The Commission presented a report on the operation
of the three European Supervisory Authorities (ESAs)
– the European Banking Authority (EBA), the European
Insurance and Occupational Pensions Authority (EIOPA), and the European
Securities and Markets Authority (ESMA) and the European System of
Financial Supervision (ESFS).
The ESAs were established in 2008 following the
financial crisis with the aim of strengthening European supervisory
arrangements. They started their operations in January 2011. The
Commission has assessed in detail the functioning of the ESAs
covering the period from their inception to December 2013. Due
account was taken of the self-assessment provided by the ESAs, of
the European Parliament Resolution on the ESFS
review of March 2014 as well as the studies
undertaken by the IMF and the European Parliament.
The review showed that in spite of the short reporting
period, overall the ESAs have performed well. They have
successfully built functioning organisations, have started to
deliver on their mandates and have developed their own
profiles.
(1) Assessment of the ESAs’ work : the main achievements concern the
following:
- the scope of the mandate of the ESAs is
considered sufficiently broad with some room for targeted possible
extensions;
- the work undertaken by the ESAs on the development of
the single rulebook has contributed significantly towards enhanced
regulatory harmonisation and coherence and has improved mutual
understanding between supervisors;
- more than 150 technical standards were
submitted in form of draft technical standards to the Commission
during the review period. Subsequent to the successful conclusion
of the negotiations on the CRDIV/CRR framework in spring
2013, EBA submitted 58 draft technical standards. During the period
under review the Commission has approved more than 45 technical
standards in total of which only three were sent back to the ESAs
for further amendments;
- in the field of supervisions, the ESAs have started
conducting peer reviews. Greater use will be made of this
tool, including not only thematic peer reviews but also country
peer reviews and more systematic follow-up, once work on the
regulatory framework has been advanced;
- EBA and EIOPA, and with the establishment of Central
Counterparties (CCP) since September 2013 also ESMA, have been
actively involved in all aspects of the work of colleges of
supervisors and have
- improved their functioning through the provision of
guidance and the oversight of agendas and annual action plans. The
ESAs contributed to enhance supervisory reporting and
disclosure;
- the ESAs have not issued recommendations, or indeed
binding decisions (e.g. on breach of law, emergency situations,
binding mediation), but have made use of their non-binding
mediation powers and moral suasion;
- the ESAs' activities as regards international
matters are framed by their underlying mandates;
- the ESAs have actively contributed to monitoring
developments in financial markets and to test the resilience of
financial institutions as well as of the EU financial system as a
whole. The ESAs have taken various measures to promote coordinated
action and to facilitate exchange of information. The report
mentioned in particular the 2011/12 recapitalisation exercise as
well as the Joint Committee report on cross-sectoral
risks;
- the ESAs have established internal structures on
consumer protection issues within their
organisations;
- while the shift away from a decision-making process
based on consensus to actual voting is a step forward, the
predominant role of the representatives of NCAs in the decision
making process has given rise to some criticism, the Management
Boards of the ESAs are considered to work
satisfactorily;
- the two joint bodies of the ESAs, namely the Board of
Appeal and the Joint Committee, have proven to be useful mechanisms
to ensure consistent views and cross-sectorial
cooperation;
- as regards financing, the ESAs' budgets are
based on 60% contribution from the NCAs and 40% contribution from
the EU budget and are fully subject to applicable financial
transparency rules in particular towards the budgetary
authorities;
- the overall structure of the ESAs appears
appropriate as it takes into account all elements of the financial
services sector and facilitates close cooperation between the
micro- (ESAs) and the macro-prudential (ESRB)
dimension.
(2) Areas for improvement: the review revealed some areas where further
improvements are required in the short- and medium term in order to
allow the ESAs to fully exploit their mandates.
Areas for improvement in the short
term: some of the improvements
can be implemented in the short term by the ESAs and the Commission
and would not require any change to the legislative framework. This
is the case as concerns:
- improving supervisory convergence in order to
ensure the consistent implementation and application of EU law, in
particular more and better use of peer reviews could be made and
more systematic follow-up needs to be ensured where deficiencies
have been detected;
- enhancing the transparency of the process for
preparing draft technical standards or advising the Commission
and ensure, where needed, high quality cost-benefit analysis,
including an analysis of impacts on stakeholders and Fundamental
Rights, where relevant;
- giving consumer/investor protection tasks a
higher priority and make full use of available powers;
- enhancing internal governance: (i) transparency
of the work of the stakeholder groups could be strengthened; (ii)
the role and influence of ESA staff within preparatory bodies could
be reinforced; (iii) the role and visibility of the Joint Committee
should be enhanced, e.g. by a dedicated website and systematic
publication of its work; (iv) reinforce the authority of the
Chairperson and more use could be made of the delegation of
specific tasks to the Chairperson.
In the short term, the Commission will take action in
the following areas:
- make sure that empowerments for technical standards in
future legislative proposals have deadlines relative to the entry
into force of the basic legal act;
- pay particular attention to the appropriateness of
timelines and to the scope of empowerments for technical standards
in draft legislative proposals and during discussions taking place
within the legislative process.
Medium term improvements: most of the issues stressed by stakeholders that
warrant further attention would imply legislative action to
amend the ESA founding Regulations.
Work to assess the possible options should examine the
following:
- improve governance of the ESAs to further
enhance the capacity of the Board of Supervisors to take swift
decisions in the interest of the EU as a whole and strengthen the
authority and role of the Chairperson and to amend the composition
and mandate of the Management Board in order to confer more
permanent and executive functions on it;
- improve the funding arrangements of the ESAs,
including the use of alternative sources of funding, ideally
abolishing EU and national contributions;
- enable the ESAs to have direct access to data
where necessary for the performance of their tasks and in line with
the applicable legislation;
- possible extensions of the current mandates
should be thoroughly assessed in the light of the subsidiarity
principle and against costs and benefits. Potential areas for
further tasks to be assigned to the ESAs concerned could include
the area of IFRS enforcement, a stronger oversight role on internal
model validation, shadow banking, and direct supervision of highly
integrated market infrastructure, such as CCPs;
- enhance the mandate in the area of
consumer/investor protection in order to better define the
respective roles and priorities of the ESAs with a pivotal role
assigned to the Joint Committee;
- strengthen the ESAs dispute settlement
powers;
- increase the duration of mandates for
Stakeholder Groups members;
- assess the possible need for structural
changes, including a single seat and extending direct
supervision powers to integrated market
infrastructures.