EIOPA's advice identifies that parts of the existing 2003 IORP Directive address some of the key governance functions. However, EIOPA considers that – with certain adjustments - article 41 of the Solvency Directive should also apply to IORPs.
This part of the new IORP Directive could, therefore, look broadly as follows:
-
All IORPs must have an effective system of governance that provides sound and prudent management. It shall include, at least, an organisation chart with clear allocation and segregation of responsibilities and an effective system of information transmission. The system of governance shall be subject to regular internal review.
-
The system must be proportionate to the scale and complexity of the institution's operations.
-
There must be written policies – reviewed regularly - on risk management, internal controls, internal audit and, where relevant, outsourcing. IORPs shall take steps to ensure continuity of performance of activities including the development of contingency plans – employing appropriate and proportionate systems, resources and procedures.
-
Supervisors shall have appropriate means/powers to verify the governance system - and to require improvement as appropriate.
On the face of it, the provisions for both general governance and requirements for those running IORPs to be fit and proper seem unlikely to make much difference to well-run IORPs. The fit and proper requirements for those who carry out a key function would be new, but it would be troubling if those currently in these roles did not already satisfy those requirements. The detail of Level 2 implementing measures may yet reveal some surprises, but EIOPA appears to recognise the merit of member participation in the bodies responsible for the governance of IORPs. Besides that, however, it appears likely that there will be a continued drive towards greater ‘professionalism’ – particularly for larger and more complex IORPs.
Press release
Full document
© Towers Watson
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article