Local view for "http://purl.org/linkedpolitics/eu/plenary/2011-07-04-Speech-1-094-001"
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"en.20110704.22.1-094-001"2
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"Madam President, Commissioner.
The issue of investor protection is important for consumers and investors and for financial stability. Tomorrow, I need a strong message from Parliament. I hope that I will receive support in the vote so that we can begin negotiations with the Council as soon as possible.
Madam President, in this case I urgently need a broad consensus, so I will take another tone in this debate.
I would like to thank all of the shadow rapporteurs, the Commission, the committee and the group secretariat for their excellent work. We had hoped to achieve our objective, but we are not quite there yet. Investor protection is a form of consumer protection for securities and money that banks and investment firms handle on their customers’ behalf. It enables the customer to receive compensation by the State if an institution that goes bankrupt cannot release the customer’s assets as a result of fraud or negligence or of serious erroneous assessments and mistakes. However, compensation is not provided for risk investments, for example if investments in shares fall in value.
I will go through the committee’s amendments point by point. Firstly, the committee wishes to increase the level of compensation to EUR 100 000 per investor and it wants the level of compensation to be the same for all EU Member States. The most compelling reason for proposing a level of EUR 100 000 is that there are countries with levels of compensation higher than the proposed EUR 50 000, including the United Kingdom, France and Spain. Thus, we do not wish to reduce the level of compensation and thereby worsen consumer protection in these countries. The level of protection should also be as high for investments as it is for bank account savings. We need people who want to invest in the enterprise of the future.
Secondly, the committee wants to extend protection to include cases where it has been proven in a court of law that an investment firm has given bad advice. It should be possible for a situation where investment firms mislead investors and give bad advice in investment decisions to constitute grounds for compensation. An example of this is if a fund advisor were to advise elderly people to invest in high-risk funds with a long investment horizon.
Thirdly, the committee considers it important to create schemes that have sufficient funds to be able to pay out the compensation. Taxpayers must not subsequently have to pick up the bill. Therefore, we should introduce
funding so that there is money in the funds if a firm should go bankrupt. It is proposed that the target fund level be reduced from 0.5 to 0.3% of the investment firm’s assets. The process is being accelerated so that all Member States are to achieve full financing of their funds in five years instead of 10 years. The calculation of the fees is to be based on the potential compensation risk incurred by a firm. Those investment firms that take the biggest risks will also have to contribute more to the funds than those firms that take smaller risks.
Fourthly, the borrowing mechanism must be adjusted. The Commission has proposed a compulsory borrowing mechanism in which schemes can borrow from one another, between countries. In order to avoid moral hazard, in other words deliberate underfunding, we propose that the compulsory borrowing mechanism not be launched until all the schemes have built up their funds and reached the target level. After a five-year period, a scheme is to have the right to borrow from other schemes within the European Union, provided that the scheme that finds itself in this situation has previously achieved the target funding level.
Fifthly, the committee would like the Commission to investigate the UCITS funds, including in the directive. We have had an intense debate in committee about whether mutual and bond funds – UCITS funds – should be included or not. We believe that we need to look more closely at how this is to be done. We obviously do not want Madoff-style dealings, but the committee thinks that the Commission should investigate the advantages and disadvantages of supplementing or replacing existing schemes with insurance-based solutions, in other words a system of insurance contracts.
Finally, the committee would also like to increase transparency by introducing a reporting obligation for the Member States of the European Union, in other words a duty to report to the Commission and the European Securities and Markets Authority on how the national schemes are working."@en1
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