(i) Do you agree that voluntary and/or obligatory mediation can be a useful tool to enhance the effectiveness of supervision?

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1 Answers of the National Bank of Poland to the questions included in the document of the European Commission, DG Internal Market, entitled Public Consultation Paper on Amendments to Commission Decisions establishing CESR, CEBS & CEIOPS Mediation (i) Do you agree that voluntary and/or obligatory mediation can be a useful tool to enhance the effectiveness of supervision? In our opinion, the obligatory mediation mechanism will not contribute to the enhancement of the effectiveness of supervision and it may even delay the making of important supervisory decisions and as a result may adversely affect the security of supervised financial institutions. It may also lead to the limitation of host supervisors freedom for the benefit of the supervisor that supervises a group on a consolidated basis. Due to the fact that the responsibility for the stability of supervised institutions lies with the national supervisor, we do not think that the introduction of obligatory mediation mechanism on the part of the Committees is justified. However, we believe that voluntary mediation, the verdict of which will not be legally binding but its rejection will require a written justification, may be a useful tool enhancing the effectiveness of supervision since it offers the possibility to settle the disputes among the supervisors from the home (consolidating supervisor) and host country. Such mediation may be particularly useful from the point of view of the host supervisor. The currently observed tendency to grant the home supervisor the right to make decisions concerning host banks even against the position of the host supervisor puts the latter one in an extremely unfavourable situation. The voluntary mediation mechanism in this case is its only chance for the change of the decision and should be treated as the appeals mechanism. Therefore, we are in favour of the proposal to enable the Committees of Supervisors to settle disputes by way of voluntary mediation. None of the supervisors has asked for mediation so far. If, however, such cases are numerous in future, the Committees will have to allocate relevant resources to fulfil this role. (ii) Do you agree that this task should be conferred to the Committees of Supervisors in the Decisions establishing them? The voluntary mediation task should be included in the Decisions establishing the Committees of Supervisors. 1

2 Consultative role (iii) Do you agree that the Committees of Supervisors should have an explicit consultative role with respect to certain decisions to be taken by supervisory authorities? The Committees should not have powers allowing them to interfere in individual supervisory decisions of national supervisory authorities since the national supervisors are responsible for the effects of supervisory decisions. Supervisory decisions must include the local specificity of individual Member States. The consultative role of the Committees is justified in the case of decisions on the equivalence of third country regimes. Information exchange (iv) Do you agree with the proposed role of the three Committees of Supervisors with regard to information exchange? Information exchange between national supervisory authorities is of key importance. A particular emphasis should be put on ensuring equivalent exchange of information both from host countries to home countries as well as from home countries to host countries. It should be pointed out, however, that there are already mechanisms in place which ensure exchange of information within the organisations associating individual supervisory authorities. In particular, the condition for accession to the IOSCO grouping the capital market supervisors is the accession to MMoU (Multilateral Memorandum of Understanding), which facilitates an effective exchange of information between supervisory authorities. The exchange of information between supervisory authorities is also the issue dealt with by other organisations (e.g. IAIS and IOPS). Therefore, the conferring of this role to the Committees of Supervisors at the European level should only supplement the existing mechanisms so as not to double the roles and not to generate completely redundant double burden for supervisory authorities. Delegation of tasks and responsibilities (v) Do you agree that the Committees of Supervisors should as a priority have a role to foster delegation of tasks between national supervisors? We do not agree with the proposal. The delegation of tasks between supervisors should take place solely on the voluntary basis within the framework of bilateral cooperation. The priority role of the Committees with respect to fostering the delegation of supervisory tasks could lead to the limitation of the powers of national supervisors while leaving them fully responsible for the consequences of supervisory decisions made by 2

3 supervisory authorities to which the functions were delegated. Only bilateral agreements taking into account the specificity of individual markets and cases should be the instrument used in the case of task delegation. (vi) Do you consider that delegation of responsibilities should also be regarded as a priority? If so, what could be the role of the Committees of Supervisors in this respect? In our opinion, the Committees should not have powers with respect to the delegation of responsibilities. Streamlining reporting requirements (vii) Do you agree with the proposed role of the three Committees of Supervisors with regard to streamlining of reporting requirements? We believe that as regards reporting requirements, work should continue on the implementation of FINREP and COREP standards. We would also like to emphasize that specific and local solutions should not be abandoned, due to disproportion in the scale and development of local markets and due to local risks and local responsibility. We do not support the proposal presented in the consultation paper concerning the introduction of the task of streamlining reporting requirements into the Decisions establishing the Committees of Supervisors. Colleges of supervisors (viii) Do you agree with the proposed role of the three Committees of Supervisors with regard to colleges or similar arrangements? In our opinion, the lack of good practices with regard to the functioning of the colleges of supervisors results in the necessity to elaborate guidelines concerning the rules of their operational activities. If general principles are not established at the level of the Committees, then each college will operate according to different rules established by individual home supervisors. Since banks from many Member States operate in some countries, the diversity of rules of operation of individual colleges, in which the supervisory authority from a given country will participate, will cause operating difficulties. In addition, the existence of common practices in respect to organisation and functioning of the colleges of supervisors will discipline home supervisors which, according to law, are responsible for the organisation of the colleges and which head them. They will have fewer possibilities to run the colleges at their discretion and in the way that takes into account only their interests. Therefore, we positively assess the proposal presented in the consultation paper, according to which the Committees of 3

4 Supervisors should be mandated in order to ensure effective and efficient functioning of the colleges in practice. Development of a common supervisory culture (ix) Do you agree with the proposed role of the three Committees of Supervisors to develop a common European culture? If yes, what are the most important tools to meet this objective? We definitely agree that one of the functions of the Committees should be to develop a common supervisory culture. In our opinion, the most important activities in this regard include: organisation of seminars, training and workshops on sectoral basis, exchange of employees among the supervisory institutions in different countries, and joint inspections. Cross-sectoral cooperation (x) Do you agree with the need to provide a general framework for joint 3L3 work in the Commission Decisions establishing the Committees of Supervisors? The issue needs a thorough consideration, in particular with regard to the impact of increased formality of cooperation on its effectiveness. It should also be considered whether at the present stage the existing solutions worked out in practice are not sufficient. (xi) Should the obligation and responsibility for 3L3 cooperation and coordination be spelled out in a more detailed way? If so, what are the specific obligations and responsibilities the Committees of Supervisors should be assigned in this respect? Detailed rules of cooperation between the Committees are at present spelled out in a Joint Protocol of November 2005 and it seems that this solution is effective. (xii) Do you agree with the approach suggested for the supervision of financial conglomerates? We agree with the general approach for the supervision of financial conglomerates. Apart from the suggestions contained in the consultation paper, it is also worth analysing experience of the Member States where the integrated supervision has already been functioning for a long time. 4

5 Qualified Majority Voting (xiii) Do you consider that the Committees of Supervisors should be requested in the Decisions to take decisions by qualified majority, with a "comply and explain" procedure? We are opposed to the possible introduction in the Decisions establishing the Committees of the possibility to take decisions by qualified majority, with a "comply or explain" procedure. Annual Work-Programmes of the Committees of Supervisors (xiv) Do you consider that the request to the Committees of Supervisors to submit their annual work-programmes to the ECOFIN Council, the European Parliament and the Commission should be included in the Decisions? We believe that the proposal to include the request to the Committees of Supervisors to submit their annual work-programmes to the ECOFIN Council, the European Parliament and the European Commission in the Decisions establishing individual Committees is premature. We are of the opinion that it is worth considering a joint template for all the Committees on which they would present their annual workprogrammes, which would increase the transparency and comparability of those programmes. Financial stability (xv) Do you agree with the proposed role of the three Committees of Supervisors? We agree with the proposal in principle. It seems that the Committees should monitor the risks to financial system stability in the EU on the basis of micro-prudential approach. Their assessments should be of solely qualitative nature. However, they should not prepare macro-prudential reports since it would mean duplication of existing analyses. Such reports are prepared by the European Central Bank and the ESCB Banking Supervision Committee, whose members include banking supervisors, apart from representatives of central banks. We believe that the monitoring tasks, including in particular the financial stability analyses, should be clearly divided between the Committees and the ESCB Banking Supervision Committee. 5

6 (xvi) Are additional efforts needed to strengthening risk analysis and responsiveness at the EU level? If so, please specify these efforts. It does not seem necessary to strengthen the risk analysis at the level of EU institutions. The quantitative risk analyses are conducted by the European Central Bank and the ESCB Banking Supervision Committee. The supervisory committees will naturally have a more sectoral perspective. 6