ESMA launched a consultation on the guidelines on internal controls for credit rating agencies (CRAs). The guidelines set out the systems and controls that CRAs should have in place to meet the requirements of the CRA Regulation on internal controls. The consultation closes on March 16, 2020. ESMA will consider the responses it receives to this consultation paper in the first quarter of 2020 and expects to publish a final report by the third quarter of 2020.
The CRA Regulation includes a number of requirements for the internal control system that a CRA must have in place to prevent or mitigate any possible conflicts of interest that may impact the independence of its credit rating activities. The proposed guidelines set out the views of ESMA on the components and characteristics that CRAs should have in place to demonstrate the presence of an effective framework for internal controls and effective internal control functions. The Internal Controls Framework focuses on the control environment, risk management, control activities, information and communications, and monitoring activities of a CRA. However, the Internal Controls Functions focus on specific roles, namely compliance, review, risk management, information security, and internal audit. These guidelines have been developed with a view to accommodate the proportionality that is provided for smaller CRAs under the CRA Regulation. The need for guidance on internal controls was identified during the supervisory work of ESMA in 2017 and 2018 and its development was highlighted as part of its 2019 Supervisory Work Program.
Comment Due Date: March 16, 2020
Keywords: Europe, EU, Banking, Insurance, Securities, CRAs, Internal Control Functions, Guideline, CRA Regulation, ESMA
Previous ArticlePRA Publishes Final Policy on Maintenance of TMTP Under Solvency II
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.