Communication from the Commission - Review of the Lamfalussy process - Strengthening supervisory convergence
Date: 2007-11-20
Institutions: European Commission
Subjects: bank, cooperation policy, financial control, financial legislation, financial market, securities, single market

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 20.11.2007 
COM(2007) 727 final 

COMMUNICATION FROM THE COMMISSION 

Review of the Lamfalussy process 
Strengthening supervisory convergence 

EN 

   EN 

 
 
 
  
COMMUNICATION FROM THE COMMISSION 

Review of the Lamfalussy process 
Strengthening supervisory convergence 

1. 

INTRODUCTION 

A dynamic and healthy financial sector is crucial for the proper functioning of the European 
economy  and  for  global  competitiveness.  Financial  services  are  extremely  important  for 
European  consumers  and  companies,  large  and  small,  who  want  a  wide  range  of  financing 
options and to rely on high-quality and secure products and institutions that are well managed 
and supervised. This requires a solid European framework for the regulation and supervision 
of the financial sector.  

The  launch  of  the  Lamfalussy  process  in  2001  aimed  at  putting  in  place  an  efficient 
mechanism  to  begin  converging  European  financial  supervisory  practice  and  enable 
Community financial services legislation to respond rapidly and flexibly to developments in 
financial markets. Under this new approach financial regulation is passed in two levels.  

At  "Level  1",  framework  legislation  setting  out  the  core  principles  and  defining 
implementing powers is adopted by co-decision after a full and inclusive consultation process 
in line with the better regulation disciplines.  

The technical details are formally adopted by the Commission as implementing measures at 
"Level  2",  after  a  vote  of  the  competent  regulatory  Committee  (the  European  Securities 
Committee, the European Banking Committee and the European Insurance and Occupational 
Pensions  Committee).  In  the  Level  2  process  the  Commission  takes  careful  account  of  the 
European Parliament's position. For the technical preparation of the implementing measures, 
the Commission is advised by Committees, made up of representatives of national supervisory 
bodies,  referred  to  as  the  "Level  3"  Committees  –  the  Committee  of  European  Banking 
Supervisors  –  CEBS,  the  Committee  of  European  Insurance  and  Occupational  Pensions 
Supervisors – CEIOPS and the Committee of European Securities Regulators – CESR. These 
Committees  set  up  by  Commission  Decisions1  also  have  an  important  role  to  contribute  to 
consistent  and  convergent  implementation  of  EU  directives  by  securing  more  effective 
cooperation between national supervisors and the convergence of supervisory practices. This 
is  "Level  3"  of  the  process.  "Level  4"  is  where  the  Commission  enforces  the  timely  and 
correct transposition of EU legislation into national law. 

This four-level, comitology-based regulatory approach for financial services has been in place 
for more than five years in the securities sector and for more than two years in banking and 
insurance.  Directive  2005/1/EC  which  established  the  new  organisational  structure  for 
financial  services  committees  requires  the  Commission  to  carry  out  a  review  of  the 
Lamfalussy process by the end of 2007. This is an appropriate time for review. EU financial 
markets  have  undergone  important  changes  over  the  last  years.  European  financial  market 
integration  is  accelerating.  Financial  institutions  are  increasingly  conducting  their  business 
outside their home market. Financial products are increasingly dealt with on a pan-European 
basis. Market concentration is increasing,  as is product innovation and complexity. Mergers 
and acquisitions are increasingly on a cross-border and cross-sectoral basis.  

1 

Commission  Decisions  2001/527/EC,  2004/5/EC  and  2004/6/EC  establishing  CESR,  CEBS  and 
CEIOPS, respectively. 

EN 

2 

   EN 

 
                                                 
The  recent  market  turbulence  has  shown  how  interconnected  markets  are  becoming  –  and 
injecting  an  added  degree  of  urgency  to  evolve  the  EU  supervisory  framework  in  line  with 
these new market realities. 

In spite of these achievements, there is a growing consensus that some future evidence-based, 
practical improvements are needed in the operation of the current EU supervisory framework. 
In  October  2007,  the  ECOFIN  Council  agreed  to  take  further  steps  to  develop  the 
arrangements  for  cross-border  financial  stability  within  the  EU.  The  enhancement  of  the 
Lamfalussy  framework  is  a  necessary  complement  to  these  steps.  In  October,  the  Inter-
institutional  Monitoring  Group  (IIMG)  published  its  final  report  which  examined  the 
functioning of the Level 3 Committees. The Financial Services Committee should also come 
forward with a report on long-term supervisory issues and convergence. All of these reports 
will trigger a debate at political level, with a view to formulating concrete recommendations 
in 2008. 

This  review  presents  some  practical,  necessary  and  achievable  improvements  to  the 
Lamfalussy  process.  These  will  encourage  deeper  cooperation  between  national  supervisory 
authorities  and  ensure  greater  consistency  and  convergence  in  national  implementation  and 
enforcement.  The  Commission  considers  that  at  this  stage  more  ambitious  institutional 
changes such as granting of independent rule making powers in Level 3 is not feasible given, 
inter  alia,  the  lack  of  agreement  among  Member  States  and  other  stakeholders.  This  is  in 
particular due to the complexity of the issues at stake in the financial sector (where there are 
different supervisory arrangements for banking, insurance and securities as well as different 
organisational  models  for  supervision  in  the  Member  States).  In  that  context  the  changes 
proposed  in  this  Communication  represent  those  the  Commission  considers  essential  to 
strengthen further the current EU supervisory framework. 

2. 

GENERAL ASSESSMENT 

The overall experience to date with the Lamfalussy process has been positive - a view broadly 
shared  by  Member  States,  the  European  Parliament2,  market  participants  and  regulators. 
Ceteris paribus, the Lamfalussy process has significantly contributed to the development of a 
more flexible European regulatory system and begun to pave the way for greater supervisory 
convergence  and  cooperation.  The  overall  decision  making  process  is  more  efficient  and 
inclusive and has speeded up. The time needed to adopt the first four Lamfalussy directives 
amounted to 20 months on average, which compares favourably to the time taken to negotiate 
previous directives (e.g. 4 years for the Investment Services Directive in 1989-93). 

The  Lamfalussy  process  has  developed  at  a  different  pace  across  sectors.  In  the  securities 
sector, four Level 1 directives and twelve implementing Level 2 measures have been adopted, 
all  of  them  unanimously,  with  strong  support  of  the  European  Parliament.  This  would  not 
have  been  possible  without  CESR's  technical  advice.  In  the  banking  sector,  the  Capital 
Requirement  Directive  (CRD,  2006/48/EC)  allows  for  technical details  reflecting  regulatory 
agreement at G10 level to be amended via comitology decisions. Twelve Level 3 guidelines 
have been adopted by CEBS to deliver a converged application of the Capital Requirements 
Directive. In the insurance sector, CEIOPS work has been dominated by providing technical 
advice  to  the  Commission  on  the  proposal  on  Solvency  II  [COM(2007)  361]  and  its 
implementing measures. CEIOPS has also helped the Commission with testing the impact of 
Solvency II by carrying out a series of Quantitative Impact Studies. 

2 

EP's Report on Better Regulation in the EU (A6-0273/2007), paragraphs 18 and 19. 

EN 

3 

   EN 

 
                                                 
Implementation  of  the  Lamfalussy  process  has coincided  with  a  significant  improvement  of 
the global competitiveness of Europe's financial services and markets. The quality of the EU 
regulatory  method  has  played  an  important  role  in  creating  a  dynamic  framework  for  EU 
capital  markets  to  develop  and  innovate.  In  addition,  the  principles-based  EU  approach 
regulation is shaping international convergence in accountancy, investment services, UCITS, 
banking  (CRD),  and  in  other  areas  offering  opportunities  for  global  standard  setting 
leadership.  

Another fundamental objective of the regulatory architecture is to achieve optimal supervision 
at the lowest possible regulatory cost for financial firms. Today no overall reliable estimate of 
the  costs  and  other  burdens  of  cross-border,  cross-sectoral  regulations  for  the  industry  are 
available. The Commission has therefore launched a study which will examine in more detail 
the  costs  of  compliance  for  firms  of  a  limited  number  of  EU  directives.  The  result  of  this 
study  will  be  available  by  2009.  Based  on  the  results  of  this  study  the  Commission,  in 
cooperation with the Level 3 Committees, will assess whether and where other improvements 
may be needed.  

3. 

IMPROVEMENTS IN LEGISLATIVE PROCESS AND ENFORCEMENT  

3.1. 

Assessment of current situation 

Progress has been made in focusing the Level 1 Directives on general rules and principles – 
although there are a few critics who claim there is still too much detail in the Level 1 texts. 
The  Level  2  measures  have  been  carefully  calibrated  by  the  Commission,  anchored  on 
technical advice of the Level 3 Committees and consultation with stakeholders, to avoid over-
prescription.  Moreover, 
the  European  Parliament’s  concerns  about  safeguarding  an 
appropriate institutional balance at Level 2 have been addressed by an agreement in July 2006 
of a new regulatory procedure with scrutiny. Once the technical scope is agreed, the European 
Parliament will be empowered to scrutinise and even block the adoption of “quasi-legislative” 
(comitology)  measures.  The  three  EU  institutions  have  also  agreed  that  the  implementing 
powers  should  be  conferred  on  the  Commission  without  time-limit,  which  means  that  the 
existing  “sunset  clauses”  included  in  financial  services  directives  must  be  abolished3.  It  is 
now  of  utmost  importance  to  fulfil  this  commitment  before  the  end  of  2007  to  remove 
institutional uncertainty. 

3.2. 

Sequencing of Level 1 and Level 2 measures 

The sequencing of the negotiations and adoption of framework co-decision legislation (Level 
1)  with  implementing  measures  (Level  2)  has  resulted  in  some  bottlenecks  and  unrealistic 
timetables.  

In practice, a significant portion of the transposition period set in Level 1 legislation is taken 
up  with  the  preparation  of  implementing  measures,  without  which  Member  States  cannot 
effectively proceed with their transposition. It is, however, hazardous to estimate the duration 
of the negotiation process at Level 2 at the time of adoption of the framework legislation. This 
has resulted in difficulties in setting reasonable deadlines both for transposition by Member 
States  and  for  application  by  industry.  This  led  to  the  extension  of  the  transposition  and 
application deadlines of the Market in Financial Instruments Directive (MiFID).  

The  Commission  considers  it  essential  to  better  align  the  timetables  for  the  adoption  and 
transposition of legislative and implementing measures. This could be achieved by linking the 

3 

OJ C 255, 21.10.2006, p. 1, point 3. 

EN 

4 

   EN 

 
                                                 
transposition  deadline  for  the  whole  legislative  package  to  the  adoption  of  the  last 
implementing measures identified in the Level 1 legislation.  

Similarly,  work  on  the  Level  1  and  Level  2  measures  should  be  carried  out  as  much  as 
possible  in  parallel  to  improve  legal  coherence  and  understanding.  Considering  the  Level  2 
measures at an early stage in the process will facilitate the negotiations of the basic act and 
provide  the  co-legislators  with  clarity  about  the  basic  content  of  future  implementing 
measures. 

3.3. 

Better regulation  

The  Lamfalussy  process  has  been  a  pioneer  in  introducing  and  strictly  applying  sound 
regulatory  principles:  a  bottom-up  approach,  open  consultation,  impact  analysis,  early  and 
thorough participation of market professionals and consumer bodies plus national regulators. 
The openness and transparency of this process has minimised regulatory arbitrage, improved 
quality and enhanced the transparency and predictability of EU policy making. In order not to 
undermine these achievements, it is highly important that Member States refrain as much as 
possible from adding national rules to the ones agreed at European level (the so-called "gold-
plating").  Drastically  reducing  gold-plating  and  more  frequent  use  of  regulations  (as  the 
Lamfalussy  report  suggested)  will  improve  regulatory  outcomes  for  the  market.  The 
Commission will propose regulations whenever appropriate and to the greatest extent possible 
for implementing measures. On gold-plating, the Commission will continue to follow a robust 
policy  as  initiated  with  the  Article  4  of  the  MiFID  implementing  Directive  (2006/73/EC). 
Member  States  should  justify  rigorously  any  regulatory  additions  or  add-ons  to  the 
Commission in cases where such latitude is possible. 

Consultation 

Systematic  and  transparent  consultation  has  been  strongly  welcomed  by  stakeholders. 
However,  in  certain  cases,  particularly  in  securities,  market  participants  have  claimed  that 
consultation  periods  were  too  short.  The  Commission  will  consider  how  to  ensure  the  right 
balance between the time allocated for consultation and the technical complexity of the issue.  

Transparent policy making also requires full transparency about the results of consultations. 
Except  for  cases  where  confidentiality  is  requested,  the  systematic  publication  of  responses 
should  become  normal  practice.  The  Commission  will  publish  summary  reports  of  hearings 
organised as part of consultations on the internet and invites Level 3 Committees to follow the 
same  practice.  The  Commission  welcomes  commentary  from  whatever  source  on  its  draft 
proposals but where alternatives are proposed they should be accompanied by sufficient and 
persuasive economic evidence, which is not the case today. 

Impact assessment 

Impact assessment is essential, both to evaluate the need for regulation and to ensure quality. 
All Level 1 legislation is now subject to an impact assessment by the Commission. But better 
regulation is a holistic concept – all parties must work for the overall result to be optimal. The 
Commission  welcomes  the  European  Parliament's  reaffirmed  commitment  "to  conducting 
impact assessments when making substantive changes to legislative proposals"4. It will also 
invite the Council, when tabling substantive amendments, and the Level 3 Committees when 
they  give  advice  to  the  Commission,  similarly  to  accompany  their  proposals  with 
comprehensive impact assessments.  

4 

Resolution on financial services policy (2007)0338. 

EN 

5 

   EN 

 
                                                 
The  Commission  considers  that  since  implementing  measures  may  have  significant  impacts 
on  various  stakeholders,  serious  consideration  must  be  given  to  carrying  out  impact 
assessment for any significant measure proposed at Level 2. The Commission will therefore 
progressively  endeavour  to  extend  its  current  impact  assessment  practice  to  implementing 
measures taken in the framework of these committees.  

3.4. 

Enforcement at Level 4 – Enhancing transparency about transposition  

The  introduction  of  the  Lamfalussy  process  has  not  significantly  improved  Member  States' 
performance  with  regard  to  timely  transposition  of  Level  1  and  Level  2  legislation.  The 
Commission  remains  concerned  about  delayed  transposition  of  European  directives,  which 
has negative impacts for both Member States and markets. A small cluster of Member States 
is repeatedly in the slow lane. 

Several disclosure mechanisms have been put in place to increase transparency. For example, 
article  144  of  the  CRD  includes  the  requirement  for  supervisors  to  disclose  information 
regarding  the  implementation  of  the  CRD  in  national  law  and  the  use  made  of  a  range  of 
national options and discretions in this Directive. To facilitate its consistent implementation, 
CEBS  has  developed  a  web-based  framework  for  supervisory  disclosure5.  However,  as  the 
CRD only fully applies on 1 January 2008, its implementation is still in its early phase. 

Twice  a  month,  the  Commission  has  been  publishing  scoreboards  showing  the  rate  of 
transposition of the Financial Services Action Plan (FSAP) Directives6 and both Level 1 and 
Level  2  Lamfalussy  directives7  on  the  Commission  website.  Similarly,  the  Commission 
publishes the state of play of MiFID transposition, based on questionnaires addressed by the 
Commission to Member States.  

During  the  transposition  periods,  the  Commission  has  worked  intensively  with  national 
administrations,  including  through  transposition  workshops,  bilateral  and  multilateral 
meetings  plus  providing  guidance  through  other  means,  such  as  non-binding  interpretative 
guidance  and  web-based  Q&A  modules.  These  practices  will  continue.  The  Commission  in 
addition  will  immediately  launch  infringement  proceedings  under  Article  226  of  the  EC 
Treaty  for  any  Member  State  that  is  late  in  implementation.  The  Commission  also  expects 
Member  States  to  provide  transposition  tables  to  facilitate  checking.  In  addition,  it  will 
systematically include an obligation for a correlation table to be communicated in each new 
proposal for a directive.  

4. 

SUPERVISORY COOPERATION AND CONVERGENCE  

4.1. 

Assessment of current situation  

A  key  objective  of  the  Lamfalussy  process  is  to  foster  supervisory  convergence  and 
cooperation. This is one of the most innovative elements of the Lamfalussy architecture.  

The  convergence  of  supervisory  practices  across  Member  States  should  result  in  consistent 
regulatory and supervisory solutions and consistent application on the ground. To achieve this 
may  require  EU  supervisors  in  Level  3  to  agree  and  apply  common  non-binding  guidelines 
and recommendations. 

There are several tools to strengthen supervisory convergence and cooperation. For example, 
mediation, delegation of tasks, streamlined reporting requirements and information and data-

5 
6 
7 

The Commission introduced a similar provision in the proposal for Solvency II, Article 30. 
http://ec.europa.eu/internal_market/finances/actionplan/index_en.htm#transposition  
http://ec.europa.eu/internal_market/securities/transposition/index_en.htm 

EN 

6 

   EN 

 
                                                 
sharing arrangements. Training programmes and staff exchanges between supervisors can also 
play an important role in the development of a common supervisory culture. 

Despite  the  Level  3  Committees'  efforts  to  put  in  place  the  tools  necessary  to  achieve  this 
objective,  the  results  have  not  always  met  expectations.  Some  unnecessary  blockages  on 
important supervisory issues have occurred.  

CESR  has  had  a  difficult  job  to  establish  a  common  transaction  reporting  format  under 
MiFID and experienced some delays with regards to the establishment of the Transaction 
Reporting Exchange Mechanism. In the banking sector, the common reporting framework 
requested  by  finance  ministers  has  given  rise  to  a  complex  outcome,  rather  than  the 
streamlined,  simplified,  homogenous  one  demanded  by  the  market.  CEBS  encountered 
difficulties  in  convergence  in  prudential  treatment  of  hybrids  and  would  prefer  that  the 
Commission  to  move directly  towards new legislation. Also, the introduction of mediation 
procedures has not borne fruit so far, since no use has been made of them. 

At times, the Level 3 Committees do not seem to be fully equipped to deliver what has been 
expected of them. A stronger political impetus is needed. On the other hand, since supervisors 
first responsibility is a national one, they might not have either adequate powers or incentives 
to converge at the European level.  

The  Commission  has  identified  a  few  policy  areas  to  enhance  greater  supervisory 
convergence.  The  Commission  expects  these  changes  to  be  put  in  place,  to  the  greatest 
possible extent, in the course of 2008.  

4.2. 

"Strengthening Level 3" 

4.2.1.  Enhancing political accountability of Level 3 Committees 

The Level 3  Committees are  accountable  to  the  Commission to the extent  specified in their 
founding  Decisions.  Their  members  are  accountable  to  their  own  governments  and/or 
Parliaments at national level. Many national supervisors do not have the capacity to perform 
their tasks at Level 3. If supervisors’ obligations under their national law conflict with non-
binding measures pursuant to Level 3, supervisors will let national obligations prevail. 

Due to the importance of the Level 3 Committees' mission for supervisory convergence at EU 
level,  but  without  prejudicing  supervisory  independence,  the  European  institutions  should 
express  their  political  expectations  as  regards  the  main  results  to  be  delivered  by  the 
Committees over a standard period ahead (e.g. 2 years). They should also be given the faculty 
to assess regularly the performance of the Level 3 Committees.  

This could be achieved through a two-step procedure.  

Firstly,  on  a  basis  of  a  Commission  text  –  and  after  prior  consultation  with  the  Level  3 
Committees - the European Parliament and the ECOFIN Council could adopt together a short 
political statement indicating the main achievements expected from the Level 3 Committees 
for the period ahead.  

Secondly,  during  that  period  and  at  the  end,  the  Level  3  Committees  would  report  to  the 
Commission, the European Parliament and the Council on their achievements or, as the case 
may be, the reasons which prevented them from meeting the objectives set. In the latter case 
they would be expected to provide detailed explanations, including the identification of any 
recalcitrant  supervisors.  If  no  progress  on  a  particular  initiative  identified  in  the  mandate  is 
possible at Level 3, as a practical measure, three possibilities remain: i) the status quo, with no 
further  development;  ii)  escalating  the  measure  to  a  Commission  comitology  measure, 

EN 

7 

   EN 

 
assuming that it falls under the scope of delegated powers; iii) if the conditions are not met for 
(ii) and if the matter is sufficiently important, consideration of a Level 1 amendment. 

This overall approach would increase political pressure on the Level 3 Committees to deliver 
results  and  strengthen  Level  3  Committee  Chairs.  This  would  significantly  enhance  the 
efficiency  of  the  Lamfalussy  process  and  strengthen  peer  pressure  among  Committee 
members. The Member State whose regulator or supervisor is in a minority could be asked for 
additional explanation.  

supervisory  convergence.  The  Commission  agrees  with 

At the national level, this should be supplemented by the inclusion in the constitutive charters 
of  national  supervisory  authorities  the  requirement  to  cooperate  with  other  supervisors  to 
enhance  European 
the 
recommendation of the IIMG that "a clear task to support the European convergence process 
should  be  added  to  the  mission  statement  of  the  relevant  supervisory  authorities".  This  has 
already  been  endorsed  by  the  ECOFIN  Council  in  October  which  invited  Member  States  to 
decide  whether  to  include  an  EU-dimension  in  the  national  mandates  of  supervisory 
authorities and to take into account the financial stability concerns in all Member State before 
the end of 2007. 

4.2.2.  Reinforcing the legal status of Level 3 Committees 

The Commission decisions setting up the Level 3 Committees do not sufficiently reflect their 
importance  in  an  increasingly  integrated  European  financial  market.  The  missions  of  each 
Committee  vary  slightly  from  one  decision  to  the  other,  reflecting  concerns  and  political 
agreements which have shifted over time. Logically, all three should be consistent. 

In  general,  there  are  three  types  of  functions  the  Committees  are  expected  to  perform. 
However, only the advisory task is well established in all three decisions. By contrast, their 
contribution to consistent implementation and their role of converging supervisory practices is 
only  mentioned  in  the  case  of  CEBS  and  CEIOPS.  The  requirement  for  the  Level  3 
Committees to enhance supervisory cooperation is only mentioned in the case of CEBS.  

This  presents  drawbacks.  For  example,  because  of  the  lack  of  a  reference  to  supervisory 
convergence and cooperation in the Decision establishing CESR, its role cannot be referred to 
in Level 1 directives. 

The Commission will consider what changes to modify the current legal framework would be 
appropriate.  Options  include  (i)  modification  of  the  Commission  decisions  constituting  the 
three  Level  3  Committees  to  align  their  functions  for  reasons  of  inter-sectoral  convergence 
and  consistency;  and  (ii)  modification  of  the  relevant  Level  1  directives  to  significantly 
strengthen cooperation requirements and to enhance the supervisory competences of the three 
Level 3 Committees. A first step has been made in the proposal for the Solvency II directive 
which  explicitly  refers  to  CEIOPS  in  its  operational  provisions  to  confer  it  mediation  tasks 
and one specific decision-making power8. The Commission will consider how this approach 
could also be applied to CEBS and CESR. 

8 

CEIOPS is required to mediate between supervisors if they cannot agree on the validation of an internal 
risk model of an insurance undertaking; it can take binding decisions to identify which authority should 
assume the function and responsibilities of the 'group supervisor' of a cross-border insurance group. 

EN 

8 

   EN 

 
                                                 
4.3. 

Building  mutual  trust  to  ensure  better  implementation  –  practical  obstacles  at 
European and national levels  

4.3.1.  Decision-making processes within the Level 3 Committees 

As a general rule, the charters adopted by the Level 3 Committees provide for decisions to be 
taken by consensus. This applies to the adoption of standards/guidelines as well as decisions 
concerning the implementation of operational projects. The only exception to the consensus-
based decision making concerns the provision of technical advice to the Commission where 
decisions  can  be  taken  by  qualified  majority  vote.  To  date  the  Level  3  Committees  have 
proceeded generally on the basis of consensus and have never used the possibility of qualified 
majority voting.  

Consensus-driven  decisions  carry  considerable weight.  However  these  decisions  can  lead  to 
lowest common denominator solutions or, at worst, no solution at all. Where the Committees 
cannot reach a solution by consensus they have turned to the Commission to find solutions to 
sometimes  highly  technical  issues,  for  example,  certain  issues  relating  to  the  application  of 
MIFID’s best execution rules, branch supervision arrangements or transaction reporting.  

It  is  essential  to  further  enhance  efficiency  and  effectiveness  of  the  decision-making 
procedures  of  the  Level  3  Committees.  They  could  introduce  in  their  charters  qualified 
majority vote for all advice to the European Commission and any measure aimed at fostering 
the convergence of European supervisory practice. The Council and the European Parliament 
should  agree  a  joint  declaration  according  to  which  the  Level  3  Committees  would  amend 
their own decision making procedures in this sense. Alternatively, if this is not possible, the 
Commission Decisions setting up the Level 3 Committees could be changed in this sense.  

The  Commission  considers  it  would  also  be  useful  for  the  Level  3  Committees  to  reach  an 
"agreement" among their members that the members in the minority would agree to apply the 
will of the majority. Such a commitment could include a safeguard clause whereby Level 3 
members may be allowed not to agree to apply guidance/non-binding standards under certain 
clearly  defined  circumstances  as  e.g.  if  the  proposed  measure  exceeds  the  scope  of  national 
legal competences. In such cases, the Committee member could be obliged to provide its legal 
reasons  for  non-compliance  with  the  recommendation  or  guidance  in  question.  And  a  clear 
explanation by the concerned Committee members should be given in the Level 3 reports to 
the European institutions and made public.  

If a Committee member does not comply with the measure agreed by the Level 3 Committee, 
and  does  not  comply  with  the  conditions  for  being  excluded  from  the  application  of  this 
decision either (or even refuses to comply or explain), the Commission would invite the Level 
3 Committee to foresee in its charter some form of disciplining.  

4.3.2. 

Implementation at national level 

Whichever form they take, the decisions adopted at Level 3 are non-binding. The Committee 
of  Wise  Men  considered  that,  although  non-binding,  such  decisions  "clearly  carry 
considerable  authority".  However,  this  has  not  always  turned  out  to  be  the  case  so  far. 
Experience  has  rather  shown  that  measures  agreed  at  Level  3  have  not  been  applied 
consistently enough in the day-to-day supervisory practice of the national supervisors9. This is 
sometimes  reinforced  by  the  fact  that  some  regulators  issue  at  national  level  guidance 
diverging  from  guidance  agreed  in  the  Level  3  Committees.  This  inflation  of  guidance  is  a 

9 

The  degree  of  supervisory  convergence  achieved  by  CEBS  was  assessed  by  the  industry  as  rather 
unsatisfactory (2006/2007 CEBS Performance Assessment Online Study). 

EN 

9 

   EN 

 
                                                 
source of confusion for market operators; it affects the integration of markets and jeopardises 
the efficient application of Community law. The Commission is therefore of the view that, in 
those areas where Level 3 guidance has been issued, national regulators should refrain from 
adopting any additional measures.  

Although providing the Level 3 Committees with some independent regulatory powers is not 
politically feasible, the practical issue is how to ensure compliance with Level 3 measures by 
Member States regulators and supervisors on the basis of non-binding instruments. Member 
States  should  request  their  supervisors/regulators  to  agree  to  the  full  application  of  Level  3 
common standards and guidelines and state so in an ECOFIN declaration.  

4.3.2.1.  Powers of national supervisors and sanctions 

Some  financial  services  legislation  contains  a  list  of  minimum  powers  supervisors  should 
have. This is notably the case in the securities sector. The banking directive contains a list of 
wide-ranging  specific  powers  for  supervisors.  National  regulators,  in  particular  in  the 
securities  sector,  do  not  need  to  have  identical  supervisory  powers  to  implement  both  EU 
directives and Level 3 standards/guidelines. But they should have the necessary and sufficient 
minimum  powers  and  tools  (including  sanctions)  to  fulfil  their  obligations.  This  is  essential 
for efficient functioning of the home/host relationship.  

The Commission and the three Level 3 Committees are analysing the extent to which there is 
sufficient convergence in rules, powers and practices among Member States. The first results 
indicate significant divergences in both national legal powers and the way they are applied in 
practice.  In  particular  there  is  a  high  variance  in  the  scope  of  sanctioning  powers  and 
penalties. For instance, the valuable mapping exercise carried out by the CESR Review Panel 
in June 2007 on the powers of the supervisors pursuant to the Prospectus and Market Abuse 
Directives reveals wide differences between Member States in this area. 

To  address  this  issue,  the  Commission  will  initiate  a  wide-ranging  cross-sectoral  survey  on 
supervisory powers and systems of sanctions in the securities, banking and insurance sectors 
to identify where uneven powers might undermine cooperation among regulators. In addition, 
the Commission will consider the need to reinforce the provisions on minimum supervisory 
powers  in  the  Level  1  legislation.  Much  greater  convergence  with  regard  to  sanctions  is 
necessary, as is a political debate  on  whether, in general, European sanctioning regimes are 
too weak across the board.  

4.3.2.2.  Operational independence of national supervisory authorities  

An effective system of European supervision implies clear responsibilities and objectives for 
supervisory authorities, and requirements to carry out their tasks in a transparent, independent 
and accountable manner. 

There  are  four  main  dimensions  to  operational  independence:  institutional,  regulatory, 
supervisory  and  budgetary.  First,  supervisors  should  be  independent  from  both  political 
authorities and commercial interference in the exercise of their powers and functions. Second, 
supervisors  should  have  sufficient  autonomy  in  setting  technical  prudential  rules.  Third, 
supervisors  should  be  able  to  exercise  their  judgments  and  powers  independently,  and  in  a 
non-discriminatory  manner,  with  respect 
inspections,  sanctioning,  and 
to 
enforcement actions. Finally, supervisors should have sufficient flexibility to determine their 
budgetary needs. 

licensing, 

Even  though  supervisory  independence  and  accountability  are  gaining  in  importance,  these 
developments are overshadowed by occasional evidence that politicians in some parts of the 
EU do not grant sufficiently full operational independence to supervisory authorities. 

EN 

10 

   EN 

 
This situation can be worrying. The Commission will raise Member States’ awareness of the 
situation  in  the  EU  and  urge  them  to  adopt  these  basic  principles  to  ensure  the  operational 
independence of their national supervisors. The Commission will monitor the progress made 
towards  operational  independence  and  will  not  hesitate  to  propose  appropriate  action  if 
significant progress is not achieved in the short term. 

4.3.2.3.  Cooperation between home and host regulators 

Delegation  of  tasks  and  responsibilities  is  an  important  tool  to  optimise  the  functioning  of 
cross-border  supervision  and  cooperation  between  EU  supervisors.  As  pointed  out  by  the 
EFC, delegation could be an incentive for the host countries to sign a cooperation agreement, 
which can be implemented in case of a potential financial crisis.  

Cross-border  delegation  requires  legal  provisions  for  it  to  function.  The  Commission  is 
considering the introduction of explicit legal provisions to allow supervisors to delegate tasks 
to  another  Member  State's  supervisor,  as  is  provided  for  in  the  CRD  (Article  131)  and  in 
Article 13 of the Prospectus Directive (2003/71/EC).  

Cooperation between home and host regulators should be further enhanced in the supervision 
of groups active on a cross border basis. Work of this nature had been underway in banking 
supervision since 1992 and is underway in relation to branches in the context of MiFID. To 
complement existing legislation, the Level 3 Committees should play a key role in fostering 
mutual  confidence  and  ensuring  a  level  playing  field.  This  could  be  done,  for  instance, 
through  the  development  of  multilateral  memoranda  of  understanding  between  supervisors 
and/or the development of common templates for such memoranda focusing on the practical 
application  of  certain  provisions  of  the  Level  1  and  Level  2  texts.  In  the  banking  area,  the 
Commission is considering adjustments to the home-host balance in the Capital Requirements 
Directive.  The  October  2007  ECOFIN  Council  has  invited  the  Commission  to  examine 
possible enhancements to clarify the nature and extent of the legal obligations for supervisory 
authorities  to  exchange  information  and  to  cooperate  and  in  this  context:  increase  the 
information  rights  and  involvement  of  host  countries,  clarify  the  role  of  the  consolidating 
supervisors  and  facilitate  the  timely  involvement  of  relevant  authorities  in  a  crisis  situation. 
The Commission will examine and report to the EFC by the end of 2007 whether legislative 
changes are necessary. This will also include the reinforcement of the legal requirement for 
supervisory collaboration and information sharing. 

Reinforcing  the  role  and  powers  of  the  'lead'  supervisor  for  cross-border  financial 
institutions10  can  also  bring  important  efficiencies  to  the  current  supervisory  system.  Initial 
steps  were  made  in  the  CRD  for  cross-border  banks.  The  Commission  must  ensure  that  the 
role  and  powers  of  'lead'  supervisors  follow  market  developments  and  are  updated  and 
strengthened,  where  appropriate.  The  Commission  therefore  intends  to  make  legislative 
proposals to strengthen the powers of the 'lead' supervisor for cross-border banking groups in 
October 2008. These adjustments will extend the current powers to include 'Pillar 2' decisions 
and reporting requirements for cross-border banking and investment firm groups. Enhancing 
the  role  of  a  'lead'  supervisor  of  a  cross-border  financial  group  is  strongly  connected  to  the 
proper functioning of a 'college' comprising all of the relevant host country supervisors of that 
group. 

10 

Referred to as the 'consolidating supervisor' in the CRD, the 'coordinating supervisor' in the Financial 
Conglomerates Directive, and the 'group supervisor' in the Solvency 2 proposal. 

EN 

11 

   EN 

 
                                                 
4.4. 

Colleges of supervisors 

Cross-border  group  supervision  and  convergence  in  the  EU  supervisory  system  would  be 
significantly  enhanced  by  the  existence  of  colleges  of  supervisors  to  facilitate  cooperation 
between  supervisory  authorities  involved  in  the  oversight  of  specific  cross  border  firms. 
Experience  is  already  positive  in  the  banking  area;  it  is  emerging  the  insurance  sector. 
Colleges  provide  a  solid  basis  for  resolving  the  current  problems  between  home/host 
competences.  By  developing  some  common  risk  assessment  policies  and  at  the  same  time 
sharing relevant data concerning the financial group in question they could serve as a forum to 
deal with the first signals of potential stress in a specific institution and thus improve crisis 
management  as  suggested  by  the  EFC.  Colleges  of  supervisors  can  also  encourage  more 
frequent use of delegation of tasks and responsibilities.  

An  optimal  functioning  of  Colleges  of  supervisors  requires  legal  underpinning  in  EU-
Directives  and  a  number  of  adjustments  to  the  present  approach.  Clear  internal  decision-
making procedures are needed for cases where no agreement is found. A requirement for all 
participants  to  comply  with  the  College’s  decisions  should  also  be  secured.  The  Level  3 
Committees should develop a set of common standards for the operation of the Colleges, the 
responsibilities of its "leading" supervisor and associated "host" supervisors. 

4.5. 

Cross-sector cooperation 

Cross-sector  cooperation  between  the  Level  3  Committees  is  based  on  a  Joint  Protocol  on 
cooperation  signed  between  CESR,  CEBS  and  CEIOPS  in  November  2005.  Cooperation  is 
provided for only in cases where added value can be expected from a joint action, i.e. where i) 
there is a high risk of disruptive regulatory arbitrage, ii) cross-sector cooperation can deliver 
obvious gains in the effective conduct of supervisory activities and iii) cooperation between 
the  Level  3  Committees  could  bring  about  real  efficiency  gains.  Level  3  Committees  have 
agreed on joint annual work programmes since 2006. 

One  of  the  priorities  of  the  annual  joint  work  programmes  since  2006  has  been  financial 
conglomerates.  In  2006,  an  Interim  Working  Committee  on  Financial  Conglomerates 
(IWCFC)  was  set  up  by  the  Level  3  Committees.  The  IWCFC  is  now  up  and  running.  It  is 
delivering  work  on  a  certain  number  of  mandates.  It  is  too  early  to  decide  whether 
improvements  are  needed. In  the  coming  months,  the  Commission will conduct a review of 
the  functioning  of  the  Conglomerates  Directive  (2002/87/EC)  and  it  intends  to  address  the 
status of the IWCFC. 

Another  priority  for  the  Commission  is  the  development  of  common  reporting  standards. 
Under the joint work programme for 2007, the Level 3 Committees will produce a report on 
this topic and will analyse the case for further action.  

4.6. 

Crisis management 

All  three  Level  3  Committees  should  ensure  that  they  are  prepared  to  act  efficiently  and 
collectively  in  the  case  of  a  major  market  disturbance  or  financial  crisis.  Rapid  crisis 
information  procedures  should  be  ensured  so  all  EU  supervisors  are  informed  of 
developments.  

4.7. 

Resources and budget 

The  Level  3  Committees  are  financed  by  their  members,  who  contribute  annually  to  the 
Committees’  budgets  according  to  their  internal  rule  of  procedure  which  defines  the  way 
contributions are calculated and the modalities of payment. However, Level 3 Committees are 
under  increasing  pressure  to  finance  projects  that  derive  from  legal  obligations  stemming 
from the EU regulatory framework. An example is the financing of the day-to-day running of 

EN 

12 

   EN 

 
the transaction reporting exchange mechanism that CESR is setting up in accordance with the 
MiFID Directive.  

Another  necessity  is  the  building  up  of  a  common  financial  supervisory  culture  in  all  the 
supervisory  areas.  One  practical  idea  is  for  the  Level  3  Committees  to  develop  a  common, 
cross-sectoral,  pan-European  training  capacity.  Such  a  platform  should  enable  staff  from 
national  supervisory  authorities  to  deepen  their  knowledge  of  EU  regulatory  processes,  to 
share practical experience in their day-to-day supervisory activities and to develop common 
practices. 

While fostering the common supervisory culture in the EU, the common training programmes 
could gradually be extended to involve officials from third countries who are in the process of 
building  their  regulatory  systems.  Their  participation  in  the  training  programmes  would  be 
aimed at raising awareness and improving their knowledge of the EU regulatory system and 
therefore  helping  to  promote  the  EU's  regulatory  approach  as  international  best  practice  to 
build a sustainable network between global regulators. 

The  Commission  considers  that  some  financial  assistance  may  be  appropriate  to  encourage 
European supervisory convergence, provided it meets existing EU regulatory and budgetary 
provisions. The Commission is examining possible modalities of contributing to the financing 
of  both  specific  projects  stemming  from  legal  obligations  under  existing  directives  and  of 
cross-sectoral training schemes for EU supervisors in a first instance and non-EU supervisors 
subsequently. The Commission will examine the intensions of the Level 3 Committees and, if 
they can be met under existing regulatory and budgetary constraints, will come forward with a 
concrete proposal in 2008.  

5. 

CONCLUSIONS 

The  recent  turmoil  on  financial  markets  has  clearly  demonstrated  growing  interconnectivity 
and  globalisation  of  financial  markets. Even  though  risks  have  been  widely  spread,  the 
European financial industry has been affected. Fortunately, to date there have been no major 
cross-border  systemic  consequences.  This  recent  experience  further  underscores  the  need  to 
adopt  a  globally  convergent  approach  to  regulation  and  supervision,  with  sound  prudential 
rules  and  a  consistent  approach  to  supervision. The  Level  3  Committees  and  national 
supervisory  authorities  have  a  key  role  to  play  in  this  respect.  Among  the  issues  the 
Commission will be working on in 2008, together with other actors at EU and international 
level, that are relevant for this Communication will be converging supervision in the financial 
sector,  and  in  particular  the  need  to  examine  how  to  strengthen  cooperation  between 
supervisors. 

The Commission therefore calls on the Council, European Parliament and the Level 2 and 3 
Committees to endorse as a matter of priority the initiatives outlined in this Communication 
with a view to reaching greater convergence of supervisory practices in the EU. It intends to 
monitor  on  a  continuing  basis  the  implementation  of  these  initiatives,  and  the  overall 
operation  of  the  Lamfalussy  framework,  to  ensure  that  it  remains  fully  adapted  to  market 
developments and fit for purpose.  

EN 

13 

   EN 

 
EN 

14 

   EN 

 
 
ANNEX II: Achievements 

Securities 

Level 1 "framework" legislation 

–  Directive of the European Parliament and of 
the  Council  of  21  April  2004  on  markets  in 
financial 
instruments  amending  Council 
Directives  85/611/EEC  and 93/6/EEC  and 
the  European 
Directive 2000/12/EC  of 
Parliament and  of the Council and repealing 
Council Directive 93/22/EEC (2004/39/EC) 

–  Directive of the European Parliament and of 
the  Council  of  28  January  2003  on  insider 
dealing  and  market  manipulation  (market 
abuse) (2003/6/EC) 

–  Directive of the European Parliament and of 
the  Council  of  4  November  2003  on  the 
prospectus  to  be  published  when  securities 
are  offered  to  the  public  or  admitted  to 
trading  and  amending  Directive  2001/34/EC 
(2003/71/EC) 

–  Directive 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  and  amending  Directive 
2001/34/EC (2004/109/EC) 

Level 2 "implementing" legislation 

–  Commission Directive of 22 December 2003 
implementing  Directive  2003/6/EC  of  the 
European  Parliament  and  of  the  Council  as 
regards  the  definition  and  public  disclosure 
of  inside  information  and  the  definition  of 
market manipulation (2003/124/EC) 

–  Commission Directive of 22 December 2003 
implementing  Directive  2003/6/EC  of  the 
European  Parliament  and  of  the  Council  as 
regards  the  fair  presentation  of  investment 
recommendations  and 
the  disclosure  of 
conflicts of interest (2003/125/EC) 

–  Commission  Regulation  of  22  December 
2003  implementing  Directive  2003/6/EC  of 
the  European  Parliament  and  of  the  Council 
for  buy-back 
as 
programmes  and  stabilisation  of  financial 
instruments ((EC) No 2273/2003) 

exemptions 

regards 

–  Commission  Directive  of  29  April  2004 
implementing  Directive  2003/6/EC  of  the 
European  Parliament  and  of  the  Council  as 
regards  accepted  market  practices, 
the 
definition of inside information in relation to 
derivatives  on  commodities,  the  drawing  up 
of 
the  notification  of 
managers’  transactions  and  the  notification 
of suspicious transactions (2004/72/EC) 

insiders, 

lists  of 

–  Commission  Regulation  of  29  April  2004 
implementing  Directive  2003/71/EC  of  the 
European  Parliament  and  of  the  Council  as 
in 
regards 
prospectuses  as  well  as 
format, 
incorporation by reference and publication of 
such  prospectuses  and  dissemination  of 
advertisements ((EC) No 809/2004) 

contained 
the 

information 

for 

rules 

–  Commission  Directive  of  8  March  2007 
the 
laying  down  detailed 
implementation  of  certain  provisions  of 
Directive 2004/109/EC on the harmonisation 
of  transparency  requirements  in  relation  to 
information  about  issuers  whose  securities 
are admitted to trading on a regulated market 
(2007/14/EC) 

–  Commission  Directive  of  10  August  2006 
implementing  Directive  2004/39/EC  of  the 
European  Parliament  and  of  the  Council  as 
requirements  and 
regards  organisational 
operating  conditions  for  investment  firms 
and  defined  terms  for  the  purposes  of  that 
Directive (2006/73/EC) 

record-keeping  obligations 

–  Commission  Regulation  of  10  August  2006 
implementing  Directive  2004/39/EC  of  the 
European  Parliament  and  of  the  Council  as 
for 
regards 
investment 
reporting, 
market  transparency,  admission  of  financial 
instruments to trading, and defined terms for 
the  purposes  of  that  Directive  ((EC)  No 
1287/2006) 

transaction 

firms, 

Level 3 measures 

–  Stabilisation  and  Allotment  –  European 
Supervisory  Approach;  CESR/02-020b 
(9/4/2002) 

EN 

15 

   EN 

 
–  A European Regime of Investor Protection – 
The  Harmonisation  of  Conduct  of  Business 
Rules; CESR/01-014d (9/4/2002) 

–  A European Regime of Investor Protection – 
The Professional and Counterparty Regimes; 
CESR/02-098b) (8/7/2002) 

–  Standards  for  Alternative  Trading  Systems; 

CESR/02-086b (8/7/2002)  

the  MiFID 

of 
CESR/06-552c (09/02/2007) 

Implementing  Directive; 

–  CESR's guidelines concerning eligible assets 
for  investment  by  UCITS;  CESR/07-044 
(19/03/2007) 

–  Guidelines  -  CESR  Level  3  Guidelines  on 
MiFID  Transaction  reporting;  CESR/07-301 
(29/05/2007) 

–  Standard  No.  1  on  Financial  Information; 

–  Recommendations 

- 

Inducements  under 

CESR/03-073 (1/3/2003) 

MiFID; CESR/07-228b (29/05/2007) 

–  Recommendation  for  additional  guidance 
regarding 
of 
International  Financial  Reporting  Standards 
(IFRS); CESR/03-323e (31/12/2003) 

implementation 

the 

–  Standard  No.  2  on  Financial  Information  - 
Co-ordination  of  enforcement  activities; 
CESR / 03-317c (22/04/2004) 

–  Standards 

for 

and 
securities 
settlement  systems  in  the  European  Union; 
CESR/04-561 (4/4/2006) (22/10/2004) 

clearing 

–  CESR’s guidelines for supervisors regarding 
the  transitional  provisions  of  the  amending 
UCITS  Directives 
and 
2001/108/EC); CESR/04-434b (3/02/2005) 

(2001/107/EC 

–  CESR’s  recommendations  for  the  consistent 
implementation 
European 
of 
Commission’s Regulation on Prospectuses nº 
809/2004; CESR/05-054b (10/02/2005) 

the 

–  Market Abuse Directive - Level 3 – first set 
of  CESR  guidance  and  information  on  the 
common  operation  of 
the  Directive; 
CESR/04-505b (11/05/2005) 

–  CESR  Recommendation  on  Alternative 
Performance  Measures;  CESR/05-178b 
(03/11/2005) 

–  CESR’s 

guidelines 

the 
notification  procedure  of  UCITS;  CESR/06-
120b (29/06/2006) 

simplify 

to 

–  CESR's 

and 
3  Guidelines 
Level 
and 
Publication 
on 
recommendations 
Consolidation of markets data; CESR/07-043 
(09/02/2007) 

–  CESR's  Level  3  Recommendations  on  the 
List of minimum records under Article 51(3) 

–  Q&A  on  Best  Execution;  CESR/07-320 

(29/05/2007) 

–  Protocol  on  MiFID  Passport  Notifications; 

CESR/07-317 (29/05/2007) 

–  Recommendations  -  The  passport  under 

MiFID; CESR/07-337 (29/05/2007) 

–  Market  Abuse  Directive  -  Level  3  –  second 
set of CESR guidance and information on the 
common  operation  of  the  Directive  to  the 
market; CESR/06-562b (12/07/2007) 

–  Guidelines  -  Level  3  guidelines  on  the 
classification  of  hedge  fund 
indices  as 
financial indice; CESR/07-434 (17/07/2007) 

Banking 

Level 3 measures 

–  CEBS  Guidelines  on  prudential  filters  for 

regulatory capital (21/12/2004) 

–  CEBS  Guidelines  on  supervisory  disclosure 

(1/11/2005) 

–  CEBS  Guidelines  on  financial  reporting 
(recast  of  15/12/2006;  amendments  of  24 
July 2007) (16/12/2005 

–  CEBS  Guidelines  on  common  reporting 

(recast of 16/10/2006) (13/1/2006) 

–  CEBS  Guidelines  on  the  recognition  of 
institutions 

assessment 

credit 

external 
(20/1/2006) 

–  CEBS  Guidelines  on  supervisory  review 

process (25/1/2006) 

–  CEBS Guidelines on supervisory cooperation 
for cross-border banking and investment firm 
groups (25/1/2006) 

EN 

16 

   EN 

 
 
–  CEBS Guidelines on validation (04/04/2006) 

–  CEBS  technical  guidelines  on  interest  rate 

risk in the banking book (03/10/2006) 

–  CEBS 

Guidelines 

on 

outsourcing 

(14/12/2006) 

–  CEBS  Additional  technical  guidelines  on 

concentration risk (14/12/2006) 

–  CEBS Additional Guidelines on stress testing 

(14/12/2006) 

Insurance 

Level 3 measures 

–  CEIOPS  Guidelines 

for  Coordination 
the 
Committees 
Insurance  Groups  Directive;  CEIOPS-DOC-
02/05 (February 2005) 

the  Framework  of 

in 

–  CEIOPS  Recommendations  regarding  the 
Implications  of  the  IAS/IFRS  Introduction 
for  the  Prudential  Supervision  of  Insurance 
Undertakings; 
CEIOPS-DOC-05/05 
(September 2005) 

–  Statement  on 

the  Lead 
Supervisor;  CEIOPS-DOC-07/06  (December 
2006) 

the  Role  of 

EN 

17 

   EN 

 
MAIN ACTIONS PROPOSED IN THE COMMUNICATION 

ANNEX III 

GENERAL 

1)    Abolition  of  sunset  clauses  in  financial  services 

legislation  

European  Parliament, 
Council 

End 2007 

2)    Publication of study on costs of compliance 

Commission 

1st half 2009 

ADOPTION OF LEGISLATION – LEVELS 1 AND 2 

3)    Future  alignment  of 

transposition  deadlines 

for 

directives and implementing measures  

Commission,  European 
Parliament, Council 

Ongoing 

4)    Extension  of  impact  assessment  to  implementing 

Commission 

Ongoing 

measures 

5)    Impact assessments for any substantive amendments in 
the  legislative  process  and  the  technical  advice  by  the 
Level 3 Committees 

Council, 
Committees 

Level 

3 

Ongoing 

6)    Limitation  of  any  regulatory  additions  ("goldplating) 

Member States 

Ongoing 

and obligation to justify to the Commission 

7)    Systematic publication of responses to consultation and 
summary  reports  of  hearings  organised  as  part  of 
consultations on the internet 

Commission,  Level  3 
Committees 

Ongoing 

SUPERVISORY COOPERATION AND CONVERGENCE – LEVEL 3 

8)    Adoption  of  political  statement  indicating  the  main 

achievements expected from the Level 3 Committees  

Commission,  European 
Parliament, Council  

Starting in 2008 

9)    Regular  reporting  on 

the  achievement  of 

these 

Level 3 Committees 

Starting in 2008 

objectives 

10)   Inclusion  of  the  requirement  to  cooperate  with  other 
supervisors  at  European  level  in  the  constitutive 
charters of national supervisors 

Member 
Commission 

States 

/ 

1st half 2008 

11)   Reinforcement  of  the  legal  status  of  the  Level  3 
Committees  (possible  modification  of  Commission 
decisions  setting  up  the  three  Level  3  Committees  / 
changes in framework Level 1 legislation) 

Commission,  European 
Parliament , Council 

2008 

12)   Extension of the qualified majority voting in decision-

making of the Level 3 Committees 

Level  3  Committees  / 
Commission  

1st half 2008 

13)   Political commitment to the full application of Level 3 

common standards and guidelines 

Level  3  Committees, 
Member States 

EN 

18 

   EN 

 
 
14)   Cross-sectoral  survey  on  supervisory  powers  and 
systems  of  sanctions  and  assessment  of  the  need  to 
reinforce  the  provisions  on  minimum  supervisory 
powers in the framework legislation  

Commission 

End 2008 

15)   Political  debate  on  operational 

independence  of 

national supervisors  

Commission  /  Member 
States 

1st half 2008 

16)   Introduction  of  explicit  legal  provisions  in  financial 
services  directives  to  allow  supervisors  to  delegate 
tasks to another Member State’s supervisor 

European  Parliament, 
Council, Commission  

End 2008 

17)   Legislative  proposal  to  strengthen  the  powers  of  the 
'lead' supervisor for cross-border banking groups 

Commission 

October 2008 

18)   Development  of  a  set  for  common  standards  for  the 

Level 3 Committees 

1st half 2008 

operation of the colleges for cross border operations  

19)   Report  on  the  development  of  common  reporting 

Level 3 Committees 

End 2007 

standards  

20)   Decision  on  possibility  and  modalities  of  contributing 

Commission 

End 2008 

to the financing of Level 3 Committees 

EN 

19 

   EN