Leaseurope Policy Latest: 8 March 2021
Leaseurope continued to serve its members and the leasing and automotive rental industry through some very challenging times. Watch Leaseurope's Chair review our 2020 activities here.
Our regular update provides members with an insight into the latest leasing and car rental industry news, policy developments, and upcoming events in an easily digestible format. It brings together up to date information on topics that will impact the leasing and car rental industry in a single place, and keeps members updated on the work of Leaseurope’s advocacy team.
In this issue, we provide an overview of our activities in the context of a preferential prudential treatment for leasing, supervision of ESG risks, tourism recovery, potential accounting changes for sale and leaseback transactions, and our response to the Data Governance Act consultation. We also provide updates on EBA guidelines around COVID-19 policies, legislative initiatives related to digitalisation, the Circular Economy Action Plan and sustainable tourism.
LEASEUROPE MET EUROPEAN COMMISSION ON BASEL IV
A Leaseurope delegation met again with key DG FISMA officials in March to follow up on our extensive dialogue with them to achieve a preferential capital treatment for leasing. The meeting was very positive as the officials confirmed that our proposal is included in their list of main potential issues within their proposal, which is expected to be published this summer. We are currently working to provide them some feedback with further evidence to strengthen our case and tackle some of their remaining concerns. This year we have also intensified our engagement with relevant Members of the European Parliament (MEPs) to convince them to support our proposals, while also continuing to work with Leaseurope member associations in support of their efforts at national level.
EBA CONSULTATION ON MANAGEMENT AND SUPERVISION OF ESG RISKS FOR CREDIT INSTITUTIONS
Leaseurope responded to the European Banking Authority (EBA) Discussion Paper on Environmental, Social and Governance (ESG) risks management and supervision. The paper provides a comprehensive proposal on how ESG factors and risks could be included in the regulatory and supervisory framework for credit institutions and investment firms. The main focus is on the risks to which institutions are exposed via the impact of ESG factors on their counterparties. The paper provides details on the risks stemming from environmental factors, especially climate change, and illustrates ongoing initiatives and progress achieved on this topic over recent years.
Our response highlights that leasing is ideally placed to act as a facilitator of the green transition, and to support Europe’s aims as outlined in the Green Deal and the Sustainable Finance Strategy. In addition, we emphasise the need for more proportionality and include a proposal for more involvement of the national supervisory authorities to take into account national specificities.
LEASEUROPE PARTICIPATES IN TOURISM4RECOVERY CAMPAIGN
As part of the European Tourism Manifesto Alliance, Leaseurope joins over 60 European organisations calling for tourism to be firmly anchored in EU national Recovery and Resilience plans. The EU's new Recovery and Resilience Facility provides an opportunity to not only rebuild this important part of the economy, but to do so in a more sustainable, resilient and innovative manner. The alliance recently published a ‘Call for Action: Accelerate Social and Economic Recovery by Investing in Sustainable Tourism Development’ paper, which presents concrete investment proposals in travel and tourism in line with the EU flagship initiatives listed in the European Commission’s Guidance to Member States on Recovery and Resilience Plans.
This includes proposals with direct relevance for leasing and car rental, covering areas like multi-modality, alternative fuels, fleet renewal, transport infrastructure, connectivity, renovation and much more. To support the alliance’s call to action, a new #Tourism4Recovery campaign has been launched with the goal of raising awareness of the devastating impact of the Covid-19 crisis on European tourism and showcasing how investment in sustainable tourism can be a key driver for the EU’s recovery. You can find more info on this campaign here.
KEEPING ACCOUNTING FOR SALE AND LEASEBACK SIMPLE
Leaseurope’s Accounting and Taxation Committee has responded to a consultation by the International Accounting Standards Board (IASB) on possible changes to how sale and leaseback transactions are measured under the new international lease accounting standard, IFRS 16. The IASB has proposed requiring firms to estimate future variable lease payments, such as payments that are based on usage of an asset, as well as fixed rentals. This follows a growth in the use of property leases where rental payments are linked to the lessee’s income. We reminded the IASB about the very real differences between equipment and property leases and the need to ensure that rules designed for property leases should not penalise equipment leases. Although sale and leaseback arrangements including variable lease payments are not common in equipment leasing, they can be used in particular for service-type arrangements for vehicle fleets and some types of industrial equipment. We pointed out that attempting to estimate usage is likely to be complex and uncertain, often needing some form of modelling by industrial engineers or other specialists. We recommended keeping the existing approach of accounting for only fixed lease payments for equipment sale and leaseback agreements.
LEASEUROPE RESPONDS TO DATA GOVERNANCE ACT PROPOSAL
Leaseurope has responded to the proposed Data Governance Act, which essentially aims to create a framework for non-personal data sharing both across sectors and across member states. Our response highlighted the key challenges surrounding access to data within the automotive industry, and the fact these challenges cannot be effectively overcome by simply “encouraging” data controllers to share relevant data. We also stressed the importance of the Data Innovation Board, which would be set up under the proposal, having representatives from industry as members, since they would be able to provide an insight into how the provisions set out in the proposal operate within their industry in practice.
EU UPDATES & INDUSTRY TRENDS
EBA CLARIFIES APPLICATION OF SELECTED COVID-19 POLICIES
The European Banking Authority (EBA) has published additional clarifications on the application of the prudential framework in response to issues raised as a consequence of the COVID-19 pandemic. These clarifications update the FAQ section of the EBA report on COVID-19 implementation policies, which provides clarity on the implementation of (i) the EBA Guidelines on moratoria and (ii) the EBA Guidelines on COVID-19 reporting and disclosure. This report is part of the EBA’s wider monitoring of the implementation of COVID-19 policies as well as of the application of existing policies under these exceptional circumstances. The report includes additional technical clarifications on the application of their recently re-activated guidelines on payment moratoria. In particular, the EBA has provided clarifications on the functioning of the 9-month cap, which limits the period of time for which payments on a certain loan can be suspended, postponed or reduced as a result of the application (and reapplication) of general payment moratoria.
EUROPEAN PARLIAMENT ADOPTS REPORT ON CIRCULAR ECONOMY ACTION PLAN
At the beginning of February, the European Parliament adopted their report in response to the Commission’s Circular Economy Action Plan. The Action Plan essentially aims to ensure that products are designed with circularity in mind, and that this principle is adhered to at all stages in the value chain. The Parliament’s proposals would effectively create binding 2030 targets for the use of materials, and notably their report recognizes the role of the rental industry in supporting the circular economy, stating “[Member States and local authorities should] raise awareness about sustainable consumption, including consumption models based on re-use, renting or sharing”. Additionally, the report calls on the Commission to update the End-of-Life Vehicles Directive so that it reflects the values of the circular economy, and to create a binding framework on the energy efficiency levels of buildings. You can find the report here.
EU STRATEGY FOR SUSTAINABLE TOURISM AND RECOMMENDATIONS ON EXIT STRATEGY
The European Parliament’s Transport and Tourism Committee adopted a draft resolution by Rapporteur Cláudia Monteiro de Aguiar on establishing an EU strategy for sustainable tourism. MEPs urged EU countries to include the tourism and travel sectors in their recovery plans and consider temporarily reducing VAT on these services. The resolution now needs to be voted on by the full house of the Parliament, possibly during the March plenary session. In the meantime, the European Tourism Manifesto Alliance, which Leaseurope is part of, published their Manifesto paper on Travel and Tourism Exit Strategy with concrete recommendations for re-opening travel & tourism in Europe, including the creation of a Commission-led Task Force to restore freedom of movement. The recommendations were shared with EU governments ahead of two crucial discussions – a videoconference of the European leaders on 25-26 February and an extraordinary meeting of Tourism Ministers on 1 March.
EU MINISTERS DEBATE THE NEW EU CONSUMER AGENDA
On 25 February, Ministers held a policy debate on the European Commission’s “New Consumer Agenda”, also referring to the Council conclusions on the subject adopted a few days prior. Both these conclusions and the outcome of the policy debate are meant to provide the Commission with political guidance for future initiatives in this field. Ministers stressed that consumer protection needs to be reinforced and integrated into all policy fields. Several ministers underlined that consumers’ trust and transparent consumer information are important elements for the recovery of Europe’s economy after the COVID-19-crisis. For example, in the context of green and digital transitions, consumers will need to feel empowered when changing their consumption patterns and protected against practices such as greenwashing. Some ministers pointed out the importance of fighting against built-in obsolescence and promoting the right to repair, in order to encourage sustainable consumption. In order to boost online retail consumption, rules on digital services across the EU should ensure a high level of consumer protection by clarifying and reinforcing the accountability of online platforms. Several ministers mentioned the very important role to be played by the future digital services act and digital markets act in this respect. Finally, consumer resilience is key in order to be prepared for a future crisis.
You can read more here.
COMMISSIONER VESTAGER EXCHANGES VIEWS WITH PARLIAMENT ON DIGITAL INITATIVES
On 23 February, Executive Vice President Commissioner Vestager held an exchange of views with MEPs on the Digital Services Act (DSA) and the Digital Markets Act (DMA). The two proposals aim to design an EU rulebook to create a fair, open, competitive digital space for equal and better protection of consumers and allow companies to scale up, contributing to the recovery of our economy and to the digital transition. Commissioner Vestager pointed out that the interventions were necessary and justified, so that the DSA preserves the e-Commerce Directive’s country of origin principle. On liability exemption, it clarifies differences between online platforms with a hosting role and those with a real commercial role in the transaction. She stated that the proposal is correcting shortcomings with a framework of asymmetric obligations (based on the size, nature, reach of platforms) and provides transparency on advertising and algorithms. Finally, large platforms need to assess risks and enforcement is strengthened with an integrated EU system.
Regarding the DMA, Vestiger stressed that EU competition law enforcement on a case by case was not enough to tackle all new issues, therefore ex ante regulation is now introduced. Market investigation would happen quickly to assign obligations to gatekeepers besides well-defined ex ante obligations and prohibitions for big platforms and related fines. She stated that democracy needs to decide what is best for society, not big online platforms. Lack of clarity on Article 5 of the DMA setting obligations was raised by MEPs. Vestager replied that the Commission purposefully avoided overly detailed obligations and tackled relevant damaging practices identified in recent investigations. MEPs also raised questions on targeted advertisement, concerns on the already existing competition authorities, on the algorithms, and made calls for more ambition on interoperability.
COMMISSION TO ASSESS POSSIBLE UPDATE TO eCALL LEGAL FRAMEWORK FOR 4G/5G NETWORKS
In their Strategy for Sustainable and Smart Mobility published in December 2020, the European Commission announced its intention to update the eCall legal framework. It has since clarified that the review would aim to prepare the new generation of eCall equipped vehicles to take into account the rise of 4G/5G networks at the expense of the 2G/3G networks, together with the shift from circuit-switched to packet-switched telecommunication networks. More specifically, the measure foreseen for the first quarter of 2022 is expected to revise EU rules on the Public Safety Answering Points (PSAPs) and eCall type-approval. The Commission announced its intention to launch a study, slated for launch early this year, to define the technical requirements for this revision and assess the question of possible double equipment of vehicles during a certain period. A second phase of the study would assess whether the 112-based eCall in-vehicle systems requirements should be extended to heavy goods vehicles, buses and coaches, powered two-wheelers, and agricultural tractors.
THE EU SME STRATEGY ONE YEAR ON: CHALLENGES AND OPPORTUNITIES
On 10 March, Eurochambres is hosting an event focused on the implications the COVID-19 crisis has had on SMEs. Speakers will also discuss the role of SMEs in facilitating the green and digital transitions. You can find more info here.
EXPANDING THE HORIZONS: HOLDING ASSETS FOR LONGER
On 11 March, Asset Finance International is holding a webinar based on their research on automotive fleet trends and holding assets on balance sheets beyond their first life. To participate in this industry roundtable discussion, you can find more info here.
EUROPEAN CONSUMER SUMMIT 2021
On 15 March, this year's European Consumer Summit will be taking place. The European Commission event brings together policy makers, national enforcement authorities, and industry to discuss a range of issues related to EU consumer policy. Topics to be discussed include the impact of the COVID-19 crisis on consumer protection, how to accelerate green consumption, and how to harness the benefits of digitalisation to improve consumers' experiences. You can find more info here.
CONNECTED FLEETS CONFERENCES
On 18 March, FleetEurope is hosting the virtual conference “Maximizing Efficiencies and Cost Savings for Commercial & Service Fleets”. You can benefit from the Hosted Buyer Programme which is a free ticket available only to Professional Buyer Profiles. You can find more info here.
DATA PROTECTION: COMPLIANCE AND ITS IMPACT ON THE SECTOR
On 18 March, FinTech Belgium invites you to a digital meetup discussing Schrems II and its impact on the financial sector, as well as three examples of RegTech solutions for data protection compliance. You can find more info here.
GLOBAL ECONOMIC OUTLOOK- BEGINNING OF THE END OF THE CRISIS?
On 19 March, Fitch Ratings is hosting a webinar discussing their latest views on the world economy in light of vaccine rollout, recovery and stimulus packages, inflationary pressures and other economic challenges for 2021. You can find more info here.
On 25 January the Accounting and Taxation Committee met via conference call
On 28 January the Expert Group on Automotive Statistics met via conference call
On 23 February the Legal Affairs Committee met via conference call
On 24 February the Prudential Supervision Committee met via conference call