14 European Central Bank: sanctions
| Committee's assessment
| Politically important |
| Committee's decision | Cleared from scrutiny
|
| Document details | Draft Council Regulation about European Central Bank sanctioning powers in relation to the Single Supervisory Mechanism
|
| Legal base | Article 129(4) TFEU; consultation; QMV
|
| Department | HM Treasury
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Summary and Committee's conclusions
14.1 There are inconsistencies between the 1998 Regulation establishing
the European Central Bank's general power to impose sanctions
on credit institutions and the specific sanctioning power it is
given in the 2013 Regulation establishing its supervisory role
in relation to the Banking Union's Single Supervisory Mechanism.
14.2 As the Government emphasises to us, the proposal
will have no impact for the UK. Nevertheless, while clearing it
from scrutiny, we draw it to the attention of the House, as a
further development in establishing the Single Supervisory Mechanism.
Full details of
the documents: Draft
Regulation amending Regulation (EC) No. 2532/98 concerning the
powers of the European Central Bank to impose sanctions (ECB/2014/19):
(36125), 10896/14, —.
Background
14.3 Regulation (EC) No. 2532/98 sets out the power
of the European Central Bank (ECB) to impose sanctions on credit
institutions. Regulation (EU) No. 1024/2013, which established
the ECB's supervisory role in the context of the Banking Union's
Single Supervisory Mechanism (SSM), extended its powers to impose
sanctions on credit institutions, as part of its responsibility
to provide prudential supervision of credit institutions in the
eurozone.
14.4 Regulation (EU) No. 1024/2013 provides that
where a credit institution intentionally or negligently breaches
the SSM rules, the ECB may impose fines of up to twice the amount
of the profits gained or losses avoided due to the breach where
those can be determined, or up to 10% of total annual turnover.
The agreed principles and procedures for imposing these administrative
penalties are set out in the Regulation and in Regulation (EU)
No. [XX]/2014 (ECB/2014/17) (yet to be published in the Official
Journal) of the ECB. Where the undertaking is a subsidiary of
a parent undertaking, the relevant total annual turnover shall
be the total annual turnover resulting from the most recently
available consolidated annual financial accounts of the ultimate
parent undertaking in the group supervised by the ECB.
14.5 In applying these rules, the ECB is required
to apply all relevant EU law. Where this includes Directives
the ECB should use the national legislation transposing those
Directives. Where this includes Regulations, and those Regulations
grant options for Member States, the ECB should also apply the
national legislation exercising those options. The ECB also needs
to comply with the procedures set out in Regulation (EC) No. 2532/98.
14.6 In order for the ECB to effectively perform
its supervisory tasks, it is important that it has a coherent
regime for imposing administrative penalties. Some of the rules
contained in Regulation (EC) No. 2532/98 (the ECB sanctions Regulation)
differ from those laid down in the SSM Regulation. The main differences
involve the upper limits to fines and periodic penalty payments
and the limitation periods set out in the SSM Regulation.
14.7 The ECB therefore proposes the following changes
to Regulation (EC) No. 2532/98:
· a
revised Article 1a setting out some general principles applying
to administrative penalties imposed by the ECB as part of its
supervisory tasks and sanctions imposed as part of its non-supervisory
tasks;
· new
Articles 4a to 4c, detailing the regime applicable to administrative
penalties imposed by the ECB as part of its supervisory tasks.
This is to achieve some differentiation between the regime applying
the ECB imposing administrative penalties as part of its supervisory
duty and the sanctions that the ECB can impose as part of its
non-supervisory tasks. This would ensure that there is a single
regime under which the ECB could impose administrative penalties
under its supervisory role; and
· additional
amendments to the principle and procedures for imposing sanctions
in Articles 2-4 of Regulation (EC) No. 2532/98, to ensure that
they are compatible with the principles and procedures governing
the imposition of administrative penalties by the ECB as part
of its supervisory role set out in the SSM Regulation.
The Government's view
14.8 In her Explanatory Memorandum of 30 June 2014
the Financial Secretary to the Treasury (Nicky Morgan), noting
that the proposal is to consolidate the ECB's existing rules for
applying sanctions, merely comments that the ECB does not have
the power to sanction UK-based natural or legal persons under
the terms of the UK's EMU Protocol and relevant secondary legislation.
Previous Committee Reports
None.
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