EIOPA has published a strategy paper on its new risk-based and preventive framework for conduct of business supervision across Europe, including plans for its implementation.
The paper, split into nine sections, analyses the background to, key principles and methods of implementation in respect of the new conduct of business supervisory framework. At the heart of the new approach is a recognition of the importance of effective conduct of business regulation and supervision.
EIOPA also acknowledges the link between prudential matters and conduct of business as well as the need to have effective supervision of both to ensure the integrity of the financial services sector as a whole.
The paper details the legal foundation for the model as well as how it fits within EIOPA’s overarching strategic policies and goals. The new supervisory approach will be more risk-based, with a focus on targeted monitoring, and preventive which will require proactive identification of risks and earlier action to tackle emerging risks and prevent them becoming systemic. EIOPA describes this as a shift away from a “legalistic, ‘tick-box’ approach” to “smart regulation” which is more dynamic and outcomes-focused.
EIOPA also makes reference to the means by which it intends to implement the new framework. This will include conducting consumer trends reports and ad hoc surveys to identify cases of actual customer detriment, which can often be an indicator of developing risks. Thematic reviews will also be utilised, facilitating a focus on specific activities or products causing concern.
Implementation of the new strategy will be reviewed and EIOPA and will report to the Board of Supervisors during Spring 2017.
A link to the Paper is here.