The Brussels-based European Financial Services Round Table (EFR) has urged the national and European regulatory authorities to start implementing a lead supervisory regime for financial institutions in the European Union(EU).
The 17 Members of the EFR – chief executive officers or chairmen of major European financial institutions doing business in several Member States – present a report with recommendations stressing not only the urgency, but also the feasibility of the lead supervisor concept.
The report proposes solutions for the extension of the ‘home country control’ principle within the EU through the concept of the lead supervisor. It describes the functions of the lead supervisor, the framework for co-operation between the lead supervisors and the local supervisors, and some legal aspects of the lead supervisor environment.
Anton van Rossum, Member of the EFR and CEO of Fortis, explained: ‘The lead supervisor should be one of the priorities for the new Commission. With the introduction of the Euro and the Financial Services Action Plan, the EU is already delivering a huge effort to achieve integrated financial markets, a process which will bring more economic growth and more competition. But the key players in this integration process, the financial companies delivering ervices across the borders, are still confronted, not only with local market conditions, but also with a multitude of local supervisors. This is not only expensive but also ineffective, something which in the area of supervision is unacceptable.
The introduction of the lead supervisor concept would be a major improvement.’ The EFR report suggests identifying for each cross border financial institution in the EU a fully empowered lead supervisor who is clearly in the driver’s seat for all aspects of prudential supervision. This should apply both for the consolidated level and for branches or subsidiaries. The lead supervisor should be the only contact for the financial institution within the prudential supervisory framework.