Opinion of the European Central Bank of 5 December 2013 on the Financial Supervisory Authority’s governance (CON/2013/83)
Date: 2013-12-05
Institutions: European Central Bank
Subjects: Denmark, board of directors, financial stability, institutional activity, national law, supervisory power

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 5 December 2013  

on the Financial Supervisory Authority’s governance 

(CON/2013/83) 

Introduction and legal basis 

On 6 November 2013, the European Central Bank (ECB) received a request from the Danish Financial 

Supervisory  Authority  (FSA)  (Finanstilsynet)  for  an  opinion  on  a  draft  law  amending  the  Law  on 

financial business, the Law on securities trading, the Law on mortgage credit loans and mortgage credit 
bonds,  the  Law  on  managers  of  alternative  investment  funds  and  various  other  laws1  (hereinafter  the 

‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning of the European Union and the sixth indent of Article 2(1) of Council Decision 98/415/EC of 

29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft 
legislative provisions2, as the draft law relates to rules applicable to financial institutions insofar as they 

materially  influence  the  stability  of  financial  institutions  and  markets.  In  accordance  with  the  first 

sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 

has adopted this opinion. 

1.  

Purpose of the draft law 

1.1  The  draft  law  addresses  the  FSA’s  governance  and  management  structure  by  establishing  a 

governing  board tasked  with  providing  technical,  organisational  and  managerial  assistance to  the 
FSA’s  management  and  with  taking  supervisory  decisions3.  The  Financial  Council,  which  is  the 

FSA’s  current  decision-making  body,  will  be  dissolved  once  this  governing  board  has  been 

established.  According  to  the  draft  law,  the  purpose  of  the  amendment  is  to  provide  an  efficient 
organisational set-up for the FSA to strengthen its supervisory powers4. 

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The draft law implements the requirements with regard to liquidity coverage, capital buffers and systemically important 
financial institutions in Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access 
to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (OJ L 176, 
27.6.2013,  p.  338)  and  contains  the  amendments  made  necessary  by  Regulation  (EU)  No 575/2013  of  the  European 
Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (OJ 
L 176, 27.6.2013, p. 1). 
OJ L 189, 3.7.1998, p. 42. 
See Section 1(10) of the draft law amending Section 345 of the Law on financial business. 
See Section 2.4 of the explanatory memorandum to the draft law. 

 
 
 
 
                                                 
ECB-PUBLIC 

1.2 

In accordance with the draft law, the FSA will be managed by the governing board and a managing 

director who will between them have legal, economic and financial expertise. The governing board 

will be responsible for the following tasks: (a) approving the organisation of supervisory activities; 

(b) laying down the strategic targets for the FSA’s supervisory activities; (c) approving the FSA’s 

annual  report;  (d)  deciding  on  supervisory  matters  of  a  fundamental  nature  and  those  having 

significant consequences; (e) deciding to transfer cases for criminal investigation; and (f) approving 
executive  orders  and  guidelines  in  areas  where  the  FSA  is  authorised  to  issue  regulations5.  The 

governing  board  may  delegate  some  of  its  powers to  the  FSA’s  managing  director  by  issuing  an 
instruction6. 

1.3  The Minister for Business and Growth will appoint seven members of the governing board: three 

with an academic background in law, economics or finance; two with management experience in 

the financial sector; one with management experience in the general business community; and one 

member  from  Danmarks  Nationalbank.  The  Minister  for  Business  and  Growth  will  appoint  a 
chairperson and a deputy chairperson from among the board members7. A representative from the 

Ministry of Business and Growth will hold a seat as an observer on the board. The governing board 

will adopt decisions based on a simple majority voting procedure. In the event of an equal number 
of votes, the chairperson will cast the deciding vote8. 

1.4  Furthermore, a panel of experts will be appointed. They will between them possess broad technical 

knowledge of the financial sector, e.g. banking business, mortgage-credit business, insurance and 

pension business, securities trading, stockbroking business, etc., as well as of financial consumer-

related  matters.  As  required,  the  governing  board  may  request  assistance  from  such  panel  in 
conjunction with the discussion of specific supervisory matters9. 

2. 

General observations  

2.1  The  ECB  welcomes  the  establishment  of the  governing  board,  which should  provide  an efficient 

organisational set-up for the FSA in order to strengthen its supervisory powers. Such a governing 
board will ensure the FSA’s operational independence from political authorities10, which is in line 
with essential and internationally recognised standards for financial market supervision11. 

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See amended Section 345(7) of the draft law.  
See amended Section 345(14) of the draft law. 
See amended Section 345(1)-(4) of the draft law. 
See amended Section 345(12) of the draft law. 
See amended Section 345(8) of the draft law. 
See the explanatory memorandum in relation to Section 345(1) of the draft law. 
See  Principle  2  of  the  Basel  Committee  on  Banking  Supervision’s  Core  Principles  for  Effective  Banking  Supervision, 
available on the Bank for International Settlements’ website at www.bis.org. 

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2.2  With regard to the composition of the governing board, the ECB welcomes the fact that Danmarks 
Nationalbank will provide one member of the governing board12, which is in line with the current 

practice for nominating Financial Council members. 

2.3  Finally, the minimum term of office for governing board members is set at two years. Currently, 

Financial Council board members serve a four-year term. For the sake of continuity and stability, 

the ECB suggests considering a longer duration for such term of office, in line with international 

practice, with a possible limitation on the number of reappointments. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 5 December 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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The existing legislation provides that Danmarks Nationalbank may nominate a member of the Financial Council, see the 
current Section 345(1), point 1 of the Law on financial business. 

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