Trust matters in the single market, but how? Analysing trust among European financial supervisors

European regulatory cooperation has become essential for the smooth operation of the single market, and this in turn requires trust. In the case of the EU ‘Undertakings for Collective Investment in Transferable Securities’ (UCITS) Directive, the member states’ financial supervisory authorities rely on each other to provide a harmonised regime for the sale of investment funds. Funds authorised in one member state can be sold freely in another member state without further authorisation, and thus the national authorities need to trust each other that there will be a consistent application of EU law. Yet we know little about how trust works in such cooperation. In this paper, we aim to provide a better understanding of how trust matters in the single market in financial services through an in-depth case study of a network of national financial market supervisory authorities, coordinated by the European Securities and Markets Authority. First, based on the wider body of literature on trust, we conceptualise and operationalise the concept, identifying in particular three components of trust most relevant for regulatory networks: (1) ability; (2) benevolence; and (3) integrity. Subsequently, based on seven semi-structured interviews and an expert survey among 24 NCA representatives in the European UCITS financial regulatory network, we analyse the extent to which these components are seen as present and important in the professional interactions of the network members. We conclude that particularly shared goals and values within the network of financial regulators play a vital role in establishing and sustaining trust in the single market in financial services.