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A new jacket for the European Supervisory Authorities?

posted by ICODA on 22.11.2017 in News  | Leave a comment
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The Commission published its package for the review of the European Supervisory Authorities (ESAs) at the end of September. Because the Commission held the cards rather briefly, the first discussions about the package in the Council Working Group (National Experts) were rather surprising. Two co-rapporteurs were appointed in the European Parliament, a French-German tango of two political heavyweights. The further ‘agencification’ of financial supervision does not seem to stop.

The Commission published end September its package on the review of the European System of Financial Supervision (the European Supervisory Authorities (ESAs) and the ESRB). The center piece is a proposal for a regulation that amends not only the ESA’s founding regulations but also some other regulations. These additional changes are due to the new powers that ESMA will receive, if all goes according to plan. A number of additional powers for EIOPA will also lead to a change in the Solvency II Directive.

Because the Commission held the cards rather close to its chest, the first discussions about the package in the Council Working Group (National Experts) were rather surprising. Focus was on the guidelines which the ESAs are often keen to use, and not, for example, on the changed governance or the proposal to adjust the funding. Does this have to do with the fact that there are mainly national supervisors in the Council working group of the Member States who should then debate about their own powers? Is there a conflict of interest here?

While the Council has already begun its reading under the Estonian presidency, the European Parliament only last week appointed two co-rapporteurs for the whole package, Burkhard Balz (EPP, DE) and Pervenche Berès (S & D, FR). The report will thus be the result of a French-German tango of two political heavyweights. The timelines are not yet fixed but a thorough lecture of the proposal is appropriate. Will the proposal that each ESA needs to draft a three-year Strategic Supervisory Plan (SSP) make it unaltered through the co-legislation process? The national authorities will be obliged to take such SSP into account in their national plans (if any). How will the EP react to the changed nomination procedure of the presidents? The Commission in its proposal shifts the accent to the Member States, away from the European Parliament. And will insurers and pension funds like the individual publications of the stress tests, as is already the case with banks?

Can we learn from what happens in other EU agencies? Are the proposals really the best for Europe? Will the supervision of financial institutions really improve? Often it is underlined that governance is a much more critical element than capital requirements. How do you control governance from a distance? The package contains many proposals and there is more than enough food for different debates. But the increasing ‘agencification’ of financial supervision does not seem to stop.

For more information about the ESA review, prudential supervision, the EU regulatory framework, and new ideas, contact Lowet@icoda.eu

 

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