Dutch Authority for the Financial Markets chair cautions against deregulation drives that create unstable pendulum-style financial rules

In a column for Het Financieele Dagblad, Dutch Authority for the Financial Markets (AFM) chair Laura van Geest warns policymakers that efforts in Brussels and The Hague to reduce regulatory burdens can backfire if they lead to “pendulum” lawmaking and unstable requirements. Van Geest argues that rules can improve efficiency, predictability and protection, but that crisis-driven, fast-tracked interventions often produce poor-quality regulation that is later rolled back once the immediate pressure fades. She points to EU sustainability reporting rules as an example, noting the AFM repeatedly pushed for streamlining in consultations and that the European Commission moved to substantially scale back the Corporate Sustainability Reporting Directive package via an “omnibus” initiative shortly after adoption, undermining stability. The column also links financial crises to procyclical regulation and supervision, and highlights risk migration from the banking sector to less-regulated areas such as private markets, citing emerging press reports on valuation problems and investor redemption constraints; she argues these spillovers are better addressed through tighter regulation of non-bank financial institutions than by following deregulation trends in the United States. Looking ahead, she urges negotiators on the EU Savings and Investment Union to keep Sweden’s institutional approach in mind, and suggests that Netherlands’ target of scrapping or simplifying 500 rules per year should draw on existing evaluations of tax provisions that already contain critical conclusions.