07 April 2008

CEIOPS review on implementation of the IORP Directive

CEIOPS requests the Commission to provide urgent clarification at a European level of some issues of the IORP Directive. The Committee issued its review of key aspects of the implementation which provides a factual basis for a limited review of the IORP Directive scheduled for 2008. CEIOPS identified “some issues where action appears to be needed for clarity and for supervisory convergence”. However, the report concludes that it would be premature to recommend changes to the Directive.

The four areas where CEIOPS requests urgent clarification are:

• Cross-border activity – the practical experience to date will be monitored going forward but the preliminary analysis captured in this report has highlighted some genuine definitional differences.

• Subordinated loans – there is fundamental divergence of approach between Member States about the treatment of subordinated loans under the IORP Directive. Further clarification is needed as to the extent to which subordinated loans fulfil the characteristics necessary to make them compliant with the IORP Directive.

• Ring-fencing – there is scope for clarification of the intended purposes of ring-fencing under the Directive, within the context of the current arrangements.

• Investment regulations –article 18(5) does not allow states to prevent institutions located in their jurisdiction from investing in ‘risk capital markets’, but CEIOPS has found divergence over the definition of what a risk capital market is, and there may need to be clarification of this definition. There are also some divergent practices around the scope of article 18(1), the single issuer rule, which points to a similar lack of common understanding.

Press release

Report

© Graham Bishop