The CJEU decision in the FBF case involves many crucial elements of EU law, all of which deserve careful consideration. Among the others, the decision touches upon the nature and the justiciability of soft law measures in the EU legal framework, the ESAs’ power to adopt them, and the relationship between corporate governance and product governance in the financial sector. In this blogpost, we concentrate only on some of these implications. In particular, we look at the general impact of the decision on the non-delegation doctrine, at the uncertainties surrounding the delegation of powers concerning broad matters such as corporate governance in the past and in the future regulatory framework and, finally, at how such uncertainties should guide the allocation of the power to review soft law measures. We suggest that the system of controls deserves our attention and reconsideration to adjust to the new realities of proliferation of soft, technical but also shared (enforcement) administration in the EU. This blog post is based upon the discussion speeches that the authors delivered in the online discussion organised by JMN EULEN (RENFORCE) in August 2021.
Continue reading ““The past is the past. The future is all that’s worth discussing” (Lord Baelish, The Game of Thrones). Some reflections on the non-delegation doctrine and its impact on the ESAs powers after the CJEU decision on the FBF case”
Under the aegis of the SSM, which comprises the ECB and 19 national central banks (NCAs), the ECB carries out banking supervision vis-à-vis euro area banks. To this end, the EU watchdog has been entrusted with various direct law enforcement powers. Yet, for executing its tasks, it still depends to a significant extent on the expertise and powers of the NCAs. For instance, a large part of banks’ (punitive) sanctioning is still being dealt with by the NCAs, upon the ECB’s request. In our recent study
‘EU administrative investigations and the use of their results as evidence in national punitive proceedings’, which was part of the report Admissibility of OLAF Final Reports as Evidence in Criminal Proceedings, we have pointed out the challenges that stem from the fact that certain ECB investigations and their concomitant results can be used as evidence for punitive sanctioning at the national level; in the absence of EU rules providing for clear guidance on the admissibility of EU gathered materials in national proceedings, numerous questions can be raised concerning the protection of defense rights in a composite law enforcement setting. We have identified three types of challenges: how to protect defense rights at the interface of i) different legal orders, ii) non-punitive and punitive law enforcement, iii) administrative and criminal law enforcement. We concluded that the introduction of EU rules facilitating the interoperability of SSM materials as evidence in national proceedings should be put high on the agenda.
Continue reading “How to ensure defense rights in the composite SSM setting?”
Ensuring effective judicial protection appears to be a challenge in the case of the increasingly integrated administrative procedures. The judicial powers are generally more strictly divided between the EU and the national level, while composite procedures may require a more integrated judicial control. Is the Court of Justice of the EU (CJEU) moving into this direction in the recent case of Berlusconi by confirming its exclusive competence to review non-binding national preparatory measures that are part of an EU decision-making process? The ruling clarifies the CJEU’s jurisdiction and avoids a strict separation of the EU and the national level, but it remains to be seen if it serves as an actual next step towards integrated judicial protection. Just how the CJEU can review the national part of the procedure is still unclear, as are the types of preparatory measures to be covered. It seems to nevertheless be a welcome step towards clarifying judicial protection in the case of composite procedures.
Continue reading “CJEU moving towards integrated judicial protection?”
Based on ‘Criminal Liability of Managers in Europe. Punishing Excessive Risk’, (2019) Hart Publishing
“In retrospect, many firms … took on too much risk and did not have sufficient resources to manage those risks effectively in a rapidly changing environment.” (Written Submission of Morgan Stanley to the Financial Crisis Inquiry Commission, John J Mack, Chairman, January 2010)
Every managerial decision is risky, at least to some extent. Conducting business is impossible without venturing into new territories and even the most ordinary daily choices could turn out to be failures. Excessive risk, however, can be very detrimental as was starkly illustrated by the most recent financial crisis. By criminalising managers’ excessive risk-taking criminal law enters a sphere at the core of business activity. But it also provides for criminal punishment for courses of conduct that can be extremely harmful.
Continue reading “Should we punish managers for taking too much risk? And if so, how?”
This blog has paid careful attention to the current strengthening of centralized enforcement of EU law by European institutions, organisms and bodies, which is increasingly replacing national implementation in many areas of law. This process is also taking place when national authorities were entrusted with the enforcement of EU secondary law that provided for transnational administrative acts. In particular, both transnational authorizations and ex post administrative measures adopted by national authorities are being substituted by enforcement decisions taken by EU agencies, at times after the implementation of a composite procedure. The point that I want to make here is twofold: leaving aside its impact on EU law effectiveness, centralization transfers problems of compliance with constitutional requirements of administrative enforcement towards EU agencies, and ultimately it intensifies the constitutional dimension of the Court of Justice of the European Union (CJEU).
Continue reading “Constitutional challenges of administrative enforcement centralization – Transparency in Banco Popular”
The establishment of the European Banking Union (EBU) stands as a paradigm for how the EU has become increasingly involved in directly enforcing EU law throughout recent years. The institutional centerpiece of the EBU is the so-called Single Supervisory Mechanism (SSM), a supervisory network under the auspices of the European Central Bank (ECB) assigned with the task to monitor the Euro-area banking system. Apart from its coordinating functions in relation to the national competent authorities (NCAs), the ECB is responsible for directly supervising the business activities of the 120 most significant credit institutions in the Euro-area in accordance to the so-called Single Rulebook, a set of harmonised prudential rules which credit institutions registered in the EU must adhere to.
This blog post is not doubting the importance of this type of vertical monitoring of market participants through public supervisory action. However, the recent crisis has shown that public enforcement is subject to several vulnerabilities. Even though the EBU may be able to overcome some of these vulnerabilities, several others will certainly remain. Thus, it is argued here that the existing supervisory architecture should be complemented by horizontal mechanisms of behavioral control. Central to this approach is a private enforcement of the Single Rulebook, i.e. the granting of individual causes of action for damages resulting from an institutions’ violation of EU banking regulation (as it is well-established for example in the area of EU competition law).
Continue reading “Complementing Centralised Banking Supervision: Preliminary Remarks on a (Harmonized) Private Enforcement of the EBU Single Rule Book”
The Markets in Financial Instruments Regulation Nº600/2014 (MiFIR) that entered into force on the 3rd of January 2018 establishes intervention powers for National Competent Authorities (NCAs), the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA). This post discusses these ‘MiFIR’ developments. Other key developments in this area are the Packaged Retail and Insurance-Based Investment Products Regulation (PRIIPs), which introduces product intervention powers for National Competent Authorities, and the European Insurance and Occupational Pensions Authority (EIOPA).
Continue reading “MiFIR: Intervention Powers strengthen customer protection”
The European Insurance and Occupational Pensions Authority (EIOPA or the Authority) is one of three European Supervisory Authorities (ESAs) created in the aftermath of the financial crisis. They are part of the European System of Financial Supervision (ESFS), a supervisory system created to ensure proper financial supervision of, for example, banks, insurance companies and pension institutions. The other two ESAs are the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA).
Continue reading “EIOPA: with more power comes more accountability?”
The European Securities and Markets Authority (ESMA) is exclusively competent for the direct supervision of credit rating agencies (CRAs) and trade repositories (TRs). ESMA is in fact the only EU agency that can exercise monitoring, investigating and sanctioning powers by itself. However, the question rises whether ESMA also renders accountability for such powers. The delegation of enforcement powers to ESMA appears to have been coupled with the establishment of sufficient political and judicial accountability mechanisms. The accountability framework may thus be assigned ‘AAA’ status. However, if changes were to happen on the basis of the ongoing revision of the operations of the European Supervisory Authorities, e.g. if ESMA’s direct supervisory powers would be extended to other areas of financial services, one important recommendation is to pair such delegation with appropriate changes to the accountability framework so that the ‘AAA’ status can be upheld.
Continue reading “‘Rating’ ESMA’s accountability for its enforcement powers: ‘AAA’ status”