EUROPE - The European Commission is proposing to replace the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) with a new pensions authority in 2010, which it hopes will significantly improve cross-border cooperation and understanding between regulators.
A major initiative was launched yesterday by Jose Manuel Barroso, EC president, alongside Charlie McCreevy, European Commissioner for Internal Markets and Services and Joaquin Almunia, European Commissioner for Economic and Monetary Policy to create a European body responsible for systemic financial risks, as well as bodies tasked with drawing up technical standards for supervision and resolve any disputes between national regulators, but do so in what they describe as a "partnership".
More specifically, a European System of Financial Supervisors (ESFS) will be formed to supervise individual institutions through a "network of national financial supervisors working in tandem with new European Supervisory Authorities, created by the transformation of existing committees for the banking securities and insurance and occupational pensions sectors".
The intention is to replace CEIOPS as a guidance body and create a new "Level 3"-style committees, similar to the proposals set out by the recent Larosiere review, which give host supervisors a say in setting financial stability and investor protection policies to deal with cross-border risks more effectively.
The European Insurance and Occupational Pensions Authority (EIOPA), alongside those for the banking and securities markets, will be tasked with drawing up technical standards for all regulatory bodies to work from, "ensure the consistent application of Community law", according to McCreevy, as well as deal with ‘dispute settlement' which should balance home and host interests, such as in information-sharing, but without impinging on the fiscal responsibilities of Member States.
Speaking at a press conference to unveil the new regime, McCreevy said the aim was not to centralise supervisory power but create a partnership of existing supervisors, "but within a real European context and with a real European interest".
EIOPA will play a role in developing a common rulebook, draw up interpretive guidelines to assist regulators in their decision-making "on the ground" while their dispute resolution will in many cases set the precedent for any complications, though the Court of Justice will preside over appeals related to EIOPA's decisions.
It will have a board structure composed on the chairpersons from each national pensions authority, and is likely to still be based in Frankfurt where CEIOPS is currently located.
A spokeswoman for VB said the Dutch representative body for industry-wide pension funds has no objection towards new European supervision, but stressed it is "important that within this new system pension funds need other supervision other than through financial institutions".
The EC overhaul to be completed in 2010 - instead of 2012 as proposed by the De Larosiere Group - is being pushed to be approved by the European Council of Ministers in June as McCreevy claimed "the authorities in the home Member States had no instinct [in the recent banking crisis] to inform other supervisors or finance ministers about decisions they were taking".
The European Systemic Risk Council could be chaired by the president of the European Central Bank and include the governors of all 27 Members States, according to Almunia.
Reactions to proposals should be submitted to the European Commission by 15 July.
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