Proposal for a Directive of the European Parliament and of the Council amending Council Directives 73/239/EEC, 85/611/EEC, 91/675/EEC, 93/6/EEC and 94/19/EC and Directives 2000/12/EC, 2002/83/EC and 2002/87/EC of the European Parliament and of the Council, in order to establish a new financial services committee organisational structure
Date: 2003-11-05
Institutions: European Commission
Subjects: advisory committee (EU), division of powers, financial market, insurance law, law of banking, market supervision, powers of the institutions (EU)

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 5.11.2003
COM(2003) 659 final

2003/0263 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Council Directives 73/239/EEC, 85/611/EEC, 91/675/EEC, 93/6/EEC and
94/19/EC and Directives 2000/12/EC, 2002/83/EC and 2002/87/EC of the European
Parliament and of the Council, in order to establish a new financial services committee
organisational structure

(presented by the Commission)

EXPLANATORY MEMORANDUM

1.

GENERAL COMMENTS

1.1.

Introduction: building a single market for financial services

While  substantive  progress  has  been  made,  the  single  market  for  financial  services  remains
incomplete.  Markets  remain  segmented.  There  are  relatively  low  levels  of  cross-border
service  provision.  Yet,  the  completion  of  a  genuine  single  market  for  financial  services  is
crucial  for  economic  growth  and  job  creation  in  the  European  Union.  It  will  increase
European economic competitiveness and contribute to economic and social cohesion.

In order to achieve this fundamental objective,  the  Commission  adopted  an  Action  Plan  for
Financial Services1 that identified a series of actions required to construct a single European
financial  market.  At  the  Lisbon  European  Council  in  March  2000,  and  at  the  Stockholm
European Council in March 2001, the European Heads of State or Government called for full
implementation of the Action Plan by 2005.

Despite these measures, it has become increasingly clear, initially in the securities sector but
subsequently  for  the  other  financial  service  sectors,  that  the  financial  services  committee
structure itself has and will increasingly come under pressure, especially when it will have to
deal with new demands being placed on it.

On the one hand:

(cid:1)  financial markets and services are now developing and moving at a much faster pace than

ever before, as they exploit new technology and innovate;

(cid:1)  combined with this, the introduction of the Euro, and the Lisbon economic reform agenda
have  accelerated  the  pace  of  European  integration  in  this  area.  For  the  first  time,  an
integrated capital and financial services market is within sight.

On the other hand:

(cid:1)  European legislators and regulators in the banking, insurance and mutual fund industry are
saddled with a legislative and "comitology" organisation that is ill-suited to an enlarged EU
of 25 Member States.  Even if this process  were  to  be  maintained,  the  present  committee
structure would still need to be adapted to new developments, with, for instance, the scope
of the Insurance Committee extended to occupational pensions;

(cid:1)  legislators and regulators in these areas need the ability to respond quickly and effectively
to  technological  change  and  market  developments,  by  adopting  implementing  rules  on  a
much faster and more flexible basis;

(cid:1)  there would be huge benefits to the EU in having an even more efficient, transparent and

clear regulatory structure in this area;

(cid:1)  above  all,  as  European  financial  services  and  markets  integrate,  there  will  be  a  much

greater need for effective supervisory co-operation and convergence.

1

COM(1999) 232 final

2

                                                
1.2.

The Existing Committee Architecture

Before  looking  at  the  changes  required,  it  is  worth  recalling  the  existing  committee
architecture.

The current committee structure for banking, insurance and investment funds is governed by
Directives 2000/12/EC, 91/675/EEC and 85/611/EEC (as amended) respectively.

1.2.1.

The Banking Advisory Committee

The Banking Advisory Committee (BAC) was established by the First Banking Directive2.
The scope of the BAC was further developed  by subsequent directives in the banking  field.
All  provisions  pertaining  to  the  BAC  are  now  to  be  found  in  the  Codified  Banking
Directive3,  which  repeals  and  supersedes  the  First  Banking  Directive  and  some  other
directives containing references to the BAC.

The BAC has three main functions. It advises the European Commission in drawing up new
proposals  for  European  legislation  in  the  banking  field,  which  are  then  presented  to  the
European Parliament and the European Council. It also advises the Commission in its task of
ensuring that legislation is correctly implemented across the EU. These two advisory tasks are
defined  in  Title  VI  of  the  Codified  Banking  Directive.  The  BAC  may  furthermore  act  as  a
"comitology" committee assisting the Commission in the exercise of its implementing powers
to make technical amendments to certain provisions of the Codified Banking Directive, under
the  "comitology"  procedure  laid  down  by  Decision  1999/468/EC4  Article  5.  This
"comitology" function is laid down in Title VII of the Codified Banking Directive. Recital 67
makes  the  link  between  the  BAC  established  under  Article  57  and  the  "comitology"
committee  established  under  Article  60(2).  In  addition,  some  specific  advisory  tasks  have
been conferred upon the BAC.

The  BAC  is  composed  of  high  level  representatives  from  each  Member  State  and  of  the
Commission.  The  BAC  is  chaired  by  a  Member  State  representative  when  acting  in  its
advisory function and by the Commission when acting as "comitology" committee.

Since  its  first  meeting  in  1979,  the  BAC  has  advised  the  Commission  on  all  aspects  of  EU
banking  legislation,  in  particular  on  the  establishment  of  the  single  market  for  banking
services and on the definition of prudential rules for credit institutions. The advisory function
has by far been its dominant activity. Since being granted a  "comitology" role in 19895, the
BAC has only acted as "comitology" committee on four occasions.

1.2.2.

The Insurance Committee

Council  Directive  91/675/EEC6  established  an  Insurance  Committee.  The  Insurance
Committee has been granted two different functions.

2

3

4

5

6

Council  Directive  77/780/EEC  of  12  December  1977  (Article  11)  on  the  coordination  of  laws,
regulations and administrative provisions relating to the taking up and pursuit of the business of credit
institutions.
Directive 2000/12/EC of the European Parliament and Council of 20 March 2000 relating to the taking
up and pursuit of the business of credit institutions.
Council  Decision  1999/468/EC  of  28  June  1999  laying  down  the  procedures  for  the  exercise  of
implementing powers conferred on the Commission.
Council Directive 89/647/EEC (Solvency Ratio Directive) Article 9.
OJ L 374, 31.12.1991 p. 32.

3

                                                
First,  it  is  a  high-level  forum  for  discussion  and  advisor  to  the  Commission  on  insurance-
related  matters.  In  particular,  the  Insurance  Committee  advises  the  Commission  on  new
proposals that the Commission intends to submit to the Council on further coordination in the
field of insurance.

Second,  the  Insurance  Committee  may  act  as  a  "comitology"  committee,  assisting  the
Commission  in  the  exercise  of  the  implementing  powers  conferred  on  it  by  Insurance
Directives7.  These  Directives  enable  the  Commission  to  take  decisions,  under  the
"comitology"  procedure  laid  down  by  Decision  1999/468/EC,  Articles  5  and  7,  in  order  to
make specific technical adaptations to the Insurance Directive, as well as to make proposals
on  the  treatment  afforded  to  insurance  undertakings  of  non-WTO  members  which  do  not
ensure effective market access to EU insurance undertakings (the “reciprocity clause”).

The Insurance Committee, which is composed of representatives of Member States, is chaired
by the Commission. It has been working since 1992 and has actively dealt with a whole range
of  policy  issues  on  insurance,  as  well  as  advising  the  Commission  on  new  legislative
proposals  on  insurance.  As  the  Commission  has  not  yet  looked  to  make  use  of  its
implementing  powers,  the  Insurance  Committee  has  not  so  far  acted  in  its  "comitology"
function.

1.2.3.

The UCITS Contact Committee

Council Directive 85/611/EEC8 on  the co-ordination of laws, regulations and  administrative
provisions  relating  to  undertakings  for  collective  investment  in  transferable  securities
(UCITS)  established  the  UCITS  Contact  Committee,  which  has  been  granted  two  different
sets of functions.

First,  it  is  a  specific  forum  for  discussion  on  UCITS-related  matters  and  policy  issues,
entrusted with the following tasks:

(cid:1)  To facilitate the harmonised implementation of the Directive through regular consultations

on practical problems arising from its application;

(cid:1)  To  facilitate  consultation  between  Member  States  on  more  rigorous  or  additional
requirements allowed under the Directive or on the means for advertising and payment for
UCITS;

(cid:1)  To advise the Commission on any additions or amendments to be made to the Directive.

7

8

Directives  73/239/EEC  Article  29  b);  92/49/EEC  (non-life),  Article  51  and  Directive  2002/83/EC,
Articles 59 and 64 (life).
OJ L 375, 31.12.1985, p.3.

4

                                                
Second,  the  UCITS  Contact  Committee  is  also  entrusted  with  assisting,  as  a  "comitology"
committee, the Commission in the exercise of the implementing powers, conferred upon it by
Directive 2001/108/EC9 amending the UCITS Directive with regard to investments of UCITS.
This  recent  Directive  enables  the  Commission  to  take  Decisions,  under  the  procedure  laid
down by Decision 1999/468/EC, Article 5, in order to make specific technical modifications
to the UCITS Directive in the following areas:

(cid:1)  clarification  of  the  definitions,  in  order  to  ensure  uniform  application  of  the  Directive

throughout the Community; and

(cid:1)  alignment  of  terminology  and  the  framing  of  definitions  in  accordance  with  subsequent

acts on UCITS and related matters.

The UCITS Contact Committee, which is composed of representatives of Member States, is
chaired  by  the  Commission.  The  Committee  has  been  working  since  1989  and  has  actively
dealt  with  a  range  of  different  policy  issues  regarding  UCITS.  It  has  also  advised  the
Commission with respect to, inter alia, the proposals which led to the most recent Directives
on UCITS. As the Commission has not yet looked to make use of the implementing powers,
the Committee has not so far met in a "comitology" capacity.

1.3.

The reform of securities regulation

As noted in Section 1.1 above, it has become increasingly clear that regulatory reform of these
structures  is  needed  if  the  objectives  of  the  Financial  Services  Action  Plan  and  the  calls  of
successive  Spring  European  Councils  for  the  completion  of  an  integrated  financial  services
market are to be realised.

This  first  became  clear  in  the  securities  sector.  In  response,  in  July  2000  the  Council
(ECOFIN)  set  up  a  Committee  of  Wise  Men  on  the  Regulation  of  European  Securities
Markets to develop proposals for making the regulatory process for EU securities legislation
more flexible, effective and transparent.

The Final Report of the Committee was issued in February 2001 and recommended a move to
a four-level regulatory approach as follows:

Level 1 will consist of legislative acts, namely Directives or Regulations, adopted in
co-decision  by  the  Council  and  the  European  Parliament  on  the  basis  of  the  EC
Treaty.  The  Council  and  the  European  Parliament  will  agree  on  the  nature  and
extent  of  the  implementing  measures  to  be  decided  at  Level  2  on  the  basis  of
Commission proposals.

Implementing  technical  measures  will  be  adopted  at  Level  2  in  application  of
Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the
exercise of implementing powers conferred on the Commission.

The key objective of Level 3 will be to ensure consistent and timely implementation
of Level 1 and 2 acts by enhanced co-operation and networking among EU securities
regulators through the Committee of European Securities Regulators.

9

OJ L 41, 13.2.2002, p. 35.

5

                                                
At Level 4, the Commission and the Member States will strengthen the enforcement
of Community law.

Under the recommendations, this approach was to be assisted by two Committees:

(1)

A Committee established under two different legal bases, according to the functions
fulfilled:

– 

– 

an  advisory  function  established  under  Commission  Decision  to  advise  the
Commission in the development of legislation (Level 1);

a  "comitology"  function  established  by 
the
Commission  in  the  exercise  of  its  implementing  powers  (Level  2),  under  the
regulatory procedure laid down by Decision 1999/468/EC, Article 5.

legislative  acts 

to  assist 

(2)

A  new  committee  of  supervisors  composed  of  high-level  representatives  from  the
national  supervisory  authorities  to  enhance  cooperation  and  networking  among
them to ensure common implementation standards in the field of securities (Level 3).

The  European  Parliament,  in  its  resolution  of  5  February  2002  on  the  implementation  of
financial  services  legislation10,  accepted  the  principle  of  a  four-level  regulatory  approach
recommended by the Committee of Wise Men’s report to establish an internal market in the
securities field, provided that it received equivalent treatment at Level 2 to that guaranteed to
the  Council  under  the  Stockholm  European  Council  Resolution.  President  Prodi's  solemn
declaration  on  5  February  2002  provided  the  European  Parliament  with  the  necessary
guarantees for it to endorse fully the four-level approach proposed.

A Committee of European Securities Regulators (CESR) was established on 6 June 2001 by
Commission Decision11 for Level 3 and to offer technical advice to the Commission.

A  European  Securities  Committee  (ESC)  was  established  on  the  same  day  in  an  advisory
capacity by another Commission Decision12. The European Parliament and Council Directive
2003/6/EC on Market Abuse of 28 January 200313 provides for "comitology" functions to be
covered by the ESC.

10

11

12

13

A5-0011/2002 European Parliament  resolution  on  the  implementation  of  financial  services  legislation
(2001/2247(INI))
Decision  2001/527/EC  of  6  June  2001  establishing  the  Committee  of  European  Securities  Regulators
(OJ L 191, 13.7.2001 p. 43)
Decision  2001/528/EC  of  6  June  2001  establishing  the  European  Securities  Committee  (OJ  L  191
13.7.2001, p. 45)
Directive  2003/6/EC  of  the  European  Parliament  and  of  the  Council  of  28  January  2003  on  insider
dealing and market manipulation (market abuse) (OJ L 96, 12.4.2003 p. 16)

6

                                                
1.4.

The New Committee Architecture in the banking, insurance and UCITS fields

1.4.1.

The requests of the Council and European Parliament

In response to the pressures mentioned in Section 1.1, in April 2002 the Council called for a
review  of  how  best  to  make  improvements  to  the  financial  services  committee  architecture.
On the basis of this review, on 3  December  2002,  the  Council14 invited the Commission to
extend  the  committee  structure  applied  in  the  securities  sector  to  the  sectors  of  banking,
insurance  and  UCITS.  In  particular,  the  Council  invited  the  Commission  to  establish  “as
quickly as possible” new committees in each sector by Decisions of the Commission.

In the banking and insurance sector, it called for two committees:

(1)

A Committee established under two different legal bases, according to the functions
fulfilled:

– 

– 

an  advisory  function  established  under  Commission  Decision  to  advise  the
Commission in the development of legislation (Level 1)

a  "comitology"  function  established  by 
the
Commission  in  the  exercise  of  its  implementing  powers  (Level  2),  under  the
regulatory procedure laid down by Decision 1999/468/EC, Article 5.

legislative  acts 

to  assist 

(2)

A  new  committee  of  supervisors  composed  of  high-level  representatives  from  the
national  supervisory  authorities  to  promote  the  convergence  of  day-to-day
supervisory  practices;  and  to  enhance  the  exchange  of  confidential  information  on
individual  supervised  institutions  (Level  3)  and  to  provide  technical  advice  to  the
Commission in particular on draft implementing measures that the Commission may
wish to propose.

The  Council  requested  that  as  had  been  done  for  the  securities  sector,  the  former  should
initially  be  established  in  advisory  mode  only,  with  a  view  to  getting  the  committees
established and working as soon as possible, before establishing them in "comitology" mode
later.

For  UCITS,  the  Council  called  for  the  transfer  of  the  functions  of  the  UCITS  Contact
Committee  into  the  already  existing  European  Securities  Committee  and  Committee  of
European Securities Regulators.

14

Ecofin (3/12/2002) on the basis of a report from the Economic and Financial Committee on financial
regulation, supervision and stability.

7

                                                
The effect of all these changes, together with the two earlier Commission Decisions of 2001
would be to establish the following system:

Banking

Insurance 
Occupational Pensions

and

Securities 
UCITS)

(including

Advisory
(Level 1) and
"Comitology"
(Level 2)

(Level 3)

European  Banking
Committee (EBC)

Insurance 

European 
Operational 
Committee (EIOPC)

and
Pensions

European 
Committee (ESC)

Securities

Committee 
of
European  Banking
Supervisors (CEBS)

Committee 
European
of 
Insurance  and  Occupational
Supervisors
Pension 
(CEIOPS)

Committee  of  European
Securities 
Regulators
(CESR)

Separately on 21 November 2002, the European Parliament adopted an own-initiative report
on  prudential  supervision  in  the  European  Union.  In  its  Resolution  A5-0370/2002  on
prudential rules in the European Union, it endorsed the emphasis on convergence not only in
rules but also in implementation and supervisory practices; welcomed the institutionalisation
of  a  regular  dialogue  between  supervisors  at  European  level  through  the  creation  of  CESR,
and  hoped  that  such  an  extension  would  indeed  lead  to  more  coherent  implementation  and
enforcement of prudential legislation within the EU.

Nevertheless,  in  its  Resolution  B5-0578/2002  on  financial  regulation,  supervision  and
stability,  the  European  Parliament  questioned  the  urgency  of  restructuring  the  committee
architecture,  and  argued  that  there  should  be  a  clear  Council  commitment  to  a  reform,
comprising  a  revision  of  Article  202  of  the  Treaty  and  Decision  No.  1999/468/EEC  with  a
guarantee of the  European Parliament being placed on an  equal  footing with the  Council  in
supervising the Commission's exercise of its implementing powers before it could agree to the
proposed extension.

While  awaiting  the  outcome  of  the  revision  of  the  Treaty,  the  European  Commission  has
proposed such a reform in its 11 December 2002 proposal for a Council Decision amending
Decision 1999/468/EEC. In its Resolution A5-0266/2003 adopted on 2 September 2003, the
European Parliament endorsed the Commission's approach.

1.4.2.

The proposed package

As noted in Section 1.3 above, in implementing this approach in the securities sector, and in
line  with  current  interinstitutional  practice  and  precedent,  three  pieces  of  legislation  were
used:

(1)

(2)

(3)

A  Commission  Decision  establishing  the  (Level  3)  Committee  of  European
Securities Regulators (Level 3);

A Commission Decision establishing the (Level 2) European Securities Committee
in advisory mode (Level 1);

A  European  Parliament  and  Council  Directive  (on  market  abuse)  subsequently
establishing  the  (Level  2)  European  Securities  Committee  as  a  committee  assisting
the Commission in the exercise of its implementing powers (Level 2).

8

In  the  banking,  insurance  and  UCITS  sectors,  however,  the  situation  is  complicated  by  the
presence  of  committees  (the  BAC,  IC  and  UCITS  Contact  Committee)  established  by,  and
referred  to  in,  existing  European  Parliament  and  Council  Directives,  and  acting  in  both
advisory and "comitology" modes.

In coming forward with a package of measures therefore, the Commission has been careful to
take an approach that:

(a)

(b)

(c)

(d)

is institutionally and legally consistent with the approach used in the securities
sector, and across the range of Community activities;

avoids  the  risk  of  unnecessary  complexity  and  duplication  due  to  the  overlap
between existing and newly established committees;

is  consistent  with  the  requests  of  the  Council  for  committees  to  be  set  up  in
advisory capacity as soon as possible;

is mindful of the concerns raised in the two Parliament Resolutions and gives
the Parliament as co-legislator an equal right to decide on the  move  to a new
financial service committee architecture.

The  Commission  has  concluded  that  the  only  way  that  these  objectives  can  be  successfully
reconciled  in  the  banking  and  insurance  fields  is  to  amend  the  provisions  of  existing
Directives  to  repeal  the  existing  committees  and  establish  the  new  banking  and  insurance
committees  as  committees  assisting  the  Commission  in  the  exercise  of  its  implementing
powers (Level 2) at the same time as new banking and insurance committees are established
in advisory mode  (Level 1)  by  two  Commission  Decisions.  New  committees  of  supervisors
(Level 3) are established by two separate Commission Decisions.

In  the  UCITS  field,  this  will  mean  amending  the  existing  Directive  to  delete  existing
references to the UCITS Contact Committee and transfer to the ESC the role of "comitology"
committee  in this  field at  the  same time as the ESC and CESR Commission Decisions are
amended to take on advisory functions in this field.

The Commission decided that most effective and transparent mechanism to ensure that such a
simultaneous  transfer  takes  place  is  for  the  Commission  to  adopt  immediately  "suspensive"
Decisions  creating  the  new  banking  and  insurance  committees  (Level  1)  and  amending  the
ESC and CESR Decisions, but with clauses stipulating that these Decisions would only come
into effect if and when an amending Directive of the type set out above also came into effect.
This will ensure both that there is no duplication of committees and that the establishment of
the committees (Level 1 and 2) in the banking and insurance field (and the transfer of UCITS
functions to the ESC and CESR) is conditional on the agreement of the Council and European
Parliament.

9

The Commission is therefore coming forward with a package of seven measures:

(1)

(2)

(3)

(4)

(5)

(6)

(7)

A Commission Decision establishing the CEBS (Level 3) with effect from 1 January
2004;

A  Commission  Decision  establishing  the  CEIOPS  (Level  3)  with  effect  from
24 November 2003;

The  attached  proposal  for  a  Council  and  European  Parliament  Directive,  deleting
references  to  the  BAC,  IC  and  UCITS  Contact  Committee  acting  in  an  advisory
mode  and  amending  references  to  them  acting  as  committees  assisting  the
Commission in the exercise of its implementing powers to refer to the EBC, EIOPC,
and ESC;

A  Commission  Decision  establishing  the  EBC  in  its  advisory  capacity  (Level 1)
which will only enter into force at the same time as such an amending Directive;

A  Commission  Decision  establishing  the  EIOPC  in  its  advisory  capacity  (Level  1)
which will enter into force at the same time as such an amending Directive;

A  Commission  Decision  amending  the  ESC  Decision  which  will  only  enter  into
force at the same time as such an amending Directive;

A  Commission  Decision  amending  the  CESR  Decision  which  will  only  enter  into
force at the same time as such an amending Directive.

The  package  of  Decisions  and  proposal  for  a  Directive  are  about  the  creation  of  a  new
committee structure and do not create any new implementation powers for the Commission.

1.4.3.

The Urgency of the Measures

The new financial services committee structure will form a  coherent whole  that needs to be
put in place in its entirety as soon as possible.

Its adoption will produce real benefits by allowing far greater and more detailed co-operation
between supervisors than at present, and much greater convergence in day to day regulation
and  supervision,  so  strengthening  European  financial  stability  as  stressed  in  Parliament
Resolution  A5-0370/2002.  Effective  co-operation  between  representatives  of  finance
ministries is needed if effective strategic decisions are to be taken on stability and other key
issues.

The  package  is  needed  urgently  if  the  Financial  Services  Action  Plan  (FSAP)  is  to  be
delivered within by the deadline of 2005 set by the 2000 Lisbon Council, and thus if the EU's
overall economic objectives are to be met. An emerging complaint from financial markets is
that  the  legislative  ambitions  of  the  FSAP  are  fundamentally  undermined  by  poor  and
inconsistent  implementation  across  Member  States  and  that  an  integrated  European
financial market is impossible without tackling this.

10

Whilst these complaints are already being addressed in the securities field by the introduction
of a new "comitology" approach, failure to extend this approach to banking, insurance and
investment  funds  risks  weakening  the  other  elements  of  the  European  financial  sector  at  a
time  when  two  crucial  pieces  of  legislation  are  about  to  be  put  forward:  the  CAD  III  and
Solvency  II  proposals  on  capital  adequacy  rules.  The  successful  implementation  of  these
new rules  in  Member States  will rely  on  close  co-operation  not  just  between  Member  State
supervisors but also between Member State  regulators. This work needs to begin as soon as
possible and can only effectively be achieved if the new committee structure is in place.

Looking  beyond  co-operation  to  ensure  common  implementation,  the  timeframe  for  the
adoption  and  implementation  of  these  two  capital  adequacy  proposals  is  extremely  short.
Delaying the creation of committees until these proposals are on the table would not give long
enough and would risk delaying the full implementation of these new frameworks as the new
capital  adequacy  framework  in  the  banking  and  insurance  sectors  involves  supervisory
judgement to a much greater extent than at present (e.g. for the validation of internal systems
and  for  the  fine-tuning  of  individual  capital  requirements).  Guidance  on  supervisory
approaches will begin to be needed from early 2004 onwards, well ahead of the adoption of
the proposal and well ahead of the deadline for its implementation.

The  extension  of  the  scope  of  the  IC  is  needed  with  the  adoption  of  the  Pension  Funds
Directive, as the committee will be able to address interpretation problems before  entry into
force and thus contribute to common implementation.

Underpinning this urgency, there is a real deadline imposed by the imminent elections to the
European Parliament in June 2004. The Parliament will be dissolved for elections in Spring
2004. If these measures are not adopted by that point, there is likely to be a significant delay
before the measures can be reconsidered by the new Parliament. This will penalise European
businesses and investors, and hinder the integration of markets.

1.4.4.

The European Banking Committee

The  European  Banking  Committee  will  take  over  most  of  the  functions  of  the  Banking
Advisory Committee, which will no longer exist.

The objective of this proposal (and related Commission Decision) is to amend the recitals and
articles in Directive 2000/12/EC referring to the BAC, thereby:

(cid:1)  Transferring its "comitology" functions to the EBC; and

(cid:1)  Deleting references to the existing Committee's advisory capacity and establishing the

EBC in an advisory mode by Commission Decision.

In advisory mode, the Committee will be consulted by the  Commission  on  policy issues, as
well  as  proposals  in  the  banking  sector.  It  will  also  assist  the  Commission  in  preparing
mandates for technical advice by the Committee of European Banking Supervisors (CEBS) on
draft implementing measures.

11

The format of the EBC should be expected to follow the recommendations of the Report of
the Economic and Financial Committee on financial regulation, supervision and stability. The
EBC will be chaired by the Commission and each Member State is expected to send one high
level  representative.  By  comparison,  the  existing  BAC  is  chaired  by  a  Member  State
representative and each delegation may comprise up to three members.

In order to ensure close links with the committee of supervisors, the chairperson of CEBS will
participate  as  an  observer  at  meetings  of  the  EBC.  The  European  Central  Bank  will  also
participate in observer capacity.

In  line  with  the  tradition  of  close  cooperation  between  the  different  European  banking
committees, the EBC may also invite the chairpersons of these committees as observers. This
is  consistent  with  the  long-established  practice  of  cross-observership  between  the  different
banking committees.

1.4.5.

The European Insurance and Occupational Pensions Committee (EIOPC)

The  objective  of  this  proposal  is  to  amend  Directive  91/675/EEC  setting  up  an  Insurance
Committee  in  order  to  embrace  occupational  pensions  and  to  clarify  that  it  covers  the
insurance sector as such, including for example activities such as reinsurance. The Insurance
Committee  will  become  the  European  Insurance  and  Occupational  Pensions  Committee
(EIOPC). Amendment of Directive 91/675/EEC entails:

(cid:1)  transferring  the  "comitology"  function  of  the  Insurance  Committee  to  the  EIOPC.
Directive 91/675/EEC provides that the Insurance Committee shall assist the Commission
in  the  exercise  of  its  implementing  powers  in  the  field  of  direct  non-life  and  direct  life
insurance, under the regulatory procedure laid down by Decision 1999/468/EC, Article 5.
The  EIOPC  will  take  over  the  current  regulatory  functions  of  the  Insurance  Committee,
and  will  continue  to  act  as  a  regulatory  committee,  in  accordance  with  Decision
1999/468/EC on comitology, in order to assist the Commission when it takes decisions or
implementing measures conferred on it by the Third Insurance Directives 92/49/EEC and
92/96/EEC, and other legal instruments adopted in the fields of insurance (e.g. reinsurance,
insurance groups) and occupational pensions.

(cid:1)  deleting references to the existing Committee’s advisory capacity and establishing the

EIOPC in an advisory mode by Commission Decision.

Under  the  accompanying  Commission  Decision,  the  EIOPC  will  take  over  the  existing
Insurance  Committee’s  consultative  functions  provided  for  in  Directive  91/675/EEC.
Therefore,  the  EIOPC  will  examine  any  question  relating  to  the  application  of  Community
provisions  concerning  the  insurance  sector,  and  in  particular  Directives  on  direct  insurance.
The  Insurance  Committee  is  also  consulted  by  the  Commission  on  new  proposals  of  legal
instruments  in  the  sphere  of  insurance.  Indeed,  the  Decision  also  endorses  the  advisory
capacities  of  the  Committee.  They  will  relate  to  insurance,  reinsurance  and  occupational
pension activities.

In order to ensure close links between both committees, the chairperson of the Committee of
European Insurance and Occupational Pensions Supervisors (CEIOPS) will participate in the
meetings of the EIOPC as an observer.

12

1.4.6.

The transferral of the powers of the UCITS Contact Committee

As  noted  in  1.4.1  above,  the  existing  Committee  has  both  "comitology"  and  advisory
functions.  The  objective  of  this  proposal  is  to  amend  Directives  85/611/EEC  and
2001/108/EC in all their provisions referring to the present Committee, thereby:

(cid:1)  transferring its "comitology" function to the ESC. The ESC will therefore become the
new "comitology" committee in the field of UCITS and in conformity with the model set
forth  in  the  European  Parliament  and  Council  Directive  2003/6/EC  on  Market  Abuse  of
28 January  200315;  Directive  2001/108/EC  provides  that  the  UCITS  Contact  Committee
shall assist the Commission in the adoption of implementing measures, limited to:

– 

– 

the clarification of the definitions; and

the  alignment  of  terminology  and  the  framing  of  definitions,  in  accordance
with  the  procedures  laid  down  by  the  rules  regarding  the  exercise  of
implementing powers.

The proposal does not affect the scope of these current regulatory powers.

(cid:1)  deleting references to the existing Committee’s advisory capacity and transferring them

to the ESC and CESR.

The  Commission  Decisions  of  6  June  2001  which  established  these  Committees  are
accordingly being amended by Decisions adopted at the same time as this proposal. However,
as explained above, these amendments will be dependent on, and will only come into effect
on the same day as the entry into force of this Directive.

2.

ARTICLES

Articles 1 and 2 – Provisions amending Directives 93/6/EC and 94/19/EC

These provisions amend a number of references to the BAC in Community legislation in the
financial  services  field:  Directive  93/6/EC  (capital  adequacy),  and  Directive  94/19/EC
(deposit insurance).

They  remove  a  duplication  of  notification  between  the  Commission  and  the  banking
committee in Article 7(9) of Directive 93/6/EC.

Article 3 – Provisions amending Directive 2000/12/EC

Article 3 – Points (1) and (2)

These changes bring the procedure for amending the list of institutions permanently excluded
from the scope of Directive 2000/12/EC and the procedure for reviewing the rules applicable
to credit institutions excluded from the scope of certain provisions of Directive 2000/12/EC in
view of their affiliation to a central body into line with the standard procedure for technical

15

Directive  2003/6/EC  of  the  European  Parliament  and  of  the  Council  of  28  January  2003  on  insider
dealing and market manipulation (market abuse), OJ L 96 , 12.4.2003, pp. 16-25.

13

                                                
adaptations to the Directive. The procedure currently laid down in Articles 2(4) and 2(5) dates
back to the First Banking Directive 77/780/EEC and as such is out of date.

Article 3 – Point (3)

This  provision  removes  the  duplication  of  notification  between  the  Commission  and  the
Banking Advisory Committee for the notification of:

- the requirements for the authorisation of credit institutions

-the process for having credit exposures brought within the limits laid down in Article 49,

-the use by Member States of the option to extend the time limits for this.

This duplication of notification is superfluous and should therefore be repealed.

Article 3 - Point (4) – Report on the withdrawal of authorisations

This  amendment  to  Article  22(9)  of  Directive  2000/12/EC  removes  the  obligation  for  the
Commission to submit a report every two years to the banking committee on the withdrawal
of authorisations by Member State home country authorities.

This provision, which  has  been  inherited  from  the  Second  Banking  Directive  89/649/EC,  is
outdated in the light of substantial progress in the cooperation between home and host country
authorities. Bilateral cooperation between supervisors in the EEA has developed significantly,
not only in the context of an  extensive  network  of  Memoranda  of  Understanding  -  some  of
them  covering  specific  cross-border  banking  and  financial  groups  -  but  also  in  the  form  of
extensive multilateral exchange of information in the Groupe de Contact of European banking
supervisors. The notification of the withdrawal of authorisation appears to be well integrated
in the routine information flow between supervisory authorities. This has made regular review
by the Commission and reporting to the Banking Advisory Committee superfluous.

Article 3 - Point (5) – Report on refusal of authorisation

This  article  amends  Article  22(10)  to  remove  the  obligation  for  the  Commission  to  report
every  two  years  to  the  banking  committee  on  the  refusal  of  authorisation.  Experience  has
demonstrated  that  such  routine  reporting  –  introduced  by  the  Second  Banking  Directive
89/649/EC - is no longer needed now that the single market for banking services has been in
place for a considerable amount of time.

Article  3  -  Point  (6)  –  Routine  information  on  third  country  authorisations  and
acquisitions

This  article  amends  Article  23(1)  to  remove  the  obligation  for  the  Commission  to
systematically inform the banking committee of individual authorisations or acquisitions. This
routine  reporting  is  not  consistent  with  the  regulatory  focus  of  the  European  Banking
Committee. This of course does not exclude the possibility for the Commission to inform the
European Banking Committee if appropriate.

Article 3 – Point (7)

The article replaces two references to the BAC with references to the EBC.

14

Article 3 – Point (8) - Examination of outcome of negotiations

This provision amends a further reference to the BAC and provides legal certainty by making
clear  that  the  provision  does  not  conflict  with  the  provisions  of  the  Treaty  on  external
competences.

Article 3 - Point (9) – Notification of delegated authority

This  amendment  to  Article  52(9)  of  Directive  2000/12/EC  removes  the  obligation  to  notify
the  delegation  of  responsibilities  for  the  supervision  of  certain  subsidiaries  to  the  banking
committee.

This provision,  which has been inherited from  Directive  89/647/EC,  now  seems  obsolete  in
the  light  of  progress  in  cooperation  between  supervisory  authorities,  as  noted  above.  While
notification  to  the  Commission  is  instrumental  in  monitoring  the  implementation  of  the
Community  provisions  regarding  cooperation  between  the  different  supervisory  authorities
involved in  the  supervision  of  a  group,  and  while  information  of  the  competent  supervisory
authorities in other Member States is needed to identify the responsible authority in a group
context, the systematic notification of every delegation of  supervisory  responsibilities to the
banking committee appears superfluous, and is not consistent with the regulatory focus of the
new European Banking Committee. The pronoun "it" in the third sentence will therefore now
refer to the delegating competent authority rather than to the European Commission.

Article 3 - Point (10) Advisory functions of the BAC and Observation ratios

This article deletes Title VI of Directive 2000/12/EC (Articles 57-59). As Articles 57 and 58
cover  the  advisory  functions  of  the  BAC,  and  as  these  functions  are  now  covered  by
Commission  Decision  [xx/2003]  establishing  the  European  Banking  Committee,  and  as
explained in Section 1.4.2 above, the title should now be deleted.

Article 59 on observation ratios for solvency and liquidity, which had been inherited from the
First Banking Directive 77/780/EEC is also deleted. These provisions are outdated in view of
the  harmonisation  of  the  framework  for  solvency,  and  in  view  of  the  development  of  the
techniques used by the banking industry to measure and manage liquidity risk.

The monitoring of solvency tends to be mainly based on the harmonised measures of capital
adequacy  laid  down  in  Sections  1  and  2  of  Chapter  2  of  Directive  2000/12/EC.  The
coordination foreseen under paragraph 1 of Article 59 has been achieved, and the calculation
of observation ratios for solvency would be largely redundant with the solvency ratio defined
in Title V (Chapter 2, Section 2).

As regards the monitoring of liquidity, the definition of a simple harmonised ratio between the
assets and liabilities of credit institutions has proved to be fraught with technical difficulties,
and has been hampered by differences in the liquidity behaviour of several key categories of
assets and liabilities (e.g. the liquidity  patterns  of deposits in  reaction to  changes  in  interest
rates differs widely across the EU). Equally important has been the substantial progress in the
management  of  assets  and  liabilities,  where  sophisticated  models  including  tailored
behavioural  assumptions  on  assets  and  liquidities  are  superseding  simpler  static  liquidity
ratios. For these reasons, the reference to liquidity ratios now appears outdated.

15

In  addition,  the  monitoring  of  solvency  and  liquidity  typically  belongs  to  the  domain  of
supervision,  for  which  other  banking  supervisory  fora  have  substantially  developed  their
contribution since the adoption of Directive 2000/12/EC. This monitoring, which is based on
extensive  quantitative  and  qualitative  analysis,  will  typically  include  a  range  of  relevant
indicators  and  help  provide  a  more  comprehensive  picture  of  the  solvency  and  liquidity  of
banks.

This monitoring would not be consistent with the regulatory focus of the European Banking
Committee,  and  should  better  be  left  to  committees  which  have  invested  heavily  on  these
aspects over recent years.

Article 3 - Point (11) - Identification of committee

This provision amends Article 60 to formally identify the "comitology" committee established
under  Article  60(2)  with  the  European  Banking  Committee  established  by  Commission
Decision  [xx/2003].  As  certain  technical  provisions  of  Directive  2000/12/EC  apply  to  both
credit  institutions  and  investment  firms,  the  composition  of  the  EBC  when  delivering  an
opinion  on  technical  adaptations  of  such  provisions  shall  ensure  that  the  investment  firm's
perspective is taken into account.

Article 4

This  provision  amends  a  reference  to  the  IC  in  Directive  73/273/EEC  as  most  recently
amended.

Article 5 – Provisions amending Directive 91/675/EEC

Article 5 - Point (1) - Title of the Committee

This  article  changes  the  title  of  the  Insurance  Committee  in  order  to  confirm  that  the
Committee will be a Committee for Insurance and Occupational Pensions.

Article 5 - Point (2) - Composition of the Committee

This article sets out membership and observership in the EIOPC.

The EIOPC comprises high-level representatives of Member States.

As already provided in Directive 91/675/EEC, the Commission will chair the EIOPC.

In  order  to  ensure  an  effective  link  between  the  EIOPC  and  the  Committee  of  European
Insurance and Occupational Pensions Supervisors (CEIOPS), the chairperson of the CEIOPS
will participate in the meetings of the EIOPC as an observer.

The EIOPC may invite experts and observers to its meetings, for instance members of other
committees.

An  identical  form  of  words  is  used  in  Article  2  of  Commission  Decision  [xx/2003]
establishing the EIOPC in advisory mode.

16

Article 5 - Point (3) - Exercise of "comitology" functions by the EIOPC

This provision states that the "comitology" functions of the EIOPC to assist the Commission
in  the  exercise  of  implementing  powers  in  the  field  of  insurance  and  occupational  pensions
shall  be  executed  in  accordance  with  the  procedure  laid  down  in  Decision  1999/468/EC,
Articles  5  and  7.  This  provision  also  expands  the  EIOPC's  "comitology"  functions  to
occupational pensions

Article 5 - Point (4) - Consultative role of the EIOPC.

In line with the approach explained in Section 1.4.1 above, this provision deletes references to
the IC acting in advisory capacity.

Article 6 – Provision amending Directive 2002/83/EC

This  provision  amends  three  further  references  to  the  IC  in  Directive  2002/83/EC  on  life
assurance.

Article 7 - Provisions amending Directive 85/611/EEC

Article 7 - Points (1) to (4) – Name of the Committee.

While Article 14(6) is taken directly from Directive 85/611/EEC, it is worth noting that  the
other concerned provisions result from amendments to that original Directive brought  about
by,  respectively,  Directive  2001/107/EC  (insofar  as  Article  6c  is  concerned)  and  Directive
2001/108/EC (insofar as Article 21(4) and Article 22(4), third sub-paragraph are concerned).
They amend the Directive to bring it into line with institutional norms.

The term, “UCITS Contact  Committee”  is  substituted  with  that  of  the  “European  Securities
Committee” as the new "comitology" committee competent for UCITS.

The  second  subparagraph  of  Article  14(6)  refers  to  a  requirement  for  the  Commission  to
report to the Contact Committee on the application of paragraphs 4 and 5 of Article 14 within
five years of the implementation of the Directive. As the Directive was adopted in 1985 and
had  a  deadline  for  implementation  of  1  October  1989,  this  subparagraph  is  outdated  and
should therefore be deleted.

Article 7 - Point (5) – Title of Section X.

This  article  changes  the  title  of  Section  X  in  order  to  point  out  that  the  relevant  committee
here is from now on the European Securities Committee.

Article 7 - Point (6) – Deletion of Article 53.

Unlike  the  above-mentioned  provisions  which  provide  that  specific  exchanges  of  views  or
focused discussions on Commission’s reports shall take place in the competent "comitology"
committee,  Article  53  of  Directive  85/611/EEC  lists  the  general  principles  organising  the
work of the UCITS Contact Committee when meeting outside its "comitology" capacity and
sets out, inter alia, membership and chairmanship principles for the Committee. As noted in
Section  1.4.2  above,  these  principles  cover  both  "comitology"  committee  and  committee  of
supervisors-type functions.

17

In  conformity  with  the  model  used  in  Directive  2003/6/EC  on  Market  Abuse,  these  general
principles need to be left to the Commission Decisions organising the work of the ESC (when
meeting outside its "comitology" capacity) and CESR, as completed by the rules of procedure
and  working  arrangements  of  these  Committees.  Therefore,  it  is  proposed  to  delete  the
contents  of  Article  53,  and  to  adopt  two  Commission  Decisions  amending  the  Decisions
setting up the ESC and CESR to give them these advisory functions, within the limits defined
in the decisions which created these committees. These Commission Decisions will only enter
into force once the proposed Directive has been adopted.

Nevertheless,  it  should  be  clear  that  in  the  UCITS  field,  policy  issues  for  discussion  in  the
ESC  will  also  include  any  more  rigorous  or  additional  requirements  which  Member  States
may  adopt  in  accordance  with  Article  1(7)  of  the  amended  UCITS  Directive  and  the
provisions which they may adopt in accordance with Articles 44 and 45 of that Directive.

Article 7 - Point (7) – "comitology" powers of the ESC under the Directive.

This provision merely substitutes the UCITS Contact Committee with the European Securities
Committee, without any modification to the contents of  the present  "comitology"  powers of
the  former  Committee.  It  also  states  that  the  "comitology"  functions  of  the  Committee
assisting the Commission in the exercise of implementing powers in the field of UCITS shall
be executed in accordance with the procedure laid down in Decision 1999/468/EC, Articles 5
and 7.

Article  8  –  Amendments  to  references  to  the  Banking  Advisory  Committee  and  the
Insurance Committee in the Financial Conglomerates Directive

This provision amends three further references to the BAC and IC in Directive 2002/87/EC on
the  supplementary  supervision  of  credit  institutions,  insurance  undertakings  and  investment
firms  in  a  financial  conglomerate  (the  Financial  Conglomerates  Directive).  It  also  provides
legal certainty by making clear that the provision does not conflict with the provisions of the
Treaty on external competences.

In  line  with  the  approach  adopted  elsewhere  in  this  amending  Directive,  the  amendment  to
Article  29(11)  (itself  inserting  a  new  Article  56a  in  the  Consolidated  Banking  Directive
2000/12/EC) brings this provision into line with institutional precedent by clarifying that the
EBC  should  give  guidance  as  to  whether  the  consolidated  supervision  arrangements  of
competent authorities are likely to achieve the objectives defined elsewhere in the chapter at
the request of the Commission.

Article 9 – Entry into force

There is no reason to delay the introduction of the committees. The  Directive  will  therefore
enter  into  force  on  the  twentieth  day  following  the  date  of  its  publication  in  the  Official
Journal.

18

2003/0263 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Council Directives 73/239/EEC, 85/611/EEC, 91/675/EEC, 93/6/EEC and
94/19/EC and Directives 2000/12/EC, 2002/83/EC and 2002/87/EC of the European
Parliament and of the Council, in order to establish a new financial services committee
organisational structure

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular
Article 47 (2) thereof,

Having regard to the proposal from the Commission16,

Having regard to the opinion of the European Economic and Social Committee17,

Having regard to the opinion of the Committee of the Regions18,

Acting in accordance with the procedure laid down in Article 251 of the Treaty19,

Whereas:

(1)

(2)

(3)

(4)

16

17

18

19

20

The Commission Action Plan for Financial Services20 identifies a series of actions that
are required in order to complete the single market for financial services.

At  its  meeting  in  Lisbon  in  March  2000,  the  European  Council  called  for  the
implementation of this Action Plan by 2005.

On 17 July 2000, the Council set up the Committee of Wise Men on the Regulation of
European Securities Markets. In its final report, the Committee of Wise Men called for
the establishment of a four-level regulatory framework in order to make the regulatory
process for Community securities legislation more flexible, effective and transparent.

In  its  Resolution  on  more  effective  securities  market  regulation  in  the  European
Union,  the  Stockholm  European  Council  welcomed  the  report  of  the  Committee  of
Wise Men and called for the four-level approach to be implemented.

OJ C …, …, p. …
OJ C …, …, p. …
OJ C …, …, p. …
OJ C …, …, p. …
COM (1999) 232 final

19

                                                
(5)

(6)

(7)

(8)

(9)

(10)

In the light of those developments, the Commission adopted Decisions 2001/527/EC21
and  2001/528/EC22  setting  up,  respectively,  the  Committee  of  European  Securities
Regulators (CESR) and the European Securities Committee (ESC).

In  the  Resolutions  of  5  February  2002  and  21  November  2002,  the  European
Parliament respectively endorsed the four-level approach for securities and called for
certain  aspects of that  approach  to  be  extended  to  the  banking  and  insurance  sectors
subject  to  a  clear  commitment  on  the  part  of  the  Council  to  guarantee  a  proper
institutional balance.

On 3 December 2002, the Council invited the Commission to implement arrangements
for  the  remaining  financial  services  sectors  based  upon  the  Final  Report  of  the
Committee of Wise Men.

For  those  purposes,  as  regards  the  banking  sector,  the  role  of  the  Banking  Advisory
Committee (BAC) set up by Directive 2000/12/EC of the European Parliament and of
the Council of 20 March 2000 relating to the taking up and pursuit of the business of
credit institutions23 should be adapted.

To  reflect  that  adapted  role,  the  BAC  should  be  renamed  "the  European  Banking
Committee".

Since  the  measures  necessary  for  the  implementation  of  Directive  2000/12/EC  are
measures  of  general  scope  within  the  meaning  of  Council  Decision  1999/468/EC  of
28 June  1999  laying  down  the  procedures  for  the  exercise  of  implementing  powers
conferred  on  the  Commission24,  they  should  be  adopted  by  use  of  the  "comitology"
procedure provided for in Article 5 of that Decision.

(11) Certain existing provisions for technical amendments to Directive 2000/12/EC need to

be brought in line with Council Decision 1999/468/EC.

(12)

In order to ensure institutional and legal consistency with the approach taken in other
Community  sectors,  Commission  Decision  [xx/2003]  of  [xx]25  establishes  the
European  Banking  Committee  in  an  advisory  capacity  to  advise  the  Commission  as
regards the development of Community banking legislation.

(13) References  to  the  advisory  functions  of  the  BAC  in  Directive  2000/12/EC  should

therefore be deleted.

(14) As regards the monitoring of observation ratios for the solvency and liquidity of credit
institutions,  the  competencies  of  the  BAC  are  no  longer  needed  in  view  of  the
harmonisation  of  capital  adequacy  rules  and  of  developments  in  the  techniques  used
by credit institutions to measure and manage their liquidity risk.

21

22

23

24

25

OJ L 191,13.7.2001, p.43
OJ L 191, 13.7.2001,p.45
OJ L 126, 26.5.2000 p. 1
OJ L 184, 17.7.1999 p 23
OJ C …, …, p. …

20

                                                
(15) Moreover, the substantial progress made in cooperation and exchange of information
between supervisory  authorities,  in  particular  through  Memoranda  of  Understanding,
has  rendered  superfluous  the  regular  monitoring  by  the  Commission  of  certain
individual supervisory decisions and their systematic reporting to the BAC.

(16)

(17)

The  establishment  of  the  European  Banking  Committee  should  not  rule  out  other
forms of cooperation between the different authorities involved in the regulation  and
supervision  of  credit  institutions,  in  particular  within  the  Committee  of  European
Banking Supervisors established by Commission Decision [xx/2003]26.

The  Insurance  Committee  (IC)  set  up  under  Council  Directive  91/675/EEC  of
19 December 1991 setting up an Insurance Committee27 is to assist the Commission,
in the exercise of the implementing powers granted by Directives adopted in the field
of  insurance,  and  in  particular  to  make  the  technical  adaptations  necessary  to  take
account  of  developments  in  the  insurance  sector;  such  measures  being  taken  in
accordance with the "comitology" procedure laid down in Decision 1999/468/EC.

(18) Under  Directive  91/675/EEC,  the  IC  is  also  to  examine  any  question  relating  to  the
application  of  Community  provisions  concerning  the  insurance  sector  and,  in
particular,  to  advise  the  Commission  on  proposals  for  legislation  which  the
Commission intends to present to the European Parliament and to the Council.

(19)

(20)

(21)

(22)

In order to build an internal market where policyholders and beneficiaries, are properly
protected, insurance and occupational pensions undertakings operating in the internal
market  under  the  principles  of  freedom  of  establishment  and  freedom  to  provide
services  are  subject  to  specific  Community  legislation.  To  ensure  the  proper
functioning  of  the  internal  market  and  maintain  financial  stability,  that  legislation
should be capable of being rapidly adapted to market changes affecting those sectors,
in particular with regard to financial and technical aspects.

The role of the IC should therefore be adapted, and this Committee should accordingly
be renamed "the European Insurance and Occupational Pensions Committee";

Since  the  measures  necessary  for  the  implementation  of  acts  covered  by  Directive
91/675/EEC are measures of general scope within the meaning of Article 2 of Council
Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of
implementing powers conferred on the Commission, they should be adopted by use of
the "comitology" procedure provided for in Article 5 of that Decision.

To  ensure  institutional  and  legal  consistency  with  the  approach  taken  in  other
Community  sectors,  Commission  Decision  [xx/2003]  of  [xx]28  establishes  the
European Insurance and Occupational Pensions Committee in an advisory capacity to
assist the Commission in the fields of insurance and occupational pensions.

(23) References  to  the  advisory  functions  of  the  IC  in  Directive  91/675/EEC  should

therefore be deleted.

26

27

28

OJ C …, …, p. …
OJ L 374, 31.12.1991 p. 32.
OJ C …, …, . …

21

                                                
(24) Council  Directive  85/611/EEC  of  20  December  1985  on  the  coordination  of  laws,
regulations  and  administrative  provisions  relating  to  undertakings  for  collective
investment in transferable securities (UCITS)29 set up a UCITS Contact Committee, to
assist the Commission by facilitating the harmonised implementation of that Directive
through  regular  consultations,  promoting  consultation  between  Member  States  and
advising the Commission, if necessary, on amendments to be made to that Directive.

(25)

The UCITS Contact Committee may also act as a "comitology" Committee within the
meaning of Decision 1999/468/EC to assist the Commission in regard to the technical
amendments to be made to Directive 85/611/EEC.

(26) On  3  December  2002,  the  Council  invited  the  Commission  to  take  steps  in  order  to
transfer to the ESC inter alia the function of advice to the Commission in the exercise
of its implementing powers held by the UCITS Contact Committee.

(27)

(28)

(29)

In  order  to  fully  implement  the  model  set  out  in  recent  Directives  in  the  securities
field, in particular Directive 2003/6/EC of the European Parliament and of the Council
of  28  January  2003  on  insider  dealing  and  market  manipulation  (market  abuse)30  -
which gives to the  ESC  the  function  to advise the  Commission  in the  exercise of its
regulatory powers, while leaving the organisation of other aspects of the ESC’s work
to  be  governed  by  Decision  2001/528/EC  –  it  is  necessary  to  delete  the  provisions
setting up, under  Article 53 of  Directive 85/611/EEC,  the  organisation  and functions
of the present UCITS Contact Committee outside its "comitology" capacity.

The  competences  of  the  ESC  should  therefore  be  expressly  extended  beyond  those
already conferred upon it by Directive 2003/6/EC, to cover the functions currently laid
down in Directive 85/611/EEC. Since the measures necessary for the implementation
of  this  Directive  are  measures  of  general  scope  within  the  meaning  of  Article  2  of
Council  Decision  1999/468/EC  of  28  June  1999  laying  down  the  procedures  for  the
exercise  of  implementing  powers  conferred  on  the  Commission,  they  should  be
adopted  by  use  of  the  "comitology"  procedure  provided  for  in  Article  5  of  that
Decision.

It  is  therefore  also  necessary  to  amend  accordingly  First  Council  Directive
73/239/EEC  of  24  July  1973  on  the  coordination  of  laws,  regulations  and
administrative provisions relating to the taking-up and pursuit of the business of direct
insurance other than life assurance31, Council Directive 92/49/EEC of 18 June 1992 on
the  coordination  of  laws,  regulations  and  administrative  provisions  relating  to  direct
insurance  other  than  life  assurance  and  amending  Directives  73/239/EEC  and
88/357/EEC  (third  non-life  insurance  Directive)32  Council  Directive  93/6/EEC  of
15 March  1993  on  the  capital adequacy  of  investment  firms  and  credit  institutions33,
Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on
deposit-guarantee  schemes34,  Directive  2000/12/EC,  Directive  2002/83/EC  of  the
European  Parliament  and  of  the  Council  of  5  November  2002  concerning  life

29

30

31

32

33

34

OJ L 375, 31.12.1985 p. 3
OJ L 96, 12.4.2003 p. 16
OJ L 228, 16.8.1973 p.3
OJ L 228 , 11.8.1992 p. 1
OJ L 141, 11.6.1993 p.1
OJ L 135, 31.5.1994 p. 5

22

                                                
assurance35 and 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  and
amending  Council  Directives  73/239/EEC,  79/267/EEC,  92/49/EEC,  92/96/EEC,
93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European
Parliament and the Council36.

HAVE ADOPTED THIS DIRECTIVE:

Chapter I

Amendments of Directives 93/6/EEC, 94/19/EC, and 2000/12/EC
on the banking sector

Article 1

Directive 93/6/EEC

In Article 7(9) of Directive 93/6/EEC, the term "Banking Advisory Committee" is deleted.

Article 2

Directive 94/19/EC

In Article 3(1) of Directive 94/19/EC, the term "Banking Advisory Committee" is replaced by
the term "European Banking Committee".

Article 3

Directive 2000/12/EC

Directive 2000/12/EC is amended as follows:

1.

Article 2 (4) is replaced by the following:

The  Commission,  pursuant  to  the  procedure  set  out  in  Article  60(2)  shall

"4.
decide on any amendments to the list in paragraph 3."

35

36

OJ L 345, 19.12.2002 p. 1
OJ L 35, 11.2.2003 p. 1

23

                                                
2.

In Article 2 (5), the last two sentences are replaced by the following:

3.

4.

5.

6.

7.

8.

9.

10.

11.

" In the  case  of  credit institutions  other  than those  which are set up in  areas  newly
reclaimed  from  the  sea  or  have  resulted  from  scission  or  mergers  of  existing
institutions dependent or answerable to the central body,  the  Commission, pursuant
to  the  procedure  set  out  in  Article  60(2)  may  lay  down  additional  rules  for  the
application of the second subparagraph including the repeal of exemptions provided
for  in  the  first  subparagraph,  where  it  is  of  the  opinion  that  the  affiliation  of  new
institutions benefiting from the arrangements laid down in the second subparagraph
might have an adverse effect on competition.

In Articles 4, 64(2) and 64(6), the term "and to the Banking Advisory Committee" is
deleted.

In Article 22(9), the last sentence is deleted.

In Article 22(10), the last sentence is deleted.

In Article 23(1), the last sentence of paragraph (a) and the last sentence of paragraph
(b) are deleted.

In Articles 24(2) and 49(2), the term "Banking Advisory Committee" is replaced by
the term "European Banking Committee".

Article 25 paragraph 3 is replaced by the following:

"3.  Without  prejudice  to  Article  300(1)  and  (2)  of  the  Treaty  establishing  the
European  Community,  the  Commission  shall,  with  the  assistance  of  the  European
Banking  Committee,  examine  the  outcome  of  the  negotiations  referred  to  in
paragraph 1 and the resulting situation."

In  the  third  sentence  of  Article  52(9),  the  words  "and  to  the  Banking  Advisory
Committee" are deleted.

Title VI is deleted.

Article 60(2) is replaced by the following:

"2. The Commission shall be assisted by the European Banking Committee instituted
by  Commission  Decision  [xx/2003](hereinafter  referred  to  as  "the  Committee"),
composed of representatives of the Member States and chaired by the representative
of the Commission.

Where reference is made to this paragraph, the "comitology" procedure laid down in
Article 5 of Decision 1999/468/EC shall apply, in compliance with Article 7 (3) and
Article 8 thereof.

The  period  provided  for  in  Article  5(6)  of  Decision  1999/468/EC  shall  be  three
months."

24

Chapter II

Amendments of Directives 73/239/EEC, 91/675/EEC and
2002/87/EC on the insurance and occupational pensions sector

Article 4

Directive 73/239/EEC

Directive 73/239/EEC is amended as follows:

(1)

Article 29a is replaced by the following:

"Article 29a

1.

The competent authorities of the Member States shall inform the Commission:

(a)

of any authorisation of a direct or indirect subsidiary, one or more parent
undertakings of which are governed by the law of a third country;

(b) whenever such a parent undertaking acquires a holding in a Community
insurance undertaking which would turn the latter into its subsidiary.

The  Commission  shall  inform  the  European  Insurance  and  Occupational
Pensions Committee.

2. When the authorisation referred to in paragraph 1(a) is granted to the direct or
indirect subsidiary of one or more parent undertakings governed by the law of
a third country, the structure of the group shall be specified in the notification
which the competent authorities shall address to the Commission."

(2)

In Article 29b(4), the second subparagraph is replaced by the following:

"In the circumstances described in the first subparagraph, it may also be decided at
any time, and in addition to initiating negotiations, in accordance with the procedure
referred  to  in  Article  2(2)  of  Council  Directive  91/675/EEC*  that  the  competent
authorities of the Member States must limit or suspend their decisions regarding the
following:

(a)  requests  for  authorisation,  whether  pending  at  the  moment  of  the  decision  or
submitted thereafter;

(b) the acquisition of holdings by direct or indirect parent undertakings governed by
the law of the third country in question.

*OJ L 374 , 31.12.1991 p.32"

25

Article 5

Directive 91/675/EEC

Directive 91/675/EEC is amended as follows:

(1)

In  the  Title,  the  term  “Insurance  Committee”  is  replaced  by  the  term  “European
Insurance and Occupational Pensions Committee”.

(2)

Article 1 is replaced by the following:

“Article 1

1.
The Commission shall be assisted by the European Insurance and Occupational
Pensions  Committee  instituted  by  Commission  Decision  [xx/2003]  hereinafter  "the
Committee”, composed of representatives of  the Member  States and chaired  by the
representative of the Commission.

Each  Member  State  delegation  shall  be  considered  to  be  one  member  of  the

2.
committee.

The chairperson of the Committee of European Insurance and Occupational Pensions
Supervisors established by Commission Decision 2003/../EC37 shall participate at the
meetings of the Committee as an observer.

3.

4.

5.

The Commission may invite experts and observers to attend its meetings.

The secretariat of the Committee shall be provided by the Commission.

The Committee shall adopt its own rules of procedure."

(3)

Article 2 is replaced by the following:

"Article 2

Where acts adopted in the field of direct non-life insurance and direct life assurance,
reinsurance  and  occupational  pensions  confer  on  the  Commission  powers  for  the
implementation  of  the  rules  which  they  lay  down,  the  "comitology"  procedure  laid
down in Article 5 of Decision 1999/468/EC shall apply, in compliance with Article 7
(3) and Article 8 thereof.

The period provided for in Article 5(6) of Decision 1999/468/EC shall be set at three
months."

(4)

Articles 3 and 4 are deleted

37

OJ C …, …, p. …

26

                                                
Article 6

Directive 2002/83/EC

Directive 2002/83/EC is amended as follows:

1.

2.

In the first sentence of Article 46(9), the words "submit to the Insurance Committee"
are replaced by the word "issue".

Article 65, paragraphs 1 and 3 are deleted.

Chapter III

Amendment of Directive 85/611/EEC on the securities sector

Article 7

Directive 85/611/EEC

Directive 85/611/EEC is amended as follows:

(1)

Article 6c is amended as follows:

(a)

in paragraph 9, the last sentence is replaced by the following:

"Every two years the Commission shall issue a report on such cases. "

(b)

in paragraph 10, the last sentence is replaced by the following:

"Every two years the Commission shall issue a report on such cases."

(2)

(3)

In Article 14(6), the second sub-paragraph is deleted.

Article 21(4) is amended as follows:

(a)

The last sentence is replaced by the following:

“Such  information  shall  be  the  subject  of  exchanges  of  views  within  the  European
Securities Committee.”

(b) The following second subparagraph is added:

"The Commission shall issue a report on the application of paragraphs 4 and 5 within
five years of the implementation of this Directive. The Commission shall, if need be,
propose appropriate measures."

(4)

In  the  third  sub-paragraph  of  Article  22(4),  the  last  sentence  is  replaced  by  the
following:

“Such  communications  may  be  the  subject  of  exchanges  of  views  within  the
European Securities Committee.”

27

(5)

The title of Section X is replaced by the following:

"European Securities Committee"

Article 53 is deleted.

Article 53a is replaced by the following:

(6)

(7)

"Article 53a

The technical amendments to be made to this Directive in the following areas, shall
be adopted in accordance with the procedure referred to in Article 53b(2):

(a)  clarification  of  the  definitions  in  order  to  ensure  uniform  application  of  this
Directive throughout the Community;

(b)  alignment  of  terminology  and  the  framing  of  definitions  in  accordance  with
subsequent acts on UCITS and related matters.

(8)

The following Article 53b is inserted:

"Article 53b

1.
The  Commission  shall  be  assisted  by  the  European  Securities  Committee
instituted by Directive 2003/6/EC of the European Parliament and of the Council of
28  January  2003  on  insider  dealing  and  market  manipulation  (market  abuse)*,
hereinafter "the Committee".

2. Where  reference  is  made  to  this  paragraph,  the  "comitology"  procedure  laid
down in Article 5 of Decision 1999/468/EC shall apply, in compliance with Article
7(3) and Article 8 thereof.

The period provided for in Article 5(6) of Decision 1999/468/EC shall be set at three
months.

* OJ L 96, 12.4.2003 p. 16"

28

Chapter IV

Amendment of Directive 2002/87/EC on financial conglomerates

Article 8

Directive 2002/87/EC

1.

Article 19 paragraph 2 of Directive 2002/87/EC is replaced by the following:

"2. Without  prejudice  to  Articles  300(1)  and  (2)  of  the  Treaty  establishing  the
European  Community,  the  Commission,  shall,  with  the  assistance  of  the  European
Banking Committee, the European Insurance and Occupational Pensions Committee,
and  the  Financial  Conglomerates  Committee,  examine  the  outcome  of  the
negotiations referred to in paragraph 1 and the resulting situation."

2.

3.

In  Article  28,  the words "The  Commission and the Insurance Committee shall"  are
replaced  by  the  words  "Without  prejudice  to  Articles  300(1)  and  (2)  of  the  Treaty
establishing the European Community, the Commission, shall, with the assistance of
the European Insurance and Occupational Pensions Committee".

In Article 29(11), the words  "The  Banking  Advisory  Committee  may" are replaced
by  the  words  "The  European  Commission  may  request  the  European  Banking
Committee to".

Chapter V: Final Provisions

Article 9

Transposition

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative  provisions
necessary to comply with this Directive by one month after its entry into force at the latest.

When Member States adopt those provisions, they shall contain a reference to this Directive
or be accompanied by such a reference on the occasion of their official publication. Member
States shall determine how such reference is to be made.

Article 10

Entry into force

This Directive shall enter into force the twentieth day following that of its publication in the
Official Journal of the European Union.

29

Article 11

Addressees

This Directive is addressed to the Member States.

Done at Brussels,

For the European Parliament
The President

For the Council
The President

30

1.

2.

3.

4.

5.

5.0

5.1

FINANCIAL STATEMENT

BUDGET HEADING:
Internal Policies
TITLE:
Directive amending Council Directives 73/239/EEC, 85/611/EEC, 91/675/EEC, 93/6/EEC and 94/19/EC
and Directives 2000/12/EC, 2002/83/EC and 2002/87/EC, in order to establish a new financial services
committee organisational structure

DATE:
APPROPRIATIONS:
0

LEGAL BASIS:
Article 47(2)
AIMS:
To establish a new organisational structure for committees in the financial services field
FINANCIAL IMPLICATIONS
(No financial implications)

12 MONTH
PERIOD

CURRENT
FINANCIAL
YEAR
2003
(EUR million)
0

FOLLOWING
FINANCIAL
YEAR
2004
(EUR million)
0

(EUR million)
0

CHARGED TO THE EC BUDGET

NATIONAL AUTHORITIES
OTHER

EXPENDITURE
-
(REFUNDS/INTERVENTIONS)
-
-
REVENUE
-
(LEVIES/CUSTOMS DUTIES)
NATIONAL
-

OWN RESOURCES OF THE EC

0

0

0

5.0.1 ESTIMATED EXPENDITURE
5.1.1 ESTIMATED REVENUE
5.2 METHOD OF CALCULATION:

2005
0
0

2006
0
0

2007
0
0

2008
0
0

6.0

6.1

Not relevant
CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE
RELEVANT CHAPTER OF THE CURRENT BUDGET?
CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF
THE CURRENT BUDGET?

6.2 WILL A SUPPLEMENTARY BUDGET BE NECESSARY?
6.3 WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS?
OBSERVATIONS:
The proposal replaces two existing committees with two new ones, and brings another within the purview of an
existing committee. The effect will therefore be that there is no net financial impact.

Not relevant

Not relevant
No
No

31