EN Official Journal of the European Union CE 9/48

Thursday 9 October 2008

Lamfalussy follow-up — Future Structure of Supervision

P6_TA(2008)0476

European Parliament resolution of 9 October 2008 with recommendations to the Commission on Lamfalussy follow-up: future structure of supervision (2008/2148(INI))

2010/C 9 E/09

The European Parliament,

having regard to the Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies (1),

having regard to the Seventh Council Directive 83/349/EEC of 13 June 1983 based on the Article 54(3)(g) of the Treaty on consolidated accounts (2),

having regard to Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions (3),

having regard to Council Directive 91/674/EEC of 19 December 1991 on the annual accounts and consolidated accounts of insurance undertakings (4),

having regard to Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes (5),

having regard to Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions (6),

having regard to Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate (7),

having regard to Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments (8),

having regard to Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market (9),

having regard to Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) (10),

having regard to Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions (recast) (11),

having regard to the amended Commission proposal for a directive of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (recast) (COM(2008)0119),

having regard to the Commission Communication of 27 September 2004 on Preventing and Combating Corporate and Financial Malpractice (COM(2004)0611),

having regard to the Commission Recommendation 2004/913/EC of 14 December 2004 fostering an appropriate regime for the remuneration of directors of listed companies (12),

having regard to its resolutions of 11 July 2007 on financial services policy (2005-2010) — White Paper (13), of 4 July 2006 on consolidation of financial services industry (14), of 28 April 2005 on the current state of integration of EU financial markets (15) and of 21 November 2002 on prudential supervision rules in the European Union (16),

having regard to the Report of the Financial Stability Forum on Enhancing Market and Institutional Resilience of 7 April 2008,

having regard to the Council conclusions on the EU supervisory framework and financial stability arrangements, adopted on 14 May 2008, and Council conclusions on related issues following its meetings of 3 June 2008, 4 December 2007 and 9 October 2007,

having regard to Article 192, second paragraph, of the EC Treaty,

having regard to Rules 39 and 45 of its Rules of Procedure,

having regard to the report of the Committee on Economic and Monetary Affairs (A6-0359/2008),

A. whereas there is an ongoing review of Directives 2006/48/EC and 2006/49/EC and an expected proposal on credit rating agencies,

B. whereas the Commission has not addressed a series of requests from Parliament, including those made in its abovementioned resolutions and whereas a list of recommendations as to how the functioning of financial markets supervision might be improved is set out in the Annex,

C. whereas financial supervision has not kept pace with market integration and the global evolution of financial markets demanding an update of the existing regulation and supervision systems in order to tackle systemic risks better, provide financial stability, attain the objectives of the European Union and contribute to an improved global financial governance,

D. whereas any suggestion made by Parliament for legislation should be principle-based and the recommendations set out in the Annex should be developed in consultation with the supervisory authorities, financial markets participants and other relevant bodies,

E. whereas there is a growing number of pan-European entities, whose activities span several Member States; whereas the interlocking of many national authorities has increased complexity and blurred the lines of responsibility, especially for macro-prudential supervision and crisis management,

F. whereas the current financial crisis, which was triggered by US subprime mortgages and derived products, has spread worldwide due to the increasingly integrated nature of markets, reinforcing the indication that existing financial market regulation and supervision is not sufficiently convergent at either EU or international level; whereas a reform of financial market regulation and supervision is therefore welcome,

G. whereas the crisis has led to a credit squeeze entailing a higher price of credit for many market players; whereas economic growth and employment are impaired by the current turmoil on the financial markets,

H. whereas capital markets intermediation and new kinds of financial vehicles did bring about benefits, but have also given rise to new sources of systemic risk globally,

I. whereas the ‘originate-to-distribute’ model has enhanced competition and spread risk; whereas that model has, however, weakened incentives to evaluate and monitor risk and led to a breakdown in due diligence in some cases,

J. whereas improper practices such as inadequate risk management, irresponsible lending, excessive debt (leverage), weak due diligence and sudden withdrawal of liquidity pose significant risks to financial institutions and may threaten financial stability,

K. whereas innovative techniques, which were designed to diminish risk at the micro level, and themselves complied with current regulation, could lead to risk concentration and systemic risk,

L. whereas harmful regulatory arbitrage should be prevented,

M. whereas the increasing cross-border nature of banking in Europe and the need to respond in a coordinated way to adverse shocks, as well as the need to deal with systemic risks effectively, require divergences between the national regimes of Member States to be reduced to the greatest extent possible; whereas there is a need to move beyond the studies that the Commission has already carried out in this regard and to amend Directive 94/19/EC as soon as possible to provide the same level of protection for bank deposits across the whole European Union in order to preserve financial stability and depositors’ confidence and avoid distortions of competition,

N. whereas adequate levels of transparency towards the public, investors and supervisory authorities must be ensured,

O. whereas compensation schemes which reflect individual and corporate performance should not reward excessive risk-taking for short-term, at the expense of necessary long-term, performance and prudence,

P. whereas conflicts of interest, which may arise from the business model used by financial institutions, credit rating agencies, and audit and law firms, must be addressed and monitored,

Q. whereas failures by credit rating agencies in respect of complex structured products and misconceptions of the meaning of ratings by market participants have generated substantial negative externalities and market uncertainties; whereas credit rating agencies’ procedures need reviewing,

R. whereas self-regulatory solutions, proposed by the credit rating agencies are as yet untested and probably insufficient to meet the pivotal role they play in the financial system,

S. whereas market integration, while generally beneficial, should be accompanied by an appropriately integrated approach to supervision, which also avoids unnecessary red tape and is consistent with better regulation policies,

T. whereas the Commission should carry out a comprehensive impact assessment of a legislative proposal,

U. whereas the European Union needs more consistent and effective, properly implemented, but not overly burdensome, regulation and supervision in order to mitigate the risk of future financial crises and ensure a level playing field across borders and among all market participants; whereas the European Union should play a leading international role and should reinforce the consistent implementation and convergence of its own regulation and supervision,

V. whereas a comprehensive review of current EU regulatory and supervisory arrangements is necessary together with measures to improve global supervisory cooperation covering the capital adequacy framework, transparency, and governance as key prerequisites for effective regulatory and supervisory arrangements in a coordinated manner,

W. whereas the supervisory approach should be adapted to specificities of the business and aspects of it that are already regulated; whereas the objectives of financial market supervision and the prudential supervision of particular institutions vary,

X. whereas future proposals should take account of negotiations on the Solvency II proposal and the review of Directives 2006/48/EC and 2006/49/EC,

Y. whereas supervisory cooperation needs to take into account the third-country dimension of supervision of international groups as most, if not all, major financial groups in the European Union have third-country interests,

Z. whereas following the Council conclusions of 3 June 2008, 4 December 2007 and 9 October 2007, a major programme of work is already under way to make targeted improvements to the arrangements for EU supervisory cooperation; whereas extensive work programmes are under way in the European Union and worldwide with a view to understanding the causes of market turmoil and responding appropriately,

AA. whereas a group of wise persons should be set up by autumn 2008, bringing together different stakeholders, such as supervisors, regulators and industry representatives, and elaborating a longer term supervisory vision; whereas that group should be tasked with developing a blueprint and a roadmap for a more radical long-term reform towards full institutional integration; whereas going beyond the architecture of financial supervision, the group could also address issues such as a single rulebook for financial supervision, a deposit guarantee scheme and a common insolvency regime, which are commensurate with an integrated financial and supervisory system,

1. Requests the Commission to submit to Parliament by 31 December 2008, on the basis of Article 44, Article 47(2), Article 55, Article 95, Article 105(6), Article 202, Article 211 or Article 308 of the EC Treaty, a legislative proposal or proposals covering the matters dealt with in the detailed recommendations below;

2. Confirms that the recommendations respect the principle of subsidiarity and the fundamental rights of citizens;

3. Considers that, where appropriate, the financial implications of the requested proposal or proposals should be covered by EU budgetary allocations;

4. Instructs its President to forward this resolution and the accompanying detailed recommendations to the Commission, the Council and the governments and parliaments of the Member States.

(1) OJ L 222, 14.8.1978, p. 11.

(2) OJ L 193, 18.7.1983, p. 1.

(3) OJ L 372, 31.12.1986, p. 1.

(4) OJ L 374, 31.12.1991, p. 7.

(5) OJ L 135, 31.5.1994, p. 5.

(6) OJ L 125, 5.5.2001, p. 15.

(7) OJ L 35, 11.2.2003, p. 1.

(8) OJ L 145, 30.4.2004, p. 1.

(9) OJ L 390, 31.12.2004, p. 38.

(10) OJ L 177, 30.6.2006, p. 1.

(11) OJ L 177, 30.6.2006, p. 201.

(12) OJ L 385, 29.12.2004, p. 55.

(13) OJ C 175 E, 10.7.2008, p. 392.

(14) OJ C 303 E, 13.12.2006, p. 110.

(15) OJ C 45 E, 23.2.2006, p. 140.

(16) OJ C 25 E, 29.1.2004, p. 394.