A report published by the Joint Committee of European Supervisory Authorities, ie the EBA, ESMA and EIOPA, has reviewed the current landscape of cross-border supervision, in particular in the light of the regulatory reforms of recent years. The report notes three categories of issues faced by competent authorities (CA):
- institutional and organisational issues, for example some lack of clarity in the distribution of responsibilities between home and host CAs;
- supervision and enforcement issues, such as the risk that that home CAs prioritise those financial institutions that are higher risk in their particular territories rather than perhaps those operating predominantly from the home state on a freedom of services basis; and
- regulatory gaps and arbitrage: the report identifies some major differences of implementation at EU legislation that are attributable to insufficient harmonisation and/or lack of clarity of some EU laws.
The report’s recommendations include
- reinforcement of the harmonisation of level 1 provisions relating to the marketing and sale of services and products, in particular in the banking sector;
- providing more clarity on when digital-channel activities fall under passporting; and
- for CAs to work with ESAs to improve the framework for cooperation in consumer protection, especially in the banking sector.