The European Commission has been accused of naïvety in its approach to the Capital Markets Union (CMU), failing to address the public’s distrust of the investment industry, according to a leading responsible investment group.
ShareAction, which today announced that Jupiter Asset Management’s former director of stewardship Emma Howard Boyd had been named its chair-designate, said that despite the CMU green paper acknowledging the importance of restoring investors’ trust in the financial sector, it lacked any specific proposals to enhance transparency.
Catherine Howarth, chief executive of the charity, said: “The green paper acknowledges the need to improve trust in the financial system but these proposals appear to be somewhat naïve when it comes to tackling the deficit of public support across Europe in the investment industry.
Howarth cited the UK’s Kay Review on long-term decision making as proof that pension funds and other institutional investors faced misaligned incentives that prevented them from acting in the best interest of beneficiaries.
“We look forward to responding in detail to the green paper to set out concrete ways the Commission could address these concerns across Europe,” she added.
Her comments are some of the most critical to come from stakeholder groups to date, with large parts of the pension and insurance industry focusing instead on the potential opportunities created by better integration of financial products across the European internal market.
Commissioner for financial stability Jonathan Hill, who has been tasked with the launch of the CMU by 2019, said earlier this week that its development would help unlock liquidity across Europe, increasing capital flows to infrastructure projects and small and medium-sized enterprises (SMEs).
However, European parliamentarians have struck a note of caution over the proposals, put to a three-month consultation by the Commission, with German Green MEP Sven Giegold urging the CMU’s creation be used to make financial markets compatible with EU values.
“A CMU with a one-sided and short-term focus on shareholder value is exactly what the EU doesn’t need,” Giegold warned.