The regulatory hierarchy in the EU
Principal EU legislation is called framework or level 1 acts. These correspond to Norwegian laws. The Council and the Parliament adopt such legislation based on proposals from the European Commission in the form of either directives or regulations.
Directives must be incorporated into national law by all member states.
Regulations apply automatically and uniformly to citizens throughout the EU. Examples of level 1 legislation for the financial markets are CRD IV and CRR (capital requirements for banks), IDD (Insurance Distribution Directive), MiFID (Markets in Financial Instruments Directive), EMIR (European Market Infrastructure Regulation) and Solvency II (capital requirements for insurance undertakings).
The level 1 legislation may authorise the Commission to lay down supplementary provisions. Such supplementary provisions are referred to in the EU as level 2 legislation and correspond to Norwegian regulations. They are generally laid down in the form of regulations.
The EEA Agreement regulates how EU legislation, at both level 1 and 2, will be legally binding for Norway, Iceland and Liechtenstein by being incorporated into the EEA Agreement. More information about this can be found below.
EBA, ESMA and EIOPA issue recommendations/guidelines on how the legislation should be enforced or how supervision should be conducted. This is referred to as level 3 legislation and is not binding. The NCAs shall inform EBA, ESMA and EIOPA of whether they intend to comply with the recommendations. Recommendations from the ESAs that are of relevance to Norwegian players are published on Finanstilsynet's website:
- EBA recommendations (Norwegian only)
- ESMA recommendations (Norwegian only)
- EIOPA recommendations (Norwegian only)
The EEA process – from EU legislation to Norwegian law
Once legislation has been adopted in the EU, it must be considered whether is falls within the scope of the EEA Agreement. In such case, it shall be incorporated into the EEA Agreement, whereby the EEA EFTA states are required to implement the provisions at national level. Most of the legislation in the financial area is covered by the EEA Agreement.
Decisions to incorporate new legislation into the EEA Agreement are made by the EEA Joint Committee, which consists of representatives from both the EU side and the EEA/EFTA side. If you want to find out whether an EU legal act has been incorporated into the EEA Agreement, you can search the EEA-Lex:
It may be necessary to adapt EU rules before including them in the EEA Agreement. Some adaptations automatically follow from Protocol 1 to the EEA Agreement, e.g. that ‘EU member states’ shall be understood as ‘EEA member states’. There are also cases where the EEA EFTA states find that material adjustments must be made when the EU rules are to be included in the EEA Agreement. This will be subject to negotiations between the EU side and the EFTA side.
It is only after the rules have been implemented in Norwegian law as an act or regulations that the legislation will apply to Norwegian citizens and institutions.
Regulations must be implemented in Norwegian legislation ‘word by word’. This is done by so-called incorporation. It means that in the Norwegian act or regulations, reference is made to the regulation (in EEA-adapted form) that is to apply as Norwegian law.
EU directives are often formulated in more general terms, and both Norway and other EEA states have greater flexibility when it comes to implementing the rules nationally.
More information about the EEA
More information about the EEA Agreement can be found on the EFTA website, including the text of the agreement and updated annexes of all legal acts included in the EEA Agreement.
You can also find useful information about the EEA on the Norwegian government’s website.
Europalov.no is an independent Norwegian website that follows the legal acts from the original consultation or proposal through the decisions of the European institutions, the EEA Joint Committee (for EEA matters) and the Norwegian government (for Schengen matters) and their implementation into Norwegian law.
How to find the various EU rules
EUR-Lex is the most important database for EU law. Here you will find all legal documents adopted in the EU:
Legislation in the financial area has become less accessible in recent years. When legislation is amended, this is reflected in the Norwegian act or regulations by including a reference to the amendment. In order to get a complete picture of current regulations, it is therefore necessary to look at:
- the original regulation
- any amending regulations
- any adaptation texts to the original regulation and amending regulation
- general adaptations in Protocol 1