EU Financial Supervision System

In response to the global financial crisis of 2008, the European Commission tasked a High Level Group chaired by Mr. Jacques de Larosière with proposing recommendations on how to strengthen European supervisory arrangements.

These recommendations were meant to strengthen the protection of its citizens and rebuild trust in the financial system. The Larosière Group's final report emphasized that supervisory arrangements should not focus solely on the supervision of individual companies, but rather promote the stability and security of the financial system as a whole.

In this regard, on 1 January 2011, four new EU regulations came into force. Four new bodies have been established under the new regulations, which have significant supervisory and regulatory powers in the field of financial supervision. These new bodies are:

• European Securities and Markets Authority (ESMA);

• European Insurance and Occupational Pensions Authority (EIOPA);

• European Systemic Risk Board (ESRB), which will monitor and assess potential threats to the financial stability that arise from macro-economic developments and from the developments within the financial system as a whole;

• European Banking Authority (EBA).

The above Authorities are part of the new European System of Financial Supervisors (ESFS). Besides ESMA, EIOPA, ESRB and EBA, the ESFS includes Board of Supervisors of each European Supervisory Authority (ESA) and the national supervisory authorities in the Member States.

The main objective of ESFS is to guarantee that the established rules are applied in an appropriate way throughout the EU, so that to preserve the financial stability and to ensure confidence in the financial system and sufficient extent of protection of the consumers of financial services.

Applicable EU Legislation

The list of applicable legislation passed by the European Union on insurance can be downloaded below: