On Tuesday morning, German Chancellor Olaf Scholz will speak in the European Parliament. The date, May 9, is historic, not only because it marks the victory over Nazi Germany celebrated in Russia and elsewhere. On May 9, 1950, Robert Schuman presented his idea of a European Coal and Steel Community. It is unlikely that Olaf Scholz’s speech this Europe Day will be similarly visionary. According to Berlin, significant new impulses are hardly to be expected in Strasbourg. Scholz had already presented his European policy ideas in Prague last summer.
So far, the chancellor has implemented little of his Prague plans. The interim results of the conference on the future of Europe are equally sobering. On May 9, 2022, the Future Conference, which was co-designed by citizens, ended with a ceremony in the Strasbourg plenum. But only the EU Commission has something to show for the 49 reform proposals, as Markus Grabitz analyzes.
Margrethe Vestager is visiting Berlin today. Robert Habeck invited the Vice President of the Commission to the Ministry of Economics to discuss the interaction between the state and the market in the ecological transformation. The Competition Commissioner is likely to be particularly interested in Habeck’s concept of an industrial electricity price. Read more about this in the news section.
Have a good start to the week!
The final report of the “Conference on the Future of Europe,” which ended last year with a ceremony in the Strasbourg plenum on May 9 – Europe Day – contained 49 points. In the meantime, it has become clear that the Future Conference did not trigger any real reform momentum. “One year later, there are virtually no presentable results,” says Nicolai von Ondarza of the German Institute for International and Security Affairs (SWP).
The Future Conference did not lead to the institutions resolving the existing contradictions between them, the research group leader notes. Instead, he says, the Council and Parliament continued to get stuck in the nitty-gritty. The big point of contention remains whether changes to the European treaties are necessary. The Parliament is calling for a constitutional convention. But there is not enough support for this among the member states.
“If there was a window of opportunity for reform after May 9, it is now almost closed because the pre-election campaign for next year’s European elections has begun,” Ondarza says. He adds that the conference was at best “good exercise for the next mandate.”
Which points from the final report have been implemented by Parliament, Council and Commission?
The Commission has the most to present. In the citizens’ forums of the Future Conference, the selected citizens demanded to be heard more strongly in the legislative process. Commission President Ursula von der Leyen made sure of that: As announced in her State of the Union address (SOTEU) on September 14, citizens’ forums were held. In each case, 150 citizens – randomly selected, from all member states, half of them female, a quarter under 25 – worked out recommendations on the following projects over three weekends (two on-site in Brussels, one weekend virtually):
“The citizens’ forums are a progress,” says Ondarza. However, he says, the Commission did not dare to involve citizens in central policy areas, such as the Green Deal or digitization. “Rather small and very technical topics have been called up at the citizens’ forums.”
In addition: Only on the issue of food waste will there be a legislative proposal from the Commission, probably in early June. On virtual worlds and learning opportunities, the Commission will only bring non-legislative proposals. A Council recommendation and communication are expected to follow by the fall. Citizens’ forums on other topics have not been announced.
Parliament wants to tackle the reforms in the form of treaty amendments. As recently as last June, it passed a resolution calling on the Council to convene a constitutional convention under Article 48. The Council is playing for time and has taken the position that a resolution is not enough but that a report must be adopted. Work on the report is ongoing. The rapporteurs are:
Negotiations are still underway. The report is to be adopted at the July plenary session in Strasbourg. The central demands for treaty changes are as follows:
The member states would have to give the green light for the convention to take place. The Scandinavian states, Hungary and Poland in particular are opposed to a convention. Unanimity is not required in the Council for a convention to be convened – it is enough if a majority of 14 member states is in favor. The German government is in favor of a convention in its coalition agreement. Spain, Belgium, Italy, the Netherlands and Luxembourg have also signaled their support. France is also likely to agree to a convention.
Ondarza criticized the German government for doing too little to achieve its stated goal. “So far, no actor in the federal government has done much to forge coalitions in the EU for a convention.”
Anna Lührmann (Greens), Minister of State for Europe at the Federal Foreign Office, on the other hand, points to the initiative for more majority decisions in the Council: “We have now set up a group of friends with eight other member states to expand majority decisions in foreign and security policy,” she told Table.Media. Negotiations on this have been going on for months in the Council working groups, but there has not yet been a breakthrough.
Lührmann calls for the Future Conference to not be “a flash in the pan.” “Strengthening the EU’s ability to act through institutional reforms is essential.” However, she is not talking about a convention.
The international packaging trade expo Interpack is taking place in Düsseldorf these days. Circular economy and resource conservation are listed as “hot topics” at the event. “Sustainability is the No. 1 topic in the packaging sector and related process industries,” said Thomas Dohse, Director of Interpack, in the run-up to the event. “We are meeting with a great deal of determination from the industry to actively shape this transformation process.”
However, the industry is fighting hard against the EU Commission’s plans to reduce packaging waste. The regulation is to replace the previous directive on packaging and packaging waste and thus bring about EU-wide harmonization of regulations in many areas. Rapporteur Frédérique Ries (Renew) told the European Parliament’s Environment Committee yesterday that this was one of the most complex dossiers of her more than 20 years as an MEP.
The Commission’s public consultation counted 500 contributions, MEPs report massive lobbying. “Since the beginning of my mandate, I have never received so many lobbying inquiries as on the Packaging and Packaging Waste Regulation,” says shadow rapporteur Delara Burkhardt (SPD). She currently receives about thirty telephone and e-mail inquiries every day.
The topic occupies many interest groups: While the industry sticks to recycling and opposes measures for reusable packaging, environmental organizations are calling for even more ambitious targets for avoiding packaging and the resulting waste.
The strongest opposition, explained Frédérique Ries, is about Article 26 of the Commission proposal. This contains reuse and refill targets for different sectors and packaging formats. Article 22 also prohibits single-use packaging in the catering sector for the consumption of food and beverages at the place of consumption. The takeaway and beverage sectors are particularly controversial here.
The Commission had originally planned even higher targets. Confronted with objections from the industry, it then scaled back these ambitions in the draft presented at the end of last year. For hot and cold beverages, it proposed reuse rates of 20 percent by 2030 and 80 percent by 2040; for food packaging, 10 and 40 percent, respectively.
A specially formed industry lobby alliance is now once again questioning the Commission’s corresponding impact assessment and recently called in an open letter to the EU institutions published by Politico for the negotiations to be paused. In April, thirteen companies and associations formed the Together for Sustainable Packaging alliance, including several restaurant chains such as McDonald’s, KFC and Pizza Hut, as well as European paper packaging manufacturers and their association EPPA. Their campaign is being carried out by the Swiss communications consultancy Boldt AG.
The alliance is drawing on the Kearney study commissioned by McDonald’s and other supposedly independent studies to argue for single-use paper packaging in the takeaway sector on environmental grounds. Returnable packaging would use nearly 40 percent more water, 46 percent more fossil fuels and 82 percent more metals than recyclable disposable packaging, EPPA explains, warning of the consequences of “well-intentioned” legislation.
Advocates of reusable systems cite studies that attribute a far better life cycle assessment to them. One thing is certain: There is no simple solution to this question – the advantages of recyclable single-use packaging and reusable systems depend on too many different factors.
A rift is also running through the Environment Committee in the EU Parliament: Frédérique Ries is scrapping reuse targets in her draft report presented Thursday, seeking consideration for a sector that is very fragile after the crises of recent years. “I wanted to base this draft on best practices and sound analysis from member states,” she said. However, she did not find these in Article 26 of the Commission’s draft. That is why she is calling for the specifications to be reconsidered, she said.
She received support for this from the EPP. The Greens and Social Democrats, meanwhile, are calling for the targets to be maintained. “Recycling alone, despite what the industry likes to claim, is not the solution,” said Delara Burkhardt. “And even simple substitutions between different single-use packaging materials are not enough to combat the dramatic increase in packaging waste.” Waste prevention and reuse must be at the forefront of regulations, she urged.
Industry Committee rapporteur Patrizia Troia (S&D) is still unsure: In her draft opinion, she writes that she recognizes “the value that the reuse of certain packaging can have in certain sectors,” but calls for further analysis before targets are set. The Industry Committee will discuss the draft on May 23.
In Germany, catering businesses have already had to offer reusable packaging for takeaway food since the beginning of this year. This is provided for in the German Packaging Act. In a statement, the Federal Environment Agency says the Commission’s draft falls short of the German law in several areas and calls for tightening at the EU level. For example, more ambitious reuse targets and shorter transition periods should be adopted than those currently provided for in Article 26. The member states should also be able to set even higher targets for reuse and refilling on their own.
It was a tweet by FDP member of the Bundestag Frank Müller-Rosentritt that caused irritation among Ampel colleagues: “Thanks to intensive intervention by the @BMF_Bund and the @fdpbt, we were able – against the express will of our coalition partners – to stop the #provision ban for the time being.”
The liberals rejoiced. So exuberantly that party colleague and Finance Minister Christian Lindner also immediately appropriated the low-income earners: “A Commission ban would have made it more difficult for customers with lower incomes, in particular, to take advantage of low-cost, low-threshold advice.”
What is this about?
At the end of last year, the EU Commission, led by Finance Commissioner Mairead McGuiness, held out the prospect of banning commissions on the sale of financial products. At least, she wanted to put a tangible cap on the exorbitantly high payouts when contracts are concluded.
It was a plan that shook up the financial community. Consumer advocates applauded, “a step in the right direction,” praised Commission Vice President Valdis Dombrovskis. Ex-Commissioner Michel Barnier also spoke of an “important step towards improving transparency.”
At the same time, banks and insurance companies, investment advisors and investment specialists, all of whom are well organized in the struggle for influence, set their lobbyists in motion. First and foremost, the representatives of the major banks and insurance companies. They knocked on doors in Berlin and Brussels, saving banks and people’s banks, talked to members of parliament. Members of the Bundestag were harassed: “You are betraying the interests of the banks!”
The lobby representatives mobilized everything and everyone who could be mobilized, especially in Germany. CSU MEP Markus Ferber spoke of a “disservice to small investors.” Even Finance Minister Christian Lindner took to the battlefield as soon as the Commissioner had voiced her intention: He was “very concerned,” he wrote in an open letter to Brussels, saying a ban would be “a significant step backward” in the effort to facilitate investment opportunities on European capital markets.
In Germany, around 300,000 consultants in savings banks, banks and insurance companies depend on commission payments. For them, a ban would have far-reaching consequences. The financial industry in Germany alone annually earns billions from commissions, as the organization Finanzwende, which is critical of banks, has calculated. The advisors get their money by collecting several percent commission for every fund and insurance policy sold. The more expensive a product, the higher the commission. It goes without saying that for advisors, thus, the focus is sometimes more on concluding contracts than on providing sound advice.
Other countries have long since reacted. In Great Britain or the Netherlands, high commissions are banned, which are also paid out right at the beginning when a contract is signed – without the business collapsing. The alternative basic idea in Brussels and also in the red and green parliamentary groups in Berlin: Customers should pay the advisor for his working time, analogous to the tax advisor or lawyer in the form of a fee.
But the organized intervention in Brussels was initially successful: The Commission shelved the idea of a commission ban for the time being. Accordingly, high commissions would continue to be permitted.
Silent resentment prevailed among Social Democrats and Greens. “This is a problem for us,” says SPD financial expert Michael Schrodi, who also does not want to ban commissions per se. “But we don’t want an amalgamation of conclusion and advice harmful to consumers.” The “massive lobby pressure” has also reached him.
For the Greens, the responsible rapporteur Stefan Schmidt thinks “that the current system, which is almost exclusively based on commission, sets the wrong incentives.” In many cases, “commissions are precisely not the guarantor of independent advice, but of sales of overpriced financial products, regardless of quality or suitability.” “Trust in good advice has unfortunately eroded,” adds colleague Katharina Beck.
The dispute has been smoldering for some time. The commission ban was already a topic during the coalition negotiations: “We wanted more fee-based and less commission-based advice,” reported a Social Democrat at the time. “More protection and good advice.” But, “With the FDP, not even a compromise was possible.”
That has changed in the meantime – despite Frank Müller-Rosentritt’s jubilant tweet. Moderate liberals are now showing a certain awareness of the problem. “We should tackle the high commissions, especially in the initial phase,” says one of them with influence. In principle, he wants to hold on to commissions, but stretch them out over time and cap them upward if necessary.
The supervisors of the Federal Financial Supervisory Authority (Bafin) also expect the FDP to move. They are extremely critical of the unbridled commission system. The banking supervisory authority has already announced its intention to “expand and intensify its auditing activities.” Many consultants collected more than four percent of the contractual premium sum. The supervisory authority speaks of a “front-heavy calculation of sales and acquisition costs” and fundamentally questions whether an acquisition commission payment is “still justifiable at all.”
Frank Grund, Bafin’s Chief Insurance Supervisor, also recently spoke of “excesses in commission design.” It says in an internal paper of the federal agency: “High effective costs at the peak cast serious doubt on whether the product release procedures have sufficiently taken into account the needs of customers.”
Bafin announced it would examine those companies more closely “that stand out due to high expenses for insurance intermediaries and, in particular, the payment of high acquisition commissions.” In any case, Social Democrat Schrodi has not given up hope. “If not a ban – a restriction will come.” He expects a timely proposal from the Commission.
Funda Tekin arrived in Istanbul just a few days before the interview with Table.Media. For three months, the scholar is living and working on the Bosphorus and researching EU-Turkey relations, one of her main areas of focus.
For this stay, the 45-year-old has scooped up time otherwise well filled with her work as Director of the Institute for European Politics (iep). With Karin Böttger, she has been at the helm of the foreign and European policy research institution since 2018. Tekin’s topics include the future of the EU, the rule of law and EU enlargement.
She is the coordinator of the German-Nordic-Baltic Forum and part of the Franco-German group of experts commissioned by the two countries to develop proposals for institutional reforms of the European Union. The group plans to present its report in the fall.
There is a great need for reform in the EU, Tekin says. “By that I mean: We need to make ourselves capable of acting.” Especially in view of the planned enlargement, she says, it is time to tackle qualified majority voting, even if that is controversial among member states.
There must also be reforms in the accession process. The accession negotiations with Turkey were an example of how things should not be done, she said, because the credibility of the accession perspective had to be preserved at all costs. She said it is important not to repeat old mistakes in the talks with Ukraine and Moldova. “Expectation management” is a term Tekin uses more often in this context. That Ukraine will become an EU member in the next five years is too optimistic, she said, and the EU must say so clearly.
In this context, it would be worth discussing the concept of differentiated integration. In the context of the accession process, it would mean creating intermediate stages. “I know that’s not so popular because there’s a fear associated with it that these intermediate stages will become permanent,” Tekin says. “But it’s something to at least think about, precisely because the process takes longer.” For example, she says, it is conceivable to incorporate the country into the domestic market ahead of time.
As lively as EU enlargement is currently being discussed, Turkey is often left out of it. “This is a blank space in the debate,” Tekin says. “But EU-Turkey relations are there and they need a form.”
Tekin’s stay in Istanbul, sponsored by the Mercator Foundation, coincides with the parliamentary and presidential elections in mid-May, the outcome of which will probably determine the future of relations between Brussels and Ankara. Should the opposition win, Tekin says, foreign policy would probably not change that much. “But the tone would change. You would have a partner to talk to again.”
Europe and Turkey as topics have accompanied Tekin for a long time. The economist wrote her diploma thesis on the Europeanization of Turkey. Her doctorate was on differentiated integration in the EU. She has worked at the Jean Monnet Chair of European Policy at the University of Cologne and has led several research projects on Europe and EU-Turkey relations. This summer, she will take up an honorary professorship on European Governance at the University of Tübingen.
That Funda Tekin has made the EU and Turkey her topics, is also due to her family. She grew up in Germany with a Turkish father. That is why she does not feel she clearly belongs to a country, but rather as a European, she says. A feeling reinforced by her year abroad at Sciences Po in Paris.
When she has time off, she goes to the ballet, travels and spends time in nature. For now, however, Tekin is settling into her everyday life in Istanbul. She lives on the Asian side of the city and takes the ferry to the European part of the city to go to the office. During her first week, she says, she even saw dolphins. Sarah Schaefer
On Tuesday morning, German Chancellor Olaf Scholz will speak in the European Parliament. The date, May 9, is historic, not only because it marks the victory over Nazi Germany celebrated in Russia and elsewhere. On May 9, 1950, Robert Schuman presented his idea of a European Coal and Steel Community. It is unlikely that Olaf Scholz’s speech this Europe Day will be similarly visionary. According to Berlin, significant new impulses are hardly to be expected in Strasbourg. Scholz had already presented his European policy ideas in Prague last summer.
So far, the chancellor has implemented little of his Prague plans. The interim results of the conference on the future of Europe are equally sobering. On May 9, 2022, the Future Conference, which was co-designed by citizens, ended with a ceremony in the Strasbourg plenum. But only the EU Commission has something to show for the 49 reform proposals, as Markus Grabitz analyzes.
Margrethe Vestager is visiting Berlin today. Robert Habeck invited the Vice President of the Commission to the Ministry of Economics to discuss the interaction between the state and the market in the ecological transformation. The Competition Commissioner is likely to be particularly interested in Habeck’s concept of an industrial electricity price. Read more about this in the news section.
Have a good start to the week!
The final report of the “Conference on the Future of Europe,” which ended last year with a ceremony in the Strasbourg plenum on May 9 – Europe Day – contained 49 points. In the meantime, it has become clear that the Future Conference did not trigger any real reform momentum. “One year later, there are virtually no presentable results,” says Nicolai von Ondarza of the German Institute for International and Security Affairs (SWP).
The Future Conference did not lead to the institutions resolving the existing contradictions between them, the research group leader notes. Instead, he says, the Council and Parliament continued to get stuck in the nitty-gritty. The big point of contention remains whether changes to the European treaties are necessary. The Parliament is calling for a constitutional convention. But there is not enough support for this among the member states.
“If there was a window of opportunity for reform after May 9, it is now almost closed because the pre-election campaign for next year’s European elections has begun,” Ondarza says. He adds that the conference was at best “good exercise for the next mandate.”
Which points from the final report have been implemented by Parliament, Council and Commission?
The Commission has the most to present. In the citizens’ forums of the Future Conference, the selected citizens demanded to be heard more strongly in the legislative process. Commission President Ursula von der Leyen made sure of that: As announced in her State of the Union address (SOTEU) on September 14, citizens’ forums were held. In each case, 150 citizens – randomly selected, from all member states, half of them female, a quarter under 25 – worked out recommendations on the following projects over three weekends (two on-site in Brussels, one weekend virtually):
“The citizens’ forums are a progress,” says Ondarza. However, he says, the Commission did not dare to involve citizens in central policy areas, such as the Green Deal or digitization. “Rather small and very technical topics have been called up at the citizens’ forums.”
In addition: Only on the issue of food waste will there be a legislative proposal from the Commission, probably in early June. On virtual worlds and learning opportunities, the Commission will only bring non-legislative proposals. A Council recommendation and communication are expected to follow by the fall. Citizens’ forums on other topics have not been announced.
Parliament wants to tackle the reforms in the form of treaty amendments. As recently as last June, it passed a resolution calling on the Council to convene a constitutional convention under Article 48. The Council is playing for time and has taken the position that a resolution is not enough but that a report must be adopted. Work on the report is ongoing. The rapporteurs are:
Negotiations are still underway. The report is to be adopted at the July plenary session in Strasbourg. The central demands for treaty changes are as follows:
The member states would have to give the green light for the convention to take place. The Scandinavian states, Hungary and Poland in particular are opposed to a convention. Unanimity is not required in the Council for a convention to be convened – it is enough if a majority of 14 member states is in favor. The German government is in favor of a convention in its coalition agreement. Spain, Belgium, Italy, the Netherlands and Luxembourg have also signaled their support. France is also likely to agree to a convention.
Ondarza criticized the German government for doing too little to achieve its stated goal. “So far, no actor in the federal government has done much to forge coalitions in the EU for a convention.”
Anna Lührmann (Greens), Minister of State for Europe at the Federal Foreign Office, on the other hand, points to the initiative for more majority decisions in the Council: “We have now set up a group of friends with eight other member states to expand majority decisions in foreign and security policy,” she told Table.Media. Negotiations on this have been going on for months in the Council working groups, but there has not yet been a breakthrough.
Lührmann calls for the Future Conference to not be “a flash in the pan.” “Strengthening the EU’s ability to act through institutional reforms is essential.” However, she is not talking about a convention.
The international packaging trade expo Interpack is taking place in Düsseldorf these days. Circular economy and resource conservation are listed as “hot topics” at the event. “Sustainability is the No. 1 topic in the packaging sector and related process industries,” said Thomas Dohse, Director of Interpack, in the run-up to the event. “We are meeting with a great deal of determination from the industry to actively shape this transformation process.”
However, the industry is fighting hard against the EU Commission’s plans to reduce packaging waste. The regulation is to replace the previous directive on packaging and packaging waste and thus bring about EU-wide harmonization of regulations in many areas. Rapporteur Frédérique Ries (Renew) told the European Parliament’s Environment Committee yesterday that this was one of the most complex dossiers of her more than 20 years as an MEP.
The Commission’s public consultation counted 500 contributions, MEPs report massive lobbying. “Since the beginning of my mandate, I have never received so many lobbying inquiries as on the Packaging and Packaging Waste Regulation,” says shadow rapporteur Delara Burkhardt (SPD). She currently receives about thirty telephone and e-mail inquiries every day.
The topic occupies many interest groups: While the industry sticks to recycling and opposes measures for reusable packaging, environmental organizations are calling for even more ambitious targets for avoiding packaging and the resulting waste.
The strongest opposition, explained Frédérique Ries, is about Article 26 of the Commission proposal. This contains reuse and refill targets for different sectors and packaging formats. Article 22 also prohibits single-use packaging in the catering sector for the consumption of food and beverages at the place of consumption. The takeaway and beverage sectors are particularly controversial here.
The Commission had originally planned even higher targets. Confronted with objections from the industry, it then scaled back these ambitions in the draft presented at the end of last year. For hot and cold beverages, it proposed reuse rates of 20 percent by 2030 and 80 percent by 2040; for food packaging, 10 and 40 percent, respectively.
A specially formed industry lobby alliance is now once again questioning the Commission’s corresponding impact assessment and recently called in an open letter to the EU institutions published by Politico for the negotiations to be paused. In April, thirteen companies and associations formed the Together for Sustainable Packaging alliance, including several restaurant chains such as McDonald’s, KFC and Pizza Hut, as well as European paper packaging manufacturers and their association EPPA. Their campaign is being carried out by the Swiss communications consultancy Boldt AG.
The alliance is drawing on the Kearney study commissioned by McDonald’s and other supposedly independent studies to argue for single-use paper packaging in the takeaway sector on environmental grounds. Returnable packaging would use nearly 40 percent more water, 46 percent more fossil fuels and 82 percent more metals than recyclable disposable packaging, EPPA explains, warning of the consequences of “well-intentioned” legislation.
Advocates of reusable systems cite studies that attribute a far better life cycle assessment to them. One thing is certain: There is no simple solution to this question – the advantages of recyclable single-use packaging and reusable systems depend on too many different factors.
A rift is also running through the Environment Committee in the EU Parliament: Frédérique Ries is scrapping reuse targets in her draft report presented Thursday, seeking consideration for a sector that is very fragile after the crises of recent years. “I wanted to base this draft on best practices and sound analysis from member states,” she said. However, she did not find these in Article 26 of the Commission’s draft. That is why she is calling for the specifications to be reconsidered, she said.
She received support for this from the EPP. The Greens and Social Democrats, meanwhile, are calling for the targets to be maintained. “Recycling alone, despite what the industry likes to claim, is not the solution,” said Delara Burkhardt. “And even simple substitutions between different single-use packaging materials are not enough to combat the dramatic increase in packaging waste.” Waste prevention and reuse must be at the forefront of regulations, she urged.
Industry Committee rapporteur Patrizia Troia (S&D) is still unsure: In her draft opinion, she writes that she recognizes “the value that the reuse of certain packaging can have in certain sectors,” but calls for further analysis before targets are set. The Industry Committee will discuss the draft on May 23.
In Germany, catering businesses have already had to offer reusable packaging for takeaway food since the beginning of this year. This is provided for in the German Packaging Act. In a statement, the Federal Environment Agency says the Commission’s draft falls short of the German law in several areas and calls for tightening at the EU level. For example, more ambitious reuse targets and shorter transition periods should be adopted than those currently provided for in Article 26. The member states should also be able to set even higher targets for reuse and refilling on their own.
It was a tweet by FDP member of the Bundestag Frank Müller-Rosentritt that caused irritation among Ampel colleagues: “Thanks to intensive intervention by the @BMF_Bund and the @fdpbt, we were able – against the express will of our coalition partners – to stop the #provision ban for the time being.”
The liberals rejoiced. So exuberantly that party colleague and Finance Minister Christian Lindner also immediately appropriated the low-income earners: “A Commission ban would have made it more difficult for customers with lower incomes, in particular, to take advantage of low-cost, low-threshold advice.”
What is this about?
At the end of last year, the EU Commission, led by Finance Commissioner Mairead McGuiness, held out the prospect of banning commissions on the sale of financial products. At least, she wanted to put a tangible cap on the exorbitantly high payouts when contracts are concluded.
It was a plan that shook up the financial community. Consumer advocates applauded, “a step in the right direction,” praised Commission Vice President Valdis Dombrovskis. Ex-Commissioner Michel Barnier also spoke of an “important step towards improving transparency.”
At the same time, banks and insurance companies, investment advisors and investment specialists, all of whom are well organized in the struggle for influence, set their lobbyists in motion. First and foremost, the representatives of the major banks and insurance companies. They knocked on doors in Berlin and Brussels, saving banks and people’s banks, talked to members of parliament. Members of the Bundestag were harassed: “You are betraying the interests of the banks!”
The lobby representatives mobilized everything and everyone who could be mobilized, especially in Germany. CSU MEP Markus Ferber spoke of a “disservice to small investors.” Even Finance Minister Christian Lindner took to the battlefield as soon as the Commissioner had voiced her intention: He was “very concerned,” he wrote in an open letter to Brussels, saying a ban would be “a significant step backward” in the effort to facilitate investment opportunities on European capital markets.
In Germany, around 300,000 consultants in savings banks, banks and insurance companies depend on commission payments. For them, a ban would have far-reaching consequences. The financial industry in Germany alone annually earns billions from commissions, as the organization Finanzwende, which is critical of banks, has calculated. The advisors get their money by collecting several percent commission for every fund and insurance policy sold. The more expensive a product, the higher the commission. It goes without saying that for advisors, thus, the focus is sometimes more on concluding contracts than on providing sound advice.
Other countries have long since reacted. In Great Britain or the Netherlands, high commissions are banned, which are also paid out right at the beginning when a contract is signed – without the business collapsing. The alternative basic idea in Brussels and also in the red and green parliamentary groups in Berlin: Customers should pay the advisor for his working time, analogous to the tax advisor or lawyer in the form of a fee.
But the organized intervention in Brussels was initially successful: The Commission shelved the idea of a commission ban for the time being. Accordingly, high commissions would continue to be permitted.
Silent resentment prevailed among Social Democrats and Greens. “This is a problem for us,” says SPD financial expert Michael Schrodi, who also does not want to ban commissions per se. “But we don’t want an amalgamation of conclusion and advice harmful to consumers.” The “massive lobby pressure” has also reached him.
For the Greens, the responsible rapporteur Stefan Schmidt thinks “that the current system, which is almost exclusively based on commission, sets the wrong incentives.” In many cases, “commissions are precisely not the guarantor of independent advice, but of sales of overpriced financial products, regardless of quality or suitability.” “Trust in good advice has unfortunately eroded,” adds colleague Katharina Beck.
The dispute has been smoldering for some time. The commission ban was already a topic during the coalition negotiations: “We wanted more fee-based and less commission-based advice,” reported a Social Democrat at the time. “More protection and good advice.” But, “With the FDP, not even a compromise was possible.”
That has changed in the meantime – despite Frank Müller-Rosentritt’s jubilant tweet. Moderate liberals are now showing a certain awareness of the problem. “We should tackle the high commissions, especially in the initial phase,” says one of them with influence. In principle, he wants to hold on to commissions, but stretch them out over time and cap them upward if necessary.
The supervisors of the Federal Financial Supervisory Authority (Bafin) also expect the FDP to move. They are extremely critical of the unbridled commission system. The banking supervisory authority has already announced its intention to “expand and intensify its auditing activities.” Many consultants collected more than four percent of the contractual premium sum. The supervisory authority speaks of a “front-heavy calculation of sales and acquisition costs” and fundamentally questions whether an acquisition commission payment is “still justifiable at all.”
Frank Grund, Bafin’s Chief Insurance Supervisor, also recently spoke of “excesses in commission design.” It says in an internal paper of the federal agency: “High effective costs at the peak cast serious doubt on whether the product release procedures have sufficiently taken into account the needs of customers.”
Bafin announced it would examine those companies more closely “that stand out due to high expenses for insurance intermediaries and, in particular, the payment of high acquisition commissions.” In any case, Social Democrat Schrodi has not given up hope. “If not a ban – a restriction will come.” He expects a timely proposal from the Commission.
Funda Tekin arrived in Istanbul just a few days before the interview with Table.Media. For three months, the scholar is living and working on the Bosphorus and researching EU-Turkey relations, one of her main areas of focus.
For this stay, the 45-year-old has scooped up time otherwise well filled with her work as Director of the Institute for European Politics (iep). With Karin Böttger, she has been at the helm of the foreign and European policy research institution since 2018. Tekin’s topics include the future of the EU, the rule of law and EU enlargement.
She is the coordinator of the German-Nordic-Baltic Forum and part of the Franco-German group of experts commissioned by the two countries to develop proposals for institutional reforms of the European Union. The group plans to present its report in the fall.
There is a great need for reform in the EU, Tekin says. “By that I mean: We need to make ourselves capable of acting.” Especially in view of the planned enlargement, she says, it is time to tackle qualified majority voting, even if that is controversial among member states.
There must also be reforms in the accession process. The accession negotiations with Turkey were an example of how things should not be done, she said, because the credibility of the accession perspective had to be preserved at all costs. She said it is important not to repeat old mistakes in the talks with Ukraine and Moldova. “Expectation management” is a term Tekin uses more often in this context. That Ukraine will become an EU member in the next five years is too optimistic, she said, and the EU must say so clearly.
In this context, it would be worth discussing the concept of differentiated integration. In the context of the accession process, it would mean creating intermediate stages. “I know that’s not so popular because there’s a fear associated with it that these intermediate stages will become permanent,” Tekin says. “But it’s something to at least think about, precisely because the process takes longer.” For example, she says, it is conceivable to incorporate the country into the domestic market ahead of time.
As lively as EU enlargement is currently being discussed, Turkey is often left out of it. “This is a blank space in the debate,” Tekin says. “But EU-Turkey relations are there and they need a form.”
Tekin’s stay in Istanbul, sponsored by the Mercator Foundation, coincides with the parliamentary and presidential elections in mid-May, the outcome of which will probably determine the future of relations between Brussels and Ankara. Should the opposition win, Tekin says, foreign policy would probably not change that much. “But the tone would change. You would have a partner to talk to again.”
Europe and Turkey as topics have accompanied Tekin for a long time. The economist wrote her diploma thesis on the Europeanization of Turkey. Her doctorate was on differentiated integration in the EU. She has worked at the Jean Monnet Chair of European Policy at the University of Cologne and has led several research projects on Europe and EU-Turkey relations. This summer, she will take up an honorary professorship on European Governance at the University of Tübingen.
That Funda Tekin has made the EU and Turkey her topics, is also due to her family. She grew up in Germany with a Turkish father. That is why she does not feel she clearly belongs to a country, but rather as a European, she says. A feeling reinforced by her year abroad at Sciences Po in Paris.
When she has time off, she goes to the ballet, travels and spends time in nature. For now, however, Tekin is settling into her everyday life in Istanbul. She lives on the Asian side of the city and takes the ferry to the European part of the city to go to the office. During her first week, she says, she even saw dolphins. Sarah Schaefer
