EBA identifies divergent supervisory practices in the implementation of its Guidelines on the assessment of the suitability of members of the management body and key function holders

22 July 2015

The European Banking Authority (EBA) published today its peer review report on the assessment of the suitability of members of the management body and key function holders. The report shows that National Competent Authorities (NCAs) largely comply with the EBA guidelines. The EBA analysis identified best practices carried out by some NCAs, but also highlighted significant differences remaining between NCAs' supervisory approaches. The EBA concluded that the existing EBA guidelines have not led to sufficient convergence in supervisory practices, and proposed the incorporation in its forthcoming review of the guidelines of a number of specific best practices observed. The EBA also intends to send an opinion to the European Commission suggesting a change in the underlying Capital Requirements Directive (CRD) framework.

Despite most NCAs being assessed as being fully or largely compliant with the EBA guidelines, the peer review assessment highlighted that the EBA Guidelines have not led to sufficiently convergent supervisory practices. Differences in actual practices include the definition of suitability, the criteria used by NCAs and institutions to assess the candidates' suitability, the approach regarding the suitability of key function holders and the notion of independence of members of the management body.

In addition, the report reveals some best practices observed of some NCAs, including the practice of assessing candidates for key positions by performing interviews, the application of the proportionality principle and the criteria used to assess suitability. The EBA proposes that the current guidelines be updated to incorporate these identified best practices so as to improve the level of convergence across NCAs' practices and also to reflect its mandates under the CRD. The EBA expects to launch a public consultation on these revised Guidelines in the first quarter of 2016. The EBA is also considering submitting an opinion to the European Commission suggesting legislative amendments that would allow for enhanced convergence of supervisory practices in this area.

Legal basis

Peer reviews are conducted in accordance with Article 30 of the EBA Regulation and with the EBA Decision establishing the Review Panel. A peer review entails an assessment and comparison of the effectiveness of supervisory activities as well as of the implementation of the provisions by competent authorities vis-à-vis those of their peers.

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Franca Rosa Congiu

E-mail: press@eba.europa.eu - Tel: +44 (0) 207 382 1772