The directors of the financial supervisory authorities in the Nordics have sent a joint letter to the European Supervisory Authorities (EBA, EIOPA, ESMA – the ESAs) calling for simpler regulation.

The directors, from the financial authorities of Denmark (Louise Caroline Mogensen), Sweden (Daniel Barr), Iceland (Ásgeir Jónsson), Finland (Tero Kurenmaa) and Norway (Per Mathis Kongsrud), have said it is “crucial to start transforming the single rulebook into also being a simpler rulebook”.

“The EU rulebook should be more simple, proportionate, and entail the least possible number of burdens while at the same time underpin financial stability and a high level of consumer and investor protection. A simpler rulebook enforced by risk-based supervision with strong discretionary tools also creates a better balance in supporting a stable, diverse, and well-functioning financial sector,” they wrote.

They called on national and European supervisors to work together to navigate a landscape that sees increasing focus on resources and reducing burdens for companies. They argued that resources should be used most efficiently on institutions and market participants with the highest risks.

They also stressed that “rigid ‘check the box’ compliance checks", which do not significantly reduce or address risks should be avoided.

“This will require a continued focus on a risk-based approach on all levels,” they wrote.

Although the directors acknowledged the enormous task placed on the ESAs, they argued that with “scarce resources” in national competent authorities, as well as in the ESAs, such a “strict focus and prioritisation is much needed”.

“In general, both at national and EU level, resources are scarce and under increasing pressure. This is not just the case in terms of budget, where public funds for areas such as defence and security are top priority. There is also a pressure in terms of the increase of regulatory requirements subject to supervision, new areas under regulation (i.e. digital finance and AI), an increasing need for coordination across regulatory areas and challenges in recruiting specialized staff,” the letter read.

The letter has been received positively by the Danish insurance and pensions industry. Insurance and Pension Denmark CEO, Kent Damsgaard, said the letter is “an extremely important signal that should raise eyebrows in the EU institutions”.

"The amount of reporting requirements and regulation has reached a point where we as an industry are struggling to make sense of it. The legislation currently takes up 3,500 A4 pages – and with the proposals that are on the way, we will exceed 6,000 pages. It's completely out of proportion,” he added.

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