EN ECB -PUBLIC 
 
 
OPINION OF TH E EUROPEAN CENTRAL BANK  
of 5 December 2013   
on the Financial Supervisory Authority ’s governance  
(CON/2013/83)  
 
Introduction and legal basis  
On 6 November 2013,  the European Central Bank (ECB) received a request from the Danish Financial 
Superv isory Authority (FSA) (Finanstilsynet ) for an opinion on a draft law amending the Law on 
financial business, the Law on securities trading, the Law on mortgage credit loans and mortgage credit 
bonds, the Law on managers of alternative investment funds and various other laws1 (hereinafter the 
‘draft law ’). 
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth  indent of Article  2(1) of Council Decision 98/415/EC o f 
29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions2, as the draft law relates to rules applicable to financial institutions insofar as they 
materially influence the stability of fi nancial institutions and markets . In accordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion.  
 
1.  Purpose of the draft law  
1.1 The draft  law addresses the FSA’s governance and management structure by establishing  a 
governing board tasked with providing technical, organisational and managerial assistance to the 
FSA’s management and with taking supervisory decisions3. The Financial Council, which is the 
FSA’s current decision -making body , will be dissolved once this governing board has been 
established . According to the draft law , the purpose of the amendment is to provide an efficient 
organisational set -up for the FSA to strengthen its supervisory powers4. 
                                                 
1  The draft law implements the requirements with regard to liquidity coverage, capital buffers and systemically important 
financial institutions in Directive 2013/36/EU of the European Parli ament and of the Council of 26 June 2013 on access 
to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (OJ L 176, 27.6.2013, p. 338) and contains the amendments made necessary by Regulation (EU)  No 575/2013 of the European 
Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (OJ 
L 176, 27.6.2013, p. 1).  
2  OJ L 189, 3.7.1998, p. 42.  
3  See Section 1(10) of the draft law amending Section 345 of the Law on financial business.  
4  See Section 2.4 of the explanatory memorandum to the draft law.  
ECB -PUBLIC  
2 1.2 In accordance with the draft law, the FSA will be managed by the governing board and a managing 
director who will between them have legal, economic and financial expertise. The governing board 
will be responsible for the following tasks: (a) approving the organisation of supervisory activities; 
(b) laying down the strategic targets for the FSA’s supervisory activities; (c) approving the FSA’s 
annual report; (d) deciding on supervisory matters of a fundamental nature and those having 
significant consequences;  (e) deciding to transfer cases for criminal investigation; and (f) approving 
executive orders and guidelines in areas where the FSA is authorised to issue regulations5. The 
governing board may delegate some of its powers to the FSA’s managing director by issuing an instruction
6. 
1.3 The Minister for Business and Growth will appoint seven members of the governing board:  three 
with an academic background in law , economics or finance ; two with management experience in 
the financial sector; one with management  experience in the general business community ; and one 
member from  Danmarks Nationalbank. The Minister for Business and Growth will appoint a 
chairperson and a deputy chairperson from among the board members7. A representative from t he 
Ministry  of Business  and Growth will hold a seat as an observer on the board. The governing board 
will adopt decisions based on a simple majority vot ing procedure . In the event of an equal number 
of votes , the chairperson  will cast the deci ding vote8. 
1.4 Furthermore, a panel  of experts will be appointed. Th ey will between them  possess broad technical 
knowledge of the financial se ctor, e.g.  banking business, mortgage -credit business, insurance and 
pension business, securities trading, stockbroking business, etc., as well as of  financial consumer -
related matters. As required, the governing board may request assistance from such panel in 
conjunction with the discussion of specific supervisory matters9. 
 
2. General observations   
2.1 The ECB welcomes the establishment of the governing board, which should provid e an efficient 
organisational set -up for the FSA in order to strengthen its supervisory powers . Such  a governing 
board will ensure the FSA’s operational independence from political authorities10, which is in line 
with essential  and internationally recognised standard s for financial market supervision11. 
                                                 
5  See amended Section 345(7) of the draft law.  
6  See amended Section 345(14) of the draft law.  
7  See amended Section 345(1) -(4) of the draft l aw. 
8  See amended Section 345(12) of the draft law.  
9  See amended Section 345(8) of the draft law.  
10  See the explanatory memorandum in relation to Section 345(1) of  the draft law . 
11  See Principle 2 of the Basel Committee on Banking Supervision’s Core P rinciples for Effective Banking Supervision , 
available on the Bank for International Settlements’ website at www.bis.org.  
ECB -PUBLIC  
3 2.2 With regard to the composition of the governing board, the ECB welcomes the fact that Danmarks 
Nationalbank will provide one member of the governing board12, which is in line w ith the current 
practice for nominating Financial Council members.  
2.3 Finally, the minimum term of office  for governing board members  is set at two  years. Currently, 
Financial Council board members serve a four -year term.  For the sake of continuity and st ability, 
the ECB suggests consider ing a longer duration for such term of office , in line with international 
practice, with  a possible limitation on the number of re appointments . 
 
This opinion will be published on the ECB’s website.  
  
Done at Frankfurt am Main,  5 December 2013.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
 
 
                                                 
12  The existing legislation provides that Danmarks Nationalbank may nominate a member of the Financial Council , see the 
current Sectio n 345(1), point 1 of the Law on financial business.