happy to propose representatives for
participating in such expert groups.
Tools

What type of instruments do you think would be more appropriate to use to achieve
smart, sustainable and inclusive growth?
We believe that, if Directives allow a higher flexibility for Member States, Regulations
allow more harmonisation and we would therefore prefer the latter to achieve a more
integrated market.
Free trade agreements and legislative initiatives should be used as negotiation tools to
ease access to third country markets and therefore help the development of EU financial
players and products in third countries (thus, ultimately contributing to a higher EU
economic growth by exporting services to third countries), as conversely the European
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market is already opening up to third country players and products with no real reciprocity
requirement.

What would best be done at EU level to ensure that the strategy delivers results? What
would best be done at Member State level?
In our opinion, the enforcement of existing rules should be a prime short term objective
as far as asset management is concerned. Supervision is key and the powers of the
European Securities and Markets Authority - ESMA - should be implemented / reinforced
in this respect in order to achieve an actual harmonisation and the same enforcement of
EU rules across Europe. Indeed, there currently is no actual harmonisation due to the
different practices of Member States and national regulators (some are strict, some are
lenient), resulting in an absence of level playing field among actors and varying levels of
investor protection. The issue is even more at stake knowing that the Single Market
principles benefit in practice players or products based in all Member States, including
those which do not comply in reality with some regional or international legislations (e.g.
those linked to anti-money laundering principles).
However, this reinforcement of ESMA in the future should not generate higher costs of
financing for market participants, but only a transfer of fees taken by national authorities
on market participants to fees taken by ESMA directly on market participants – in order
not to increase the overall level of fees taken by regulators (national + European) on
market participants. Otherwise it would prejudice the competitiveness of European
market participants in the future.

How can the strategy encourage Member States to put a stronger policy focus on
growth?
As mentioned previously, the best thing to ensure growth would be to stop always adding
new regulatory requirements in the area of asset management, as the cost of regulatory
compliance within asset management companies have significantly increased these
years (in particular within SMEs of our sector).
The second aspect would be for the European Commission to fight more in favour of the
opening of third country markets to the EU asset management industry, as the potential
growth for EU players in now more and more in third countries – and the benefit of EU
passports for non-EU players and products should be freezed as long as the reciprocity
of access to such non-EU markets is not ensured in practice.

Are targets useful? Please explain.
Yes. It could be useful to set targets in terms of number of companies and jobs created in
the asset management sector e.g. a growth of 10% over 5 years – i.e. the length of a
European mandate for European Commissioners and MEPs. For example, the number of
asset management companies in France grew by 8% for the last 5 years (2009-2013),
therefore creating jobs and bringing revenues to public authorities. This kind of target
would be useful.
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
Would you recommend adding or removing certain targets, or the targets in general?
Please explain.

What are the most fruitful areas for joint EU-Member State action? What would be the
added value?
The European market for asset management is already comprehensively regulated by
European Directives and Regulations. The issue of the harmonised implementation and
proper enforcement of those rules should be the next focus, for instance through an
enhancement of the supervision powers of the European Securities and Markets
Authority - ESMA. Today, enforcement of the rules is different among Member States and
national regulators, which results in an absence of level playing field among actors –
resulting ultimately in reducing investor protection at European level through the principle
of cross-border ‘passports’ benefiting EU financial players and products wherever they
come from within the Union, as the principle of the Single Market is applied in practice
even if some Member States do not comply with regional or international sets of rules
(e.g. on anti-money laundering principles).
However, this reinforcement of ESMA in the future should not generate higher costs of
financing for market participants, but only a transfer of fees taken by national authorities
on market participants to fees taken by ESMA directly on market participants – in order
not to increase the overall level of fees taken by regulators (national + European) on
market participants. Otherwise it would prejudice the competitiveness of European
market participants in the future.
3) Do you have any other comment or suggestion on the Europe 2020 strategy that
you would like to share?
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Thank you for completing the questionnaire. Please send your contribution, along with any
other documents, to [email protected].
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