The Lamfalussy procedure is one of the procedures used to establish secondary legislation. Lamfalussy is only used for acts on financial and monetary affairs. In part due to the complexity and in part due to the political sensitive nature of regulation in this sector Lamfalussy utilises the expertise of the financial supervisory bodies in the member states as much as possible.
In short the procedure proceeds as follows: basic legislation stipulates on which part of the legislation the European Commission has to establish further, technically detailed rules. In practice the European supervisory bodies of the various financial sectors will draft proposals. The Commission, Council of Ministers and the national supervisory bodies of the financial sector of each of the member states will finalise the new legislation. All these parties are jointly responsible for implementing the new rules.
Step 1: establish framework
In the basic legislation a framework is established in which the Commission will draw up more detailed secondary legislation.
Step 2: drafting the proposal
The Commission, in close cooperation with the European supervisory bodies of the various financial sectors drafts a proposal. In practice these supervisory bodies draft the proposal and the Commission puts a proposal forward with little or no changes.
Note that the member states are able to provide input on proposals through their representatives at the European supervisory bodies.
Step 3: approval of the proposal
The national supervisory bodies of the financial sector of each of the member states decide on a proposal by qualified majority vote, akin to the Council of Ministers.
When the national supervisory bodies approve of the proposal the Commission may implement the proposal.
Step 4: further measures for implementation
The Commission, in close cooperation with the European and national supervisory bodies draw up technical guidelines for the purposes of better implementation. These guidelines are not binding.
On voting procedures
National supervisory bodies decide by qualified majority vote i, and votes are weighed akin to the Council of Ministers. It is not clear how the non-binding guidelines (step 4) are decided upon.
Right to revoke
Both the Council of Ministers as the European Parliament may, without prior warning, notify the Commission that in their opinion the Commission has exceeded its mandate when establishing secondary legislation.
Should either Council or EP give notification hereof the Commission is required in investigate the measures taken and the objections raised by Council or EP. This investigation has three possible outcomes:
1.the Commission notifies the Council of Ministers and the European Parliament the measures will be retracted
2.the Commission notifies the Council of Ministers and the European Parliament the measures will be amended
3.the Commission notifies the Council of Ministers and the European Parliament the measures will not be amended
This only applies to measures taken per step 3. Additional non-binding guidelines issues per step 4 are exempt of this procedure.
Lamfalussy only applies for some measures taken on financial and monetary affairs.
Lamfalussy is based on the Treaty on European Union and the Treaty on the functioning of the European Union.