Select Committee on European Union Minutes of Evidence

Annex 2

Examples of Over-Implementation

1.  GOLD-PLATING

Examples for the Review team to consider:

—  The Cross-border Pensions Regime—the Directive on the Activities and Supervision of Institutions for Occupational Retirement Provision (2003) has been poorly implemented through the Pensions Act 2004, leading to a lack of clarity in the regulations. This has led to many companies mistakenly downgrading their level of pension provision. For further information please contact Sumantra Prasad—[e-mail]

—  The Landfill Directive. The targets in this Directive relate to bio-degradable municipal waste. The Government is currently consulting on introducing targets also for industrial and commercial waste. The Directive only requires adequate provision to be made for aftercare of landfills. The Environment Agency has nonetheless proposed introducing a new system of compulsory escrow accounts for landfill operators, which goes far beyond adequate provision. A separate submission has been made by CBI member Viridor Waste, which outlines the problem in more detail.

—  The Marketing in Financial Instruments Directive (MiFID) was intended to apply to banks, investments firms and independent advisers who hold client money. The FSA has chosen to apply it to all regulated firms with a consequent re-write of all conduct of business rules and other changes, which will be very time-consuming and, above all, hugely expensive for the financial services industry. For further information please contact Clive Edrupt—[e-mail]

—  When considering the Solvency 1 Directive, the FSA chose to require some firms to hold more capital than required by the Directive because the Agency did not believe the requirements in the Directive were strong enough. The FSA also declined to allow the transitional period permitted by the Directive. For further information please contact Clive Edrupt—[e-mail]

—  The Directive on Fixed Term Work does not require employers to provide equal treatment to employees on a fixed-term contract in respect of pay or pension benefits. However, in the 2002 Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations, the UK Government has nonetheless included such requirements. The final regulations require no less favourable treatment on pay and also require employers to offer access to occupational pension schemes to fixed-term employees on the same basis as permanent employees, unless the difference in treatment is objectively justified. For further information please contact Mariska van der Linden [e-mail]

—  The Directive on the Extension of the Directive on the Framework Agreement on Part-time Work to the United Kingdom of Great Britain and Northern Ireland. The Directive provides that, Member States can exclude from the scope of national regulations part-time workers who work on a casual basis. The UK did not take advantage of this provision. In addition there is a right under the UK regulations for part-time workers to request a written statement of reasons if they believe that they have been less favourably treated than a full-time worker and there is an obligation for the employer to respond within 21 days. This right, which is not required by the Directive, has been much criticised as being excessive and onerous for the employer. For further information please contact Mariska van der Linden—[e-mail]

—  Consumer Protection Enforcement Co-operation Regulation. New powers for on site inspections in respect of cross-border cases under the regulation are to be extended to purely domestic cases. This is unnecessary gold-plating of the requirements of the regulation. The CBI has argued that there is no justification for the power to be extended to infringements of national law. For further information please contact Linda Jackson—[e-mail]

—  The Insurance Mediation Directive is an example of a regulatory regime that companies consider more burdensome in the UK than in other EU Member States. For further information please contact Duncan Campbell—[e-mail]—or Rod Armitage—[e-mail]

2.  DOUBLE BANKING

Examples for the Review team to consider:

—  The Unfair Commercial Practices Directive (UCPD)—an opportunity to avoid double banking. There are concerns that the DTI consultation document on the UCPD refers to the Directive as "gap filling". The CBI has argued that the Directive must deliver on its deregulatory promise and that it should not impose another layer of legislation on top of the already extensive framework of specific vertical legislation, which applies at national level. Transposition of the UCPD provides an opportunity for a wholesale review of consumer law, which should result in significant simplification, and it is imperative that the outcome of transposing and implementing the UCPD is deregulatory.

  The general purposive approach adopted in the Directive should be accepted as the way forward. This move towards principles-based legislation presents the opportunity for fundamental reassessment of the way consumer protection law should operate in the future, particularly where set against the government's commitments to the Hampton principles and to its simplification agenda. This will present significant challenges to business but the reward could be a modern regulatory framework, which could permit consumer-focused innovation on the part of business while allowing flexibility for enforcers and eliminating the need for new, specific regulation in response to market developments. The onus is on the Government to sweep away all overlapping legislation unless there are very strong reasons to justify its continuation. In its recent consultation paper on transposition, the DTI floats a number of policy proposals, which, if implemented, would exceed the requirements of the Directive and its policy aims. For further information please contact Linda Jackson—[e-mail]

—  The Sale of Consumer Goods and Associated Guarantees Directive. The new Directive regime was superimposed on top of the existing sale of goods legislative framework without rationalisation. For further information please contact Linda Jackson—[e-mail]

3.  REGULATORY CREEP

Examples for the Review team to consider:

—  The Working Time Directive. Guidance on technical aspects of the Directive such as exemptions from working time limits for "autonomous workers", compulsory rest breaks for employees and the way in which workers are paid for their annual leave has been challenged by the European Court of Justice in 2006, causing changes to guidance and confusion for employers. For further information contact Thomas Moran—[e-mail]

—  The Distance Selling Directive. The implementing regulations and Office of Fair Trading guidance embellish the requirements of the Directive in certain key respects. For further information please contact Linda Jackson—[e-mail]

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