November 28
2021
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Emilija Berzanskaite
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19th October 2021
Banking & Finance Institutional law Internal Market

Reports on supervisory independence of competent authorities published by European Supervisory Authorities 

The European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA) published individual reports on the supervisory independence of competent authorities (CAs) in their sectors.

The reports show that CAs self-assessments provide a reasonably consistent picture of a good level of mechanisms being in place to support supervisory independence. However, the precise nature of those mechanisms frequently varies and there are indications of limits on the mechanisms in certain authorities.

The reports and self-assessment of each supervisory authority are organised around four principles of supervisory independence: operational; financial; personal; and accountability and transparency.

In particular, the main findings for each principle can be summarised as follows:

  • Operational independence: most CAs are established as independent bodies, however, a few are established under the aegis of a ministry, and some are required to reply to requests made by certain public bodies. Further, not all CAs are able to hire sufficient staff for the fulfilment of their supervisory tasks.

  • Financial independence: while almost all CAs reported adequate funding, a variety of funding models are subject to centralised government budget rules and a few allowing for the creation of reserves.

  • Personal independence: while a framework is in place in most CAs, there are differences in aspects such as terms of office and removal conditions for CAs’ senior management and board members, management of conflicts of interest, cooling-off periods and legal protection for staff.

  • Transparency and accountability: to ensure transparency, CAs publish documents (some in English to enhance transparency), disclose supervisory measures taken, and report periodically on their activities to a government entity or democratic assembly.

The reports can now be used to further develop the monitoring and fostering of CAs supervisory independence and assess whether any legislative or regulatory amendment is needed, to help supervisory authorities in their future work and to provide input for the European Commission’s own report on supervisory convergence. 

Read the ESMA’s press release here and access the reports by clicking on their respective links: ESMA report, EBA report and EIOPA report.

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