The Socialists and Democrats led the drive for better rules to tighten financial supervision, which were approved by the European Parliament today. Significant progress will be made by including environmental, social and governance factors in the mandate of the European supervisory authorities (ESAs) and by setting up a quicker and more efficient decision making process on issues related to potential breaches of Union law, to inquiries pertaining to financial institutions or products that could threaten the stability of the financial system and to the quality of supervision exerted by national competent authorities through EU driven peer reviews.

 

 

“Against fierce resistance from some short-sighted EU governments, we managed to strengthen European supervision of the financial sector. The last financial crisis clearly demonstrated that national supervision alone has too many blind spots. When it comes to supervision, proximity cannot be a must. Strong European financial supervision is the best guarantee for a safe financial system and is urgently needed if any genuine Capital Markets Union is to be setup. Ordinary citizens must never again be made to pick up the bill for ill-designed banking services, fraudulent insurance companies operating cross borders or speculators on the stock markets.

"I am proud that we managed to both increase supervisory convergence and improve the governance of the ESAs . The ESAs' chairpersons will from now on be selected through a democratic appointment process; under strict principles including an assessment based on a gender-balanced list of candidates and, in return, will be granted with enlarged powers. All the ESAs will now be able to prohibit toxic financial products and the EBA will have a leading role in countering money laundering. To ensure the sustainability of finance, the ESAs will be required to conduct stress tests to identify financial activities that could have a negative impact on the environment. With the updated rules, users of financial services, retail investors and consumers will be better protected. It is now up to the Authorities to make the best out of this revised framework, up to the members states to stick to their words that the ESAs will be provided with the resources they need to accomplish their new tasks and up to the European Parliament to control them."

 

The European system of financial supervision (ESFS) was introduced in 2010 and is composed by the European Systemic Risk Board (ESRB) and three European supervisory authorities (ESAs), namely the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA).