Following the adoption of a legislative package to strengthen financial supervision in Europe on 23 September 2009, including the creation of a European System of Financial Supervisors with three new European Supervisory Authorities, the Commission proposes to make targeted changes to existing financial services legislation to ensure that the new Authorities can work effectively. In particular, these proposals lay down in detail the scope for the Authorities to exercise their powers, ensuring a more harmonised set of financial rules through the possibility to develop draft technical standards, settle disagreements between national supervisors and facilitate the sharing of micro-prudential information. The package will now be sent on to the Council and the European Parliament for consideration.

Internal Market and Services Commissioner Charlie McCreevy said "This proposal complements and reinforces our supervision package of 23 September and provides more detail about precisely what powers are proposed for the new European Supervisory Authorities and in what areas. I urge the Council and the Parliament to adopt the whole supervision package in good time to allow the new Authorities to come into being at the end of 2010, if not before."

Today's legislative proposals complement a package of proposals on financial supervision presented by the Commission on 23 September. In addition to proposals to create a European Systemic Risk Board, the package envisages the creation of a European System of Financial Supervisors (ESFS) for the supervision of individual financial institutions ("micro-prudential supervision"). The ESFS will consist of a network of national financial supervisors working in tandem with new European Supervisory Authorities, created by the transformation of existing Committees for the banking, securities and insurance and occupational pensions sectors. There will be a European Banking Authority (EBA), a European Insurance and Occupational Pensions Authority (EIOPA), and a European Securities and Markets Authority (ESMA).

The new Authorities in the ESFS will take over all of the functions of the existing committees, and in addition have certain extra competences, including the following:

• Developing proposals for technical standards, respecting better regulation principles;

• Resolving cases of disagreement between national supervisors, where legislation requires them to co-operate or to agree;

• Contributing to ensuring consistent application of technical Community rules (including through peer reviews);

• The European Securities and Markets Authority will exercise direct supervisory powers for Credit Rating Agencies;

• A coordination role in emergency situations.

In order for the ESFS to work effectively, changes to existing financial services Directives are necessary, laying down the precise scope for them to exercise certain of the proposed new powers. The areas in which amendments are proposed fall broadly into the following categories:

• Definition of the appropriate areas in which the Authorities will be able to propose technical standards as an additional tool for supervisory convergence and with a view to developing a single rule book;

• Incorporation in an appropriate manner of the possibility for the Authorities to settle disagreements between national supervisors in a balanced way, in those areas where common decision making processes already exist in sectoral legislation; and

• General amendments which are necessary for the Directives to operate in the context of new authorities for example, renaming the level 3 committees to the new authorities and ensuring the appropriate gateways for the exchange of information are present.

Further proposals for technical amendments to sectoral Directives are envisaged by the Commission early in 2010, in particular in the insurance sector, which is not covered by the current proposal.

The Commission's supervision proposals are currently being considered by the Council and Parliament, and creation of the new Authorities is envisaged for the end of 2010. The proposals are an integral part of the Commission's strategy for preventing future crises.