Commission published the “Omnibus Directive” II – Complementing the framework for financial supervision in Europe
19 January 2011
The EC legislative proposal contains a limited set of amendments to the "Solvency II" Directive, including the provision of more specific tasks for EIOPA, such as ensuring harmonised technical approaches on the use of ratings in relation to the Solvency Capital Requirements.
Following the launch of the three new European Supervisory Authorities on 1 January 2011, the Commission now proposes to make targeted changes to legislation in the area of insurance and securities regulation to ensure that the new Authorities can work effectively. In particular, the proposal sets out in detail the scope for the Authorities to exercise their powers, which include the possibility to develop draft technical standards and to settle disagreements between national supervisors. The proposed directive will now be sent to the Council and the European Parliament for consideration.
Internal Market and Services Commissioner Michel Barnier said: "The financial crisis in Europe exposed weaknesses in the supervision of financial markets, which the new EU financial supervisory structure intends to correct. Today's proposal is an important building block to ensure that the new supervisory bodies will run smoothly. By giving the new supervisors a clearly defined mandate and bringing existing legislation in line with that mandate, the Commission further delivers on the promise of creating more solid and stable markets and mitigating future crises."
The proposal complements a package of legislative acts on financial supervision which were agreed on 22 September 2010 and which entered into force on 1 January 2011, creating a new architecture for supervision at European level with three new European Supervisory Authorities (ESAs). The ESAs, which replace the former European Committees for the banking, securities and insurance and occupational pensions sectors, are the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA). In cooperation and coordination with nationally-based supervisors, the ESAs are in place to ensure that rules are applied in a rigorous and consistent fashion throughout the European Union, to monitor developments within the financial system as well as to detect potential risks to financial stability.
The trio of new ESAs have taken over all of the functions of the previous committees, and in addition have certain additional competences, including the following:
· developing proposals for technical standards to better define common standards for the application of legislative acts, respecting better regulation principles;
· resolving cases of disagreement between national supervisors, where legislation requires them to cooperate or to agree;
· contributing to ensuring consistent application of existing and future technical EU rules (including through peer reviews);
· a coordination role in emergency situations.
In order for the ESAs to work effectively, changes to existing financial services Directives are necessary, laying down the precise scope for the ESAs to exercise certain of the new powers. The areas in which amendments are necessary fall broadly into the following categories:
· definition of the appropriate areas in which the Authorities will be able to propose technical standards as an additional tool for supervisory convergence and with a view to developing a single rule book to ensure strengthened stability, equal treatment, lower compliance costs and to prevent regulatory arbitrage;
· detail how the Authorities will settle disagreements between national supervisors in a balanced way, in those areas where common decision-making processes or cooperation between national supervisors already exist in sectoral legislation; and
· general amendments which are necessary for the existing Directives in the financial services sector to operate in the context of new authorities, for example, renaming the level 3 committees as the new authorities and ensuring the appropriate gateways for the exchange of information are present.
A first set of technical amendments to 11 Directives was agreed as part of the supervision package now in force. However, for technical reasons, those amendments did not cover the "Solvency II" Directive for the insurance sector and parts of the Prospectus Directive.
Today's legislative proposal contains a limited set of amendments to the "Solvency II" Directive. These amendments include the provision of more specific tasks for EIOPA, such as ensuring harmonised technical approaches on the use of ratings in relation to the Solvency Capital Requirements, and extending the implementation date by two months to ensure better alignment with the end of the financial year for the majority of insurance and reinsurance undertakings. The amendments will also enable the Commission to specify transitional measures in certain areas if deemed necessary to avoid market disruption and to allow a smooth transition to the new regime under "Solvency II".
© European Commission
