Financial conglomerates: EU Commission carries out analysis of regulatory framework

25/07/2017 | Clifford Chance

The EU Commission has prepared a staff working document setting out an analysis of Directive 2002/87/EU on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate (FICOD) and the FICOD amending Directive (2011/89/EU), as well as regulatory technical standards (RTS) that support the application of the FICOD rules. In particular, the paper draws conclusions on the continued fitness of FICOD in achieving its objectives and assesses whether FICOD remains fit for purpose.

FICOD sets out specific provisions for groups identified as financial conglomerates, including rules relating to capital adequacy, reporting on intragroup transactions and governance requirements at the level of the financial conglomerate. The analysis considers each of the main areas covered in FICOD:


  • scope;
  • capital;
  • governance;
  • intragroup transactions and risk concentration; and
  • supervision and enforcement.


FICOD was included under the Commission's REFIT programme in the Commission Work Programme, but the evidence gathered has not been sufficient to support a full evaluation. Overall, the Commission's analysis highlights that FICOD remains a useful supervisory tool. The Commission views it as important to keep in place a framework for the supervision of mixed-activity financial groups and believes that, in general, FICOD has functioned well. The framework under FICOD functions to capture group risks and gives supervisors oversight over cross-sector groups, and the Commission has identified that in some instances certain gaps and inconsistencies are addressed by supervisors in the application of the FICOD framework and therefore do not fundamentally undermine the effectiveness of the framework.