Report from the Commission to the European Parliament and the Council – The review of Directive 2002/87/EC of the European Parliament and the Council on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate

The rapid development in financial markets in the 1990s led to the creation of financial groups providing services and products in different sectors of the financial markets, the so-called financial conglomerates. In 1999, the European Commission’s Financial Services Action Plan identified the need to supervise these conglomerates on a group-wide basis and announced the development of prudential legislation to supplement the sectoral legislation on banking, investment and insurance. This supplementary prudential supervision was introduced by the Financial Conglomerates Directive (FICOD) on 20 November 2002.

The first revision of FICOD (FICOD1) was adopted in November 2011 following the lessons learnt during the financial crisis of 2007-2009. FICOD1 amended the sector-specific directives to enable supervisors to perform consolidated banking supervision and insurance group supervision at the level of the ultimate parent entity, even where that entity is a mixed financial holding company. On top of that, FICOD1 revised the rules for the identification of conglomerates, introduced a transparency requirement for the legal and operational structures of groups, and brought alternative investment fund managers within the scope of supplementary supervision in the same way as asset management companies.

FICOD1’s Article 5 requires the Commission to deliver a review report before 31 December 2012 addressing in particular the scope of the Directive, the extension of its application to non-regulated entities, the criteria for identification of financial conglomerates owned by wider non-financial groups, systemically relevant financial conglomerates, and mandatory stress testing. The review will be followed up by legislative proposals if deemed necessary.

EUR-Lex: COM(2012)785: Follow the progress of this document through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2012:785:FIN

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