Wider disclosure on insurance products could damage Malta firms, MEP says

Labour MEP Alfred Sant says Brussels should carry out impact assessment on SMEs over new disclosure rules on financial products

Labour MEP Alfred Sant
Labour MEP Alfred Sant

Labour MEP Alfred Sant has urged caution on proposals for the insurance sector he says could damage small companies.

The EP’s Economic and Financial Committee of the European Parliament (ECON) was discussing disclosures that must be made publicly when investments are launched in financial markets, about how such investments will contribute to future environmental sustainablility, by way among others of their contribution to renewable energy targets.

One proposal is to extend the rules about how such disclosures be made across the board to all participants in a launch.

The European Commission is proposing a harmonised EU framework which specifies how institutional investors, asset managers, insurance distributors and investment advisors have to integrate Environmental, Social and Governance (ESG) risks within their existing procedures, as part of their duty to act in the best interest of clients. They also need to publish their findings.

But Sant has said the broadening of the proposal’s remit and the introduction of new rules on due diligence should be assessed by an impact study with special reference for SMEs.

“One-size-fits-all approaches are likely to simply increase the costs of running financial businesses without contributing anything to the cause of renewable and clean energy. Care should be taken to assess the impact, general and particular, of the proposed measures.

“A significant part of the EU’s financial services are intermediated by SMEs. Moreover, a number of member states, including my own, Malta, basically rely on them for the provision of most services that do not belong to the banks,” Sant said.

ECON rapporteur MEP Paul Tang replied to Sant more time was needed to make the proposed transition, agreeing with arguments on small and medium sized industries. A vote on these proposals in ECON is scheduled for 5 November.

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