Implementing a common European framework for supervisory disclosure (CP05)

Start Date: 23/03/2005 | Deadline: 24/06/2005

Consultation Paper on the framework for Supervisory Disclosure

1. This paper sets out CEBS' guidelines for implementing a common European framework for supervisory disclosure. The framework is intended to make supervisory practices more transparent, which should in turn promote the legitimacy and credibility of supervisors from the perspective of the institutions that they supervise. This paper should therefore be of key interest to supervised institutions.

2. The need for transparency is all the more pressing in the context of increasing integration of European financial markets in Europe, which requires consistent implementation of EU legislation and convergence of supervisory practices. CEBS members recognise that supervisory disclosure promotes sound governance and is a powerful tool for convergence of supervisory practices across Europe.

3. The importance of supervisory transparency and accountability has been stressed by the Basel Committee on Banking Supervision and by the new European legislation , which will require supervisors to make disclosures that permit meaningful comparisons of supervisory rules and practices across Europe.

4.The guidelines developed by CEBS implement a framework for supervisory disclosure at both the European and national levels.

5. The proposed framework will make it easier to compare national texts that implement the CRD, and to compare the ways in which Member States exercise the options and national discretions available to them in the CRD. In addition, the framework will enable institutions to compare the criteria and methodologies that supervisors use in evaluating and reviewing them. Finally, it will provide aggregate statistical data on key aspects of the implementation of the CRD.

6. The scope of the proposed framework has been limited to the provisions of the CRD that implement Basel II. The framework is based on the Commission's proposal of the CRD dated 14 July 2004 and will need to be revisited to reflect the final version of the CRD.

7. The form of disclosures plays an important role in allowing meaningful comparisons. The proposals set forth in this document seek to permit meaningful comparison in the following ways:

  • Disclosures will be accessible via the Internet, using both the CEBS website and national websites, which will be linked to each other.
  • CEBS recommends using a common format, consisting of a series of simple and similar information tables in standard formats which can be posted on websites. These tables have been designed to show two complementary levels of detail: summary tables on the CEBS website for ease of cross-country comparisons, linked to tables on the websites of national authorities that provide more detailed information.

8. CEBS has provided tentative templates for these tables. The templates are subject to change, to reflect the final outcome of other CEBS work streams, the final version of the CRD and the feedback from the consultation on the framework.

9. A demonstration of the functionality of the framework is available on the CEBS website.

10. The framework is written in English, the working language of CEBS. The information displayed on the CEBS website will be disclosed in English. Information on the national websites of non English-speaking countries will be available in English on a best-efforts basis. In any case, the information should be made available in national language prior to any translation.

11. The proposed framework will be implemented by CEBS and the national authorities in charge of the supervision of credit institutions and investment firms. The guidelines for implementing the common supervisory framework should be finalised by year-end 2005. The framework will then be implemented by year-end 2006 as a target date for qualitative information, and by mid-2008 for the statistical data, recognising that some of the intended content may not yet be available at the time.

12. CEBS believes that a formal consultation of the envisaged framework before work on it is finalised will benefit both institutions and supervisors. Consequently, the guidelines for a common European supervisory disclosure framework are now being presented for formal public consultation. This consultation runs until 24.6.2005. Comments should be made in English. Unless respondents request otherwise, comments received will be published on the CEBS website. CEBS expects to publish feedback on the responses received, along with the amended framework by year-end 2005.

13. Comment is specifically requested on the following questions:

1) Does the framework allow for a meaningful comparison across EU of the approaches to implementation of the Basel II-related provisions of the CRD?

2) What additional disclosures, if any, would you like supervisors to make, in addition to those listed in Annex II? Why?

3) How do you envisage using the disclosure framework?

4) Do you have any comments on the mechanics of the website architecture, e.g. suggestions for making it more user-friendly?