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Joint Committee Annual Report 2018 Summary

Core Content

The Joint Committee (JC) in 2018, under the chairmanship of ESMA, played a central role in coordinating and exchanging information among the European Supervisory Authorities (ESAs), the European Commission, and the European Systemic Risk Board. The year was marked by an increased focus on Brexit-related issues, as the ESAs prepared for the UK's withdrawal from the EU. In addition, the JC continued to monitor market developments, cross-sectoral risks, and financial innovation, while also strengthening efforts to combat money laundering and terrorist financing (ML/TF) and ensuring a level playing field across the EU financial market.

Main Focus Areas

1. Brexit-Related Issues

• The JC prioritized Brexit-related challenges, including the impact of a potential "cliff-edge" scenario, ongoing supervisory matters, and future cooperation with UK authorities.
• The biannual Risk Reports (JC 2018 07 and JC 2018 27) addressed these concerns and outlined necessary measures to ensure consistent EU supervisory oversight.
• The reports also highlighted the need for contingency planning by financial institutions in light of Brexit.

2. Consumer Protection and Financial Innovation

• The JC emphasized consumer protection, especially with the implementation of the PRIIPs Regulation in 2018.
• Additional Questions and Answers (JC 2018 22) were issued to clarify the application of the new rules.
• The JC also launched a consultation paper (JC 2018 60) on amendments to the Delegated Regulation for PRIPs Key Information Documents (KID).
• A consultation on the extension of complaints-handling guidelines (JC 2018 35) ensured consistent consumer protection across the banking, investment, and insurance sectors.
• The JC examined FinTech developments, including Big Data and automated financial advice, and published reports on these topics (JC 2018 04 and JC 2018 29).
• A Joint Report on Regulatory Sandboxes and Innovation Hubs (JC 2018 74) was issued as part of the FinTech Action Plan, offering a comparative analysis of innovation facilitators in the EU.

3. Combating Money Laundering and Terrorist Financing

• The JC intensified efforts to ensure consistent application of AML/CFT rules across the EU, especially in response to high-profile cases involving EU banks.
• Three workshops were organized to explore risk-based approaches to AML/CFT, focusing on ML/TF risks, e-money, and money remittance.
• Over 300 AML/CFT supervisors from EU Member States participated in these workshops.
• The JC issued an Opinion on the use of innovative solutions (JC 2017 81) to address the risks of unthinking application of new technologies in AML/CFT.
• A consultation on draft joint guidelines (JC 2018 59) was launched to improve supervisory cooperation and information exchange, including the establishment of AML/CFT colleges and bi-lateral communication between competent authorities.

Key Actions and Publications

• RTS on clearing obligation and risk mitigation techniques (JC 2018 76 and JC 2018 77) were published to ensure a level playing field with covered bonds.
• Disclosure requirements for EU securitisations were addressed in a statement (JC 2018 70), with a proportionate approach recommended for short-term compliance.
• Consultations were launched on further amendments to Implementing Regulations (JC 2018 40 and JC 2018 41) to reflect the outcomes of a monitoring exercise on credit assessments by External Credit Assessment Institutions (ECAls).
• The annual list of Financial Conglomerates (JC 2018 68) was published, showing the location of 78 financial conglomerates with their headquarters in the EU/EEA area, plus one in Switzerland, Bermuda, and the United States.
• The Board of Appeal handled two cases in 2018, both of which were unanimously dismissed due to lack of grounds or jurisdiction.

Conclusion

The Joint Committee in 2018 was instrumental in addressing cross-sectoral risks, enhancing consumer protection, monitoring financial innovation, and strengthening AML/CFT supervision. It also played a key role in preparing for Brexit and ensuring consistent regulatory oversight across the EU. Through various consultations, reports, and guidelines, the JC contributed to the stability and integrity of the EU financial market.