The European Commission has proposed legislative changes that would ensure national regulators have a more independent role in their supervision of the financial industry.
According to Regulation Asia, the draft legislation will seek to stop bank supervisors across the EU from ‘seeking or taking instructions’ or being influenced by any external body, including firms they regulate or government agencies, while at the same time tightening rules on staff who are trading in the shares of companies they supervise.
The legislation comes over a year after the now infamous Wirecard scandal, where German regulator BaFin was accused of being bound to banking industry lobbyists and the German finance ministry and failing to properly react to the range of worrying signs of accounting fraud at the payments firm.
It was also found that some of the BaFin staff had investments in the troubled entity, which raised significant conflicts of interest.
The measures being put forward by the EC are part banking legislation to bolster financial supervision across the EU and improve operational independence of BaFin and other national supervisors.
An unnamed EC official reportedly said, “Recent developments such as the Wirecard scandal showed the need for clearer and more operational provisions on the principle of the independence of supervisors. This is included in our proposal.”
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