The European Insurance and Occupational Pensions Authority (EIOPA) has published criteria for assessing the independence of supervisory authorities. In a statement, the EU regulator said that he independence of supervisory authorities is crucial for the legitimacy and credibility of the supervisory process. For public bodies, independence and good governance are necessary to avoid possible conflicts of interest and to reduce the likelihood of undue external influence on supervisory decisions.
In Malta, the responsibility for regulating the insurance industry is vested in the Malta Financial Services Authority.
The criteria provide clarity for supervisory authorities on EIOPA’s expectations. Taking on board the relevant articles in the Solvency II and IORP II Directive, international standards and supervisory experiences, they specify further the principles of operational, financial and personal independence as well as transparency and accountability.
Among the criteria, the EU regulator says that there should be clear and comprehensive procedures regarding the appointment and dismissal of the head of the supervisory authority enhance independence, as they limit the potential for government interference in the management of the supervisor. Those procedures should be codified in legislation. It adds that legislation should disclose the general criteria for appointing members of a governing body,
including that they possess relevant qualifications, knowledge and experience to oversee the activities of the supervisor, as well as the mechanism for 0their remuneration (for example, salary, daily allowance or voluntary work).
EIOPA further recommends that the procedures for appointment and dismissal of governing body members should be publicly available. The procedures should include who appoints the head of the supervisory authority and members of the governing body, the length of those appointments and the reasons
for which the head of the supervisory authority or the members of the governing body can be dismissed before the end of their term.
As a next step, EIOPA plans to assess supervisory authorities’ independence, for example with the use of dedicated peer reviews. By doing this, EIOPA aims to ensure the consistent application of legislation, to preserve financial stability and to protect consumers.
(Image via europa.eu)