A comparative analysis of the US and EU retail banking markets - Wsbi

The SROs have the responsibility to develop rules
which guarantee the integrity of the markets they
are responsible for and the protection of investors.
These rules must be submitted to the SEC, which
has to agree on them, after having performed a
public consultation. However, the SEC also has the
possibility to draft rules which are directly applicable
to the entirety of the market.
It should be noted here that in the American regulatory
system, a distinction is made in terms of responsible
authorities between securities and futures; in the
futures area, like in the securities one, supervision
and regulation are organised at the federal level. In
this field however, federal oversight is ensured by the
Commodity Futures Trading Commission (CFTC) (and
not by the SEC), whereas industry oversight is the
responsibility of the SROs – the futures exchanges
and the National Futures Association (NFA).
4.2.2.1.3 Responsible authorities in
the insurance area
The regulation and supervision of the insurance area
is the exclusive responsibility of regulators at the states
level, unlike in the other financial services sectors.
The view that regulation should take place at the
states level was defended by the McCarren-Ferguson
Act of 1945. A central structure was however
established to help coordinate the approaches of
the 50 state regulators: the National Association of
Insurance Commissioners (NAIC).
Historically, state regulators in the insurance area
have stressed specifically the safety and soundness
issues, as well as the conduct-of-business area,
especially in relation to sales practices.
4.2.2.2 European Union
4.2.2.2.1 EU bodies
In the European Union, the responsibility for supervising
the financial services area lies entirely at the Member
States level. There are therefore no EU bodies in the
financial area comparable to the US regulatory
agencies. Some “Committees” however play a
coordinating role, and will therefore be presented in
the subsequent section “Coordination in the EU”.
4.2.2.2.2 Member State level
Member States are responsible for organising the
supervision of their financial services sector in the
way they consider the most appropriate. Consequently,
there is much variety among the supervisory
structures of the 25 individual Member States.
Historically, in most EU Member States supervision
was organised for each different area of the financial
services sector individually: banking, securities and
insurance. However, this situation changed in recent
years in several Member States, with a clear trend
towards the establishment of a single authority to
supervise the three traditional sectors. This move was
often presented as a response to important changes
in the financial sector, such as the increasing blurring
of the specificities of the different types of financial
services businesses and the trend towards more
consolidation and conglomeration in the financial
sector, especially at the level of the Member States.
The first country to establish an independent single
supervisory authority was the UK in 1997 with the
establishment of the Financial Services Authority (FSA).
The FSA is responsible for the prudential supervision
and more general business supervision of all financial
institutions and markets. Other countries have also
re-examined their supervisory arrangements. A single
authority was for instance created in Luxembourg 145
in 1998. A proposal for a single authority in
Germany 146 was put forward in January 2001 and
entered into force in April 2002. In Austria too, a
single authority 147 was formally established in April
2002. In each of these cases, the single authority is
independent from any other institution.
National central banks also play a role in supervision.
Traditionally, their direct role in the supervisory
process was limited to the banking sector. In certain
Member States however, a decline in this role has
been observed in recent years as a direct consequence
of the combining of financial supervisory competences
in just one agency. There are nevertheless exceptions,
such as Ireland, where a single authority has been
created under the wing of the national central bank,
and the Netherlands, which is the first EU Member
State in which the central bank will take over the
supervision of all three financial sectors, thus
breaking with a long supervisory tradition, where the
role of the central bank is generally limited to
maintaining financial stability.
145 Commission de surveillance du Secteur Financier.
146 Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin).
147 Finanzmarktaufsichtsbehörde (FMA).
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