The European Commission has proposed to amend existing European rules on the supervision of financial conglomerates, according to its work creating a safer and sounder financial system and preventing a future crisis.

The Commission has provided financial supervisors with new tools to better oversee financial conglomerates, as they are a key element in the economy of a country.

Financial conglomerates are financial groups that are usually active in more than one country and operate in both the insurance and banking businesses. They are often of systemic importance to our economy. The fact that financial conglomerates can impact our economy was highlighted during the financial crisis in 2008. In addition, to address the crisis, the Commission adopted measures between October 2008 and February 2009, as guidance documents: the notice on banks in October 13, 2008, the Communication on measures to recapitalize December 5, 2008 and the Communication on impaired assets of February 25, 2009.

Drawing lessons from the financial crisis, the Commission proposes to equip national financial supervisors with new powers to better oversee the conglomerates' parent entities, such as holding companies. This would allow supervisors to apply banking supervision, insurance supervision and supplementary supervision at the same time, thereby remedying to unintended loopholes identified in the context of the financial crisis.

Currently, the conglomerates are supervised mainly at the national level. Each single legal entity that wants to operate in the banking sector in an EU Member State needs authorisation from the national financial supervisor and needs to comply with the relevant banking regulation. The same applies for legal entities that want to operate in the insurance sector: such entities need to be authorized as insurance companies and must comply with the relevant insurance regulation.

In this way, supervisors should be able to get better information at an earlier stage should a financial conglomerate run into trouble and be better equipped to intervene. The proposal now passes to Member States and the European Parliament for consideration.