ESAs Report on Supervisory Independence of Competent Authorities
The European Supervisory Authorities (ESAs) published individual reports on the supervisory independence of competent authorities in their respective sectors. Based on the self-assessment of competent authorities, the three reports highlight that the independence of competent authorities is multi-faceted and dependent on a number of legal, institutional, operational, and cultural factors. The three reports take stock of the competent authorities’ independence along the key areas of operational, financial, and personal independence as well as accountability and transparency. The reports seek to factually represent the arrangements and practices reported by competent authorities, without assessing the independence of individual competent authorities.
The reports set out the following key findings with respect to each area:
- Operational independence. While the vast majority of competent authorities are established as independent bodies, a few are established under the aegis of a ministry and a limited number are required to reply to requests made by certain public bodies, such as Ministers. Not all competent authorities report being in a position to hire staff at the level needed for the fulfilment of their supervisory tasks.
- Financial independence. Almost all competent authorities reported adequate funding. However, a variety of funding models are in operation, with some being subject to centralized government budget rules and a few allowing for the creation of reserves.
- Personal independence. While a framework is in place at most competent authorities, there are differences on aspects such as terms of office and removal conditions for competent authorities’ senior management and board members, management of conflicts of interest, cooling-off periods, and legal protection for staff.
- Transparency and accountability. Competent authorities typically ensure public transparency through the publication of documents such as annual reports or financial statements, disclosing supervisory measures taken, and through duties to report periodically on their activities to a government entity or democratic assembly. Some publish documents in English as a way to enhance transparency.
EBA will use these findings to consider, together with ESMA and EIOPA, how to further develop the monitoring and fostering of supervisory independence. Potential activities might include monitoring supervisory independence through periodic surveys, monitoring conflicts of interest, establishing common EU-wide criteria for supervisory independence, benchmarking/assessment of supervisory independence, and advice on legislative change. The reports can support competent authorities in assessing whether it might be desirable to seek any legislative or regulatory amendment to further improve the framework underpinning their independence. In addition, the reports may be used by the European Commission as input for its own report on the independence of competent authorities, which it is preparing under the review clauses of the ESAs founding regulations.
Related Links
Keywords: Europe, EU, Banking, Insurance, Securities, Competent Authorities, Supervisory Independence, EBA, EIOPA, ESMA, EC, ESAs
Previous Article
APRA Finalizes Guidance for New Prudential Standard on RemunerationRelated Articles
EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
BCBS and EBA Publish Results of Basel III Monitoring Exercise
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
PRA Updates Timeline for Final Basel III Rules, Issues Other Updates
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
US Treasury Sets Out Principles for Net-Zero Financing
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
EC Launches Survey on G7 Principles on Generative AI
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.