Changing the domestic supervisory architecture in Europe
Scaling the peaks
- March 2012
- 298 KB
- Changing the domestic supervisory architecture in Europe (PDF)
- Area: Financial Services
In the aftermath of the financial crisis, many EU jurisdictions were left questioning the suitability and adequacy of their supervisory architectures and approaches to supervision. The resulting shift to systems with more than one financial regulator and new supervisory approaches presents challenges for both financial services firms and national supervisors in jurisdictions undergoing such changes.
Financial services firms need to navigate an increasingly complex regulatory environment in which both the number and the nature of regulatory relationships are changing. Equally, supervisors are faced with a myriad of ‘design dilemmas’ as in practice the devil (and the success) of systems with two (‘twin-peaks’) and multiple regulators (‘multiple-peaks’) is often in the detail.
The paper analyses the supervisory architecture in the EU countries that (will) have two or more regulators – Austria, Belgium, France, Germany, Italy, the Netherlands, Spain and the UK – and provides suggestions and examples that could inform answers to a number of questions often asked by supervisors and firms operating in systems with more than two supervisors.
Our paper identifies three key ‘ingredients’ that every jurisdictions with two or more supervisory authorities should have:
- The basics must be in place;
- The regulators must be joined-up (in more ways than one); and
- The data and information must be obtained and shared with cost (and efficiency) in mind
Financial services firms also have a significant role to play in making sure twin- and multiple-peaks systems run smoothly, most notably by proactively engaging with the regulators and raising potential issues early.