The three European Supervisory Authorities– the European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA) and European Securities and Markets Authority (ESMA) (EBA, EIOPA and ESMA – the ESAs) – today published their joint criteria on the independence of supervisory authorities.
Supervisory independence is key to ensure that fair, effective and transparent decisions are taken by appropriately resourced supervisory authorities. These authorities can in turn provide effective and adequate protection for customers and consumers of financial services ensuring confidence in the financial system.
The independence criteria are organised around four key principles:
- Operational independence: so supervisory authorities operate without any form of undue influence from the supervised sector and the government, have adequate legal powers and operational resources.
- Personal independence: with transparent rules for the appointment, selection and removal of members of the supervisory authority’s governing body, and high ethical standards for members of the supervisory authority’s staff and governing body.
- Financial independence: with sufficient financial resources for supervisory authorities to fulfil their mandates.
- Accountability and transparency: so supervisory authorities conduct their tasks in a transparent and accountable manner.
Background
In 2020, following their review, the ESAs were tasked to foster and monitor supervisory independence.
To fulfil this task, in 2021 the ESAs published in close coordination their individual report (read here: EBA, EIOPA, ESMA) to take stock of the factual situation of supervisory authorities’ independence. Building on these reports and based on the 2021 EIOPA’s criteria and international standards, the ESAs further worked together to issue joint criteria on the independence of supervisory authorities.
Next steps
The criteria can be used by supervisory authorities as a tool to enhance their independence and, at a later stage, by the ESAs to assess supervisory independence in the EU.