By Stefanie Schmidt¸ PKF Malta

Following the outbreak of the financial crisis in 2008¸ the stabilisation of financial markets became a priority and financial sector reform a crucial instrument to achieve it. Filling in the gaps in financial sector regulation and strengthening the supervision of the financial sector in Europe have been the two main strands of work. To this end¸ the European Union has recently adopted new rules to transform the European Committees of supervisors into supervisory authorities with real teeth. Work is also currently under way in order to examine the consistency and deterrence of sanctions in the EU¸ in order to improve confidence in the financial sector.

At global level¸ the EU collaborates with its international partners by actively taking part in the G20 and other international forums in order to improve global financial supervision and crisis management. In particular¸ the Commission is a member of the newly created Financial Stability Board (FSB). The Commission has also developed regulatory or other dialogues with the EU’s main trading partners¸ namely the United States (in the context of the EU-US Financial Market Dialogue) and Japan¸ but also the emerging financial services markets in China¸ India¸ Russia and Brazil.[1]

In September 2009 the Commission brought forward proposals to replace the EU’s existing supervisory architecture with a European system of financial supervisors (ESFS)¸ consisting of three European Supervisory Authorities – a European Banking Authority¸ a European Securities and Markets Authority¸ and a European Insurance and Occupational Pensions Authority.

They will:

• help restore confidence;
• contribute to the development of a single rulebook;
• solve problems with cross-border firms;
• prevent the build-up of risks that threaten the stability of the overall financial system.

On 22 September 2010¸ the European Parliament – following agreement by all Member States – voted through the new supervisory framework proposed by the Commission. This was confirmed by the ECOFIN Council on 17 November 2010. Three European supervisory authorities (ESAs) and a European Systemic Risk Board (ESRB) were established as from 1 January 2011 to replace the former supervisory committees.[2]

The trio of new ESAs have taken over all of the functions of the previous committees¸ and in addition have certain additional competences¸ including the following:

• developing proposals for technical standards to better define common standards for the application of legislative acts¸ respecting better regulation principles;
• resolving cases of disagreement between national supervisors¸ where legislation requires them to cooperate or to agree;
• contributing to ensuring consistent application of existing and future technical EU rules (including through peer reviews);
• a coordination role in emergency situations.

In order for the ESAs to work effectively¸ changes to existing financial services Directives are necessary¸ laying down the precise scope for the ESAs to exercise certain of the new powers. The areas in which amendments are necessary fall broadly into the