The “founding father” of the European supervisory bodies has backed calls for the European Insurance and Occupational Pensions Authority (EIOPA) to be given an independent budget, and suggested that granting it greater supervisory powers was inevitable.
Jacques de Larosière, a former head of the IMF and chairman of the Larosière committee that in 2009 recommended the creation of the current European Supervisory Authorities (ESAs) of EIOPA, the European Securities and Markets Authority and the European Banking Authority, said the work of establishing the ESAs remained unfinished until they were granted a greater role in supervising their respective sectors.
He said EIOPA’s “absolutely fundamental” work on harmonising both regulation and supervision needed to go hand-in-hand with greater powers for the authority chaired by Gabriel Bernardino.
Speaking during the keynote address at EIOPA’s annual conference in Frankfurt, de Larosière said: “It is essential that EIOPA have sufficient powers to conduct enquiries into particular financial institutions, and not only in situations of crisis.
“And they have to have to have the liberty to do that, without permission.”
He also said the funding of the ESAs should be “de-coupled” from the European Commission’s budget, as this would grant them the flexibility needed to carry out its tasks.
Carlos Montalvo, EIOPA’s executive director, praised de Larosière as the founding father of the “successful experiment” of ESAs.
“I would say the work is unfinished,” de Larosière added, “because, eventually, your institutions, your authorities are going to have to have a wider role in supervision.
“Now, we knew that when we wrote the report, but it was not possible to articulate that in that way, and I think it was wise not to do it at the time.
“But, little by little, as you establish your credibility, as you establish your objectivity in your work, you will become inevitably a moving force in that question of harmonising supervision.”
He said that while it was important not to apply undue pressure, eventually, the three ESAs would be granted a significant role in supervising the European financial system.
De Larosière’s intervention comes months after the Commission approved a report on reforming the ESAs that also suggested each should only have a single stakeholder group, essentially merging the pensions and insurance groups at EIOPA.
Any suggestion that the occupational pensions stakeholder group (OPSG) should be abolished has been rejected by the industry and members of the OPSG, while Bernardino recently told IPE that the current arrangement should remain.
The review also recommended that the funding of the ESAs no longer be the responsibility of the European Commission, and new commissioner for financial services Jonathan Hill has been asked to investigate if the authorities could be funded, either partially or fully, through an industry levy.