Note for Information – The new EU supervisory framework
JANUARY 14, 2011
  • Following the financial crisis that has exposed important failures in financial supervision and following approval by the European Council, the European Commission has in September 2009 presented a package of proposals reforming the EU’s supervisory structure;
  • The reform of the EU’s supervisory structure established a European System of Financial Supervisors (ESFS) consisting of a network of national financial supervisors working together with three new European Supervisory Authorities (ESAs) and a European Systemic Risk Board (ESRB);
  • The three new European Supervisory Authorities were created by transforming the previous European supervisory Committees - the Committee of European Banking Supervision (CEBS), the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) and the Committee of European Securities
  • Regulators (CESR) - respectively into the following:

    1. the European Banking Authority (EBA);
    2. the European Insurance and Occupational Pensions Authority (EIOPA);
    3. the European Securities and Markets Authority (ESMA).

  • The main responsibility of these new Authorities is to ensure that a single set of harmonised rules and consistent supervisory practices are applied by the supervisory authorities of the Member States;
  • The objective of the Authorities is to contribute to:

    1. improving the functioning of the internal market, including in particular a high, effective and consistent level of regulation and supervision;
    2. protecting depositors, investors, policyholders and other beneficiaries;
    3. ensuring the integrity, efficiency and orderly functioning of financial markets;
    4. safeguarding the stability of the financial system; and
    5. strengthening international supervisory coordination.

  • The Authorities have been entrusted with a number of tasks and powers including:

    1. the power to issue guidelines addressed to financial market participants;
    2. the power to adopt individual decisions addressed to financial institutions;
    3. the implementation of technical standards; and
    4. the power to address instances of non-application or incorrect application and breach of Union Law.

Regulations of the European Union are directly applicable.

The above-mentioned EU legislation was published in the Official Journal on the 15th December 2010 and is available on the following link:

http://eur-lex.europa.eu/JOHtml.do?uri=OJ:L:2010:331:SOM:EN:HTML

 

MFSA Ref 01-2011