In accordance with Article 47 of the Italian Constitution and the EU law, banks and financial intermediaries are subject to extensive regulation, in order to foster their correct and prudent conduct. Banking and financial markets regulation keeps evolving in response to the growing internationalization of finance and integration of markets and intermediaries, in addition to the growing complementarity between banking and financial products. A key point of such regulation lies in granting transparent contractual conditions and correct relations with customers.

In the Italian regulatory system, the supervisory model, where the Bank of Italy is entrusted with prudential supervision over credit institutions, investment firms and all other financial intermediaries to ensure the stability of the financial system while the Consob is responsible for the transparency and conduct of investment services and for the disclosure of information made available by issuers, led to a potential conflict between the different objectives of the regulation and supervision.

For long, in fact, primacy was given to the objective of financial stability at the expense of the objective of competition between intermediaries. This is also why those two objectives (financial stability vs. competitiveness of the financial system) were assigned by the law to the same supervisory authority.

Recently, however, the Italian system of regulation has not been inclined only to the financial stability of banks but also included other purposes (competitiveness of the financial system, investors’ protection) under the impetus of the EU law to achieve protection of all public interests involved in regulating banking and finance.

More generally, the Italian administrative and regulatory system is sometimes perceived as one of the main obstacles to a higher growth of the productive system. Some causes of this ineffectiveness are deeply rooted and date back to the Italian unification: a strong administrative tradition; an excessive political influence over the administration; the relevance of the juridical culture. Some reactions to these inefficiencies have led in some cases to further problems: for example, an immoderate number of laws and administrative acts, often too complicated.

It is therefore essential to reduce the bureaucratic burden on business and to reorganise the judicial system to make it more efficient, as a factor that influences the impact of structural reforms. The current effort consists of overcoming the limits of the regulatory state by simplifying the regulation, rendering it more user-friendly and effective. Rules need to be clear, easy to implement and stable over time to stimulate competition and encourage the reallocation of resources toward activities with higher growth potential.

Therefore, Supervisory Authorities should now exert their task observing the principle of valuation of the decision-making autonomy of authorised persons and the principle of proportionality meant as a criterion for the exercise of power implying the minimum sacrifice of the recipient’s interests.

The strategic use of regulation is becoming more and more, even in Italy, a tool to combat the ongoing economic crisis and foster economic growth: an example are all the regulatory initiatives aimed at implementing the so-called finance for growth. Nevertheless, regulation enforcement and compliance strategies remain essential.

The book deals with regulation of banking activities, investment services or activities, collective portfolio management, Italy’s supplementary pension system, relations between intermediaries and customers, public offering of financial instruments and products, public takeover bids, listed companies, insurance and reinsurance business. Among the current topics, it also examines the link between investor protection and confidence in the financial markets, the relationship between the quality of corporate governance and the development of the financial markets as well as the financial markets as a source of financing for companies.

The TUB contains the main provisions regulating banking activities, from the definition of banking activity (Arts 10 and 11) and the conditions for granting banking licence (Art. 14) and authorizing the acquisitions of qualifying holdings (Art. 19) to the regulation of crisis and insolvency (Arts 70–105) and deposit guarantee schemes (Arts 96 to 96-quinquies). Furthermore, the TUB identifies and regulates the credit authorities intervening in the regulation and supervision of banking activities (Arts 2–9). Such authorities are the Interministerial Committee on Credit and Savings (Comitato interministeriale per il credito e il risparmio (CICR)), the Ministry of Economy and Finance and the Bank of Italy (Art. 1, lett. a, of TUB). The latter plays a core role in regulation and it is the Italian national competent authority for supervision according to EU legislation (Art. 4, para. 1, point 40, of the CRR, according to which “‘competent authority’ means a public authority or body officially recognised by national law, which is empowered by national law to supervise institutions as part of the supervisory system in operation in the Member State concerned”).

The TUB also contains the main provisions on prudential supervision, both on an individual basis (Arts 51–58) and on a consolidated basis (Arts 59–69) and regulates other aspects of banking activities outside the scope of prudential supervision, such as in the field of transparency of contractual conditions and correctness of relations with customers (Arts 115–128-ter). The TUB also provides the criminal and administrative sanctioning framework, in case of breach of banking regulation (Arts 130–145 TUB).

The other core law dealing with financial activities is the Consolidated Law on Finance (Legislative Decree no. 58 of 1998), which also regulates activities of banks outside the scope of the typical banking business of taking deposits and granting credits, such as investment services or the function of custodian of assets of undertakings for collective investment. The provisions on banks as issuers of financial instruments or listed company are contained in the Consolidated Law on Finance.

Other legislation defines many other important aspects of the regulatory framework for banks (e.g. the civil code for company law; Legislative Decree no. 231 of 2007 for AML/CFT; Legislative Decree no. 11 of 2010 for payment services). The typical core banks’ activity, however, is still mainly regulated by the TUB.

The TUB generally applies irrespective of the type of banks involved, although some special provisions only refers to cooperative banks (in the two different forms of banca popolare and banca di credito cooperativo: Arts 28 to 37 of the TUB; see also, Art. 150-bis that provides for several derogation to general provisions of the civil code on cooperatives companies). The TUB therefore overcomes the specialization of banks (and of the corresponding discipline) which previously characterized the Italian banking law.

The centrality and longevity of the TUB has been granted so far also by virtue of its flexibility: only the main provisions on banks’ activity are contained in the TUB, which leaves wide leeway to the recourse to secondary law, that is to regulation adopted by credit authorities, making it possible to take into account future developments with the benefit of the effectiveness of supervisory action.

This two-level regulatory structure of the TUB applies particularly, but not only, for prudential rules. Arts 53 and 67 of the TUB provide the power of the Bank of Italy to issue general provisions in the fields of capital adequacy, limitation of risk in its different forms, permissible holdings, corporate governance, management and accounting procedures, internal control mechanisms, remuneration and incentive systems. The provisions shall be issued by the Bank of Italy in conformity with the deliberations of the Interministerial Committee on Credit and Savings (CICR), which is chaired by the Minister of Economy and Finance and shall deliberate upon proposal of the Bank of Italy. In case of urgency, the Minister of Economy and Finance substitutes the CICR for the adoption of the deliberations (see Arts 2 to 4 of the TUB). A similar procedure is also provided for the adoption of secondary provisions in the field of transparency of contractual conditions and correctness of relations with customers, but in this case the deliberations of the CICR are adopted on a proposal of the Bank of Italy with the agreement of the Consob (Art. 127, para. 3, of the TUB).

This “circular” regulatory procedure – with a proposal of the Bank of Italy to the CICR, which then deliberates on the general aspects of secondary regulation while Bank of Italy establishes more detailed rules in conformity with CICR’s deliberations – was intended to maintain a core role of the technical expertise of the Bank of Italy as the banks’ supervisor and, at the same time, a link with the political ministerial stance through the CICR.

The CICR is the credit authority in charge of the “high supervision in the field of credit and protection of savings” according to Art. 2 of the TUB, a competence which has never been well defined in concrete terms and which poses a threat to the operational independence of the authority competent for supervision (in this regard, see the opinions of the ECB CON/2006/51, para. 2.3 and CON/2007/17, para. 2.3; the independence of national competent authorities is now required also by Art. 19, para. 1, of EU Regulation no. 1024/2013 – that is the Single Supervisory Mechanism (SSM) Regulation). The role of the CICR in the regulatory process is currently under discussion, also taking into account that regulation is more and more determined at EU level, without the need of a link of the general principles of banking legislation with the political stance at national level. Hence, the law delegating to the government the implementation in Italy of EU Directive 2013/36 (Capital Requirements Directive (CRDIV)) provides that secondary law in this field shall be adopted by the Bank of Italy without the previous deliberation of the CICR (Art. 3, para. 1, point b, of Law no. 154 of 7 October 2014).

The Bank of Italy issues secondary regulation by means of general decisions (denominated Disposizioni di vigilanza and previously Istruzioni di vigilanza), either on specific issues or regulating several aspects of banking activities (adopted by means of circulars): these are in particular circulars no. 229 of 1999, no. 263 of 2006 and no. 285 of 2013, which are periodically revised (and in some parts have been repealed). The latter circular adapts the secondary legislation to the Basel 3 principles, as transposed at EU level by CRDIV and CRR and aims at constituting a comprehensive rulebook of secondary provisions for banking activity in Italy.

As far as the procedure for the adoption of secondary regulation in the banking field is concerned, the general due process principle of participation of interested parties in the administrative proceedings are not applicable to regulation, according to Art. 13 of law no. 241 of 1990 (i.e. the general law on administrative proceedings). The same law also generally exempts regulations from the obligation to state the reasons on which the decisions of administrative bodies are based (Art. 3, para. 2, of law no. 241 of 1990). The TUB provides for the general rule of publicity of the Bank of Italy’s regulation and also of the principles and criteria of its supervisory activity; regulation is published in the Bank of Italy bulletin or, where its scope extends to persons other than those subject to supervision, on the Italian Official Journal (see Arts 4 and 8 of the TUB).

The Italian legal framework of regulatory powers takes into account the better regulation principles, also in order to strengthen the supervisor’s consideration of the intermediaries’ perspective. Those principles have fully become a common ground for regulation adopted by all financial supervisors in Italy in 2005, by means of the law on the protection of savings (Art. 23 of law no. 262 of 2005; the Bank of Italy adopted a regulation for the detailed implementation of this provision on 24 March 2010: see Official Journal no. 102 of 4 May 2010). Under this law, the regulations of the Bank of Italy and other Italian supervisory authorities (the Consob, Ivass, Covip) must be justified with reference to the general choices of regulation and supervision. Furthermore, those regulations shall be accompanied by a report that assesses their impact on the activity of regulated institutions and on the interests of investors and savers. The regulations shall take into account the principle of proportionality, which is defined as the exercise of the power appropriate to its objective with the minimum sacrifice of the interests of the regulated institutions. To this end, representatives of the supervised entities and of consumers shall be consulted on the content of the regulations, prior to the approval. The regulations shall be reviewed at least every three years in order to adapt them to changing in market conditions and in the interests of investors and savers.

The harmonisation of EU banking law through the adoption of EU directives dates back many decades, starting from the already mentioned first and second banking directives of 1977 and 1989 until the recent fourth version of the CRDIV. This process is linked with the achievement of the EU single market, in order to concretely give effect in the banking field to the freedom of establishment and the freedom to provide financial services. Those directives are traditionally legally based on (the current) Art. 53, para. 1, TFEU (and the corresponding articles in the former treaties), that is “for the mutual recognition of diplomas, certificates and other evidence of formal qualifications and for the coordination of the provisions laid down by law, regulation or administrative action in Member States concerning the taking-up and pursuit of activities as self-employed persons”, “in order to make it easier for persons to take up and pursue activities as self-employed persons”. The removal of the main differences between Member States legal frameworks in the banking field is therefore justified, in order to make it easier to take up and pursue the business of credit institutions for the smooth functioning of the internal market.

The regulatory discretion of national legislature of EU Member States has been progressively eroded by the growing amount and details of EU directives in the banking field (as far as the power of EBA are involved, see a list of such Directives in Art. 1, para. 2, of the EBA Regulation). However, a substantial change in the EU legislature approach, consisting in a tradition of 30 years of flexible and only partially harmonised banking legislation, occurred with the financial crisis with a...