No. 90 - Private and public enforcement of EU investor protection regulation

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by Raffaele D'Ambrosio and Stefano MontemaggiOctober 2020

This Quaderno collects the contributions of the speakers at the seminar organized by the Banca d'Italia on 4 October 2019, in order to address - in an open dialogue with academics and legal practitioners - the rules of conduct established by MiFiD and the legal tools for their enforcement.

The rules and standards set out in MiFiD to protect investors were progressively adopted as a sort of "template" by the subsequent EU financial legislation, overcoming by this way the segmentation of the banking, financial and insurance sectors.

Despite the expansion of the protection models mentioned above, the EU Legislator has so far refrained from harmonizing the private law tools aimed at effectively implementing those rules. Indeed, the comparative analysis shows a variety of civil remedies among the different jurisdictions. Some alignment could be achieved through a more mindful reference to the principles of effectiveness and equivalence of protection as developed by the CJEU.

In this context, so far, the Union Law was mainly focused on public intervention measures, affecting the financial products offered in the market and therefore the related contracts. At the same time, the EU Legislator has progressively anchored these measures not only to the objectives of the stability and the integrity of the financial system, but also to the goal of protection of investors.

Nevertheless, due to the original absence of private enforcement harmonization at the EU level in this area, there is still a lack of coordination between the initiatives carried out by the public authorities and the protection granted by the courts on a case-by-case basis. These potential inconsistencies bring considerable risks in terms of coherent implementation of the rules and standards, which are often based on open and flexible legal concepts: hence the need to envisage possible coordination mechanisms, also by taking inspiration from the antitrust legislation where this issue was mostly dealt with.

Moreover, in the field of financial services, the private enforcement is no longer an exclusive prerogative of the Courts, but also of the ADR (Alternative Dispute Resolution) systems, as the Italian Arbitro delle Controversie Finanziarie, whose case-law has already been confronted with the application of the rules of conduct set out in the MiFiD.

Waiting for the harmonisation process to gain momentum and to overcome the imbalances described above, it is then up to the authorities, courts and ADRs to adopt an overall view on this issue in order to attain suitable solutions to protect investors while balancing the other general interests at stake.

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