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Ongoing innovation in financial services, increasing digitalization and post-crisis reform efforts are combining to complicate cross-border oversight of financial markets, European regulators find.

A new report from the umbrella group of securities, banking, insurance and pension regulators — known as the Joint Committee of the European Supervisory Authorities — examined the supervision of retail financial services across national borders, and found that regulators are facing “intensified demands” when supervising financial institutions that provide retail banking, investment and/or insurance services across borders.

Among other things, the report noted that increasingly borderless financial markets pose a variety of regulatory issues, including added supervision and enforcement challenges, gaps in regulation and arbitrage opportunities, along with organizational issues.

For instance, the report points to “the aggressive and misleading cross-border marketing of complex financial products to retail clients.”

To address their concerns, the regulators make a number of recommendations to policymakers, including that they look to increase harmonization; clarify how rules apply when firms provide services online across borders; and seek to increase cooperation, collaboration and information sharing between regulators.