Leading MEP talks to Insurance Times about the thinking behind the overhaul
Labour MEP Peter Skinner is in no doubt about the significance of this week’s vote by the European parliament to approve the new insurance super-regulator.
“One of the biggest structural changes to financial supervision we will ever see,” is how he describes the move to overhaul financial services regulation at the European level.
Skinner was speaking to Insurancetimes.co.uk in the week that the Strasbourg parliament rubberstamped the new arrangements, which ushers in next January’s establishment of the European Insurance and Occupational Pensions Authority - one of three new European Supervisory Authorities (ESAs).
“It’s taken a lot of time, a lot of effort and a lot of drive,” says Skinner, who has had a key role in shaping the new agency as the European Parliament’s ‘rapportuer’ for insurance and pensions, meaning that he takes the lead on any regulation issues concerning the two sectors.
The agreement follows months of negotiations between the parliament and the EU’s member states.
He says the parliament has managed to secure some key wins from this long winded process.
The Council of Ministers, which represents the member states, vetoed the parliament’s push to give the new ESAs general powers to regulate insurers that operate across borders.
But the new body will get tighter supervision powers over companies which operate across national boundaries in so called ‘emergency situations’, like the recent financial crisis.
“It will not have a direct supervisory role, but it will have enforcement,” says Skinner,
The ESAs will have powers to settle disputes between national supervisors and to impose temporary bans on risky financial products and activities.
If a national supervisor fails to act on breaches of EU law, the authorities may also impose decisions directly on financial institutions.
In the event of disagreements between national supervisors, Eiopa will be able to impose legally-binding mediation. It will also be able to intervene without being requested, says Skinner who represents the south east region for Labour.
The agreement between the Council of Ministers and the parliament also moots the possibility of the latter gaining new powers.
The European Commission will be required to report back every three years on whether the ESAs should be entrusted with further supervisory powers, notably over financial institutions with pan-European reach.
Skinner says: “It is possible that the agency will have greater powers in the future, but this will be step by step.”
