On 3 April 2025, Deputy Governor at the Central Bank of Ireland (“Central Bank”), Mary Elizabeth McMunn delivered a speech (“Speech”) at the Institute of Bankers. The theme of the Speech centred around the regulation and supervision of the financial sector, particularly in an increasingly challenging environment.

The Deputy Governor spoke about the macroeconomic background and the risk landscape that the financial sector is currently operating in, citing the global pandemic, war in Europe, geo-political shifts, geo-economic fragmentation and a rapid technological transformation. Specifically, Deputy Governor  McMunn stated that all of these changes and volatilities informed the Central Bank’s recently published Regulatory and Supervisory Outlook. For more information on the latter, see FIG Top 5 at 5 dated 6 March 2025. 

Against this background of change and fragmentation, Deputy Governor McMunn highlighted the importance of regulators and firms being prepared for short term shocks together with long term shifts, taking account of both traditional and novel risks.

The Deputy Governor then went on to provide a summary of the Central Bank’s new supervisory approach, which was implemented in January 2025. She stated that “This new approach is essential to ensuring we can continue to deliver our important role regulating and supervising the financial sector in the public’s interest.” For more information, see FIG Top 5 at 5 dated 8 August 2024 and FIG Top 5 at 5 dated 6 March 2025.

Simplification

The Deputy Governor then turned her attention to the topical issue of the simplification of regulation, particularly referencing its role in European productivity and competitiveness. Deputy Governor McMunn stated that the simplification agenda is one that is welcomed by the Central Bank, emphasising that it must be done correctly. She stressed that regulators must always be open to reviewing and considering existing frameworks, to see if the same outcomes can be delivered in different and more simplified ways.

However, she cautioned that this must not be done at the cost of the lowering of standards, with standards becoming so simple that they do not address complex risks. Additionally, the Deputy Governor pointed out that simplification cannot mean no new rules – the framework must evolve in tandem with the financial system.

Deputy Governor McMunn went on to give some examples where the Central Bank has already identified, and in some cases, implemented, areas where matters could be simplified and the burden reduced, some of which are as follows:

• authorisation – noting that the Central Bank has increased engagement and improved processes significantly;
• fitness and probity – here the Deputy Governor stated that, as part of the implementation of the Enria review, the Central Bank has already, or will soon, introduce a number of changes, noting that the Central Bank plans to consult on enhancing the clarity of its expectations (by consolidating its guidance) as well as a simplification of the PCF list – as an initial step in advance of a more substantial review. For more information on the Enria review, see FIG Top 5 at 5 dated 18 July 2024;
• operational resilience – for example, in implementing DORA, aspects of reporting requirements that risked duplication or overlap with the new framework are being removed; and
• the new supervisory approach, referred to above.

What to Expect

The Deputy Governor stated that throughout 2025, the Central Bank will continue to engage with stakeholders as regards the simplification agenda, specifically where stakeholders feel simplification is merited or where a burden could be alleviated. However, Deputy Governor McMunn highlighted that this must be done in a context where financial protections, that have been built into the system over the last ten years, are not sacrificed.

Indeed, the Deputy Governor stated “It is our job as a good policymakers to ensure our regulations are proportionate and appropriate. But it is also our job as an independent central bank and regulator to call out the risks should simplification slide into de-regulation and lower standards”, pointing to this position as being critical in ensuring that financial stability, resilience and consumer protection are not compromised. 

On 8 April 2025, the European Insurance and Occupational Pensions Authority (“EIOPA”) published a note (“Note”) setting out its approach regarding simplifying regulation and reducing administrative burdens to help boost European competitiveness.

In the Note, EIOPA acknowledges that competitiveness is not explicitly part of its mandate and also sets out that it has not received any official mandates as regards simplification and burden reduction. However, EIOPA highlights its support for the new political priorities of the European Union, stating that Europe must increasingly act as a single entity in a time of geopolitical and economic uncertainty, through enhancing the competitiveness of the single market while ensuring robust consumer protection and a level playing field for businesses.

The Note addresses the issue of simplification and burden reduction under three main headings as follows:

Policy Work

Under this heading, EIOPA sets out a number of matters relating to the following:

• prudential reporting  - some of the matters referenced by EIOPA include the simplification initiative of the implementing technical standards (“ITS”) on reporting and disclosures / EIOPA’s consideration of the impact of the reporting reduction on prudential supervision, financial stability and consumer protection / the shortening of all existing Level 3 texts that are relevant for the insurance industry by reducing, to the extent possible, the number of articles by 25%;
• proportionality – here EIOPA cites its draft technical advice to the European Commission (“Commission”) as regards the implementation of the new proportionality framework in the revised Solvency II Level 2 legislation, whereby it provides guidance on assessing undertakings that do not qualify as small and non-complex;
• sustainability – EIOPA refers to the requirement under the Solvency II review for insurers to draft specific sustainability risk plans to address financial risks due to sustainability factors, noting that in the draft regulatory technical standards (“RTS”), EIOPA has sought to use existing requirements and data, for example the ORSA scenarios.

  Further, EIOPA cites its support for the Commission’s Sustainability Omnibus package;

• digitalisation and AI – EIOPA points to its mandate under the revised Solvency II directive to draft a report on integrated data reporting with the objective of reducing duplications and inconsistencies between the reporting frameworks in the insurance sector and other sectors of the financial industry, to improve data standardisation and data sharing and as a result, reduce compliance costs.

  The Note also mentions the  potential for the European Single Access Point (“ESAP”) to act as a comprehensive data hub for supervisors, enhancing insights and reducing burdens. Additionally, the Note refers to the preparation, by EIOPA, of an opinion on the application of sectoral legislation, like Solvency II, to use cases that are not classified as high-risk under the AI Act, prioritising supervisory implementation rather than introducing new rules;

• financial stability – the Note highlights that EIOPA is exploring ways to reduce reporting requirements by simplifying reporting templates. In addition, the Note points to the further simplification of stress testing for insurers and IORPs; and
• consumer protection – the Note highlights EIOPA’s work as regards its promotion of streamlining of requirements related to product disclosures, design, and sales processes in order to promote greater uptake of insurance and pension products, enhance consumer financial health, and boost SME competitiveness. However, EIOPA points out that progress is often hampered by national or other infrastructural barriers.

Policymaking

Some of the matters highlighted by the Note under this heading include:

• simplification should begin at the earliest stages of the EU legislative process, that is, at the preparatory stages of level 1, with consistency and efficiency at all levels. The Note particularly emphasises that there should be greater involvement from EIOPA during level 1 negotiations which would ensure solid technical input regarding the need for particular mandates;
• the legislative process should always aim to provide adequate consultation periods and sufficient implementation time for both industry and supervisors; and
• the right balance must be achieved between the introduction of simplification measures and the maintenance of regulatory stability and legal certainty.

Supervision

Some matters addressed in the Note under this heading are as follows:

• strong supervisory convergence is essential; and
• the consideration of a stronger mandate at EIOPA board level to help reduce complexity and enhance efficiency with the further exploration of ways of working together from the outset. Additionally, the Note highlights that a stronger mandate at EIOPA board level, particularly as regards the supervision of the freedom of establishment or the freedom to provide services in insurance, would contribute to more consistent enforcement across jurisdictions, strengthening overall effectiveness.

Next Steps

Petra Hielkema, Chair of EIOPA stated:

“Regulatory simplification and burden reduction is important and possible. Yet, it should be viewed as a means to an end, not as the end itself. The ultimate goal, after all, is to create a more resilient and competitive European economy, where businesses can flourish, consumers are well protected and financial stability is maintained. Efforts to simplify regulation must, in our view, strike the right balance, ensuring that streamlining leads to a stronger, more cohesive framework, rather than introducing new gaps, inconsistencies or unintended burdens elsewhere.”

On 3 April 2025, the European Insurance and Occupational Pensions Authority (“EIOPA”) launched three consultations, regarding two sets of guidelines and an opinion, under the amended Solvency II Directive, as follows:

1. Consultation on the review of EIOPA’s guidelines on the treatment of related undertakings, including participations

   This consultation paper sets out the draft revised guidelines on the treatment of related undertakings, including participations and its explanatory text. The current guidelines have been in force since 2015. In the draft revised guidelines some legal references have been updated and clarifications were added in order to reflect changes to the legal framework.

   EIOPA has stated that the amendments to these guidelines are solely for clarification and streamlining purposes with no intention to reduce supervisory expectations, nor do they provide new guidance for the application of the legal framework. Consequently, EIOPA has stated that the revisions are not expected to have a material impact on the insurance industry or supervisory authorities.

   Next Steps

   This consultation is open for feedback until 26 June 2025.

   EIOPA will revise its proposal in light of comments received from stakeholders and will then publish a report on the consultation including the revised proposal and the resolution of stakeholder comments. These guidelines will apply from 30 January 2027.

2. Consultation on the proposal for guidelines on exclusion of undertakings from the scope of group supervision 

   Under the amended Solvency II Directive, a group supervisor is required to consult with EIOPA and the other supervisory authorities concerned before deciding to exclude one or more undertakings from the scope of group supervision where that would not trigger the application of group supervision under Article 213(2)(a) to (c) of the Solvency II directive. EIOPA has stated that such decisions are to be taken in exceptional circumstances and are to be justified to EIOPA.

   The Guidelines are based on the mandate for EIOPA to further specify the exceptional circumstances where it may be justified to exclude one or more undertakings from the scope of group supervision that would not trigger group supervision or to exclude the ultimate parent undertaking.

   This consultation sets out the draft guidelines. An analysis of the expected impact from the proposed policy is set out in an annex to the consultation.

   Next steps

   This consultation is open for feedback until 26 June 2025.

   EIOPA will revise its proposal on foot of feedback received. EIOPA will publish a report on the consultation including the revised proposal and the resolution of stakeholder comments. The Guidelines will be applicable from 30 January 2027.  

3. Consultation on the revised opinion on the supervisory assessment of internal models including a dynamic volatility adjustment

The opinion on the supervisory assessment of internal models including a dynamic volatility adjustment was published in 2017 and this review comes on foot of the review of the volatility adjustment framework in Solvency II.

The changes in the revised opinion consist of proposed deletions, amendments and additions in an effort to align the opinion with the Solvency II Directive amendments. EIOPA has stated that the changes have no material impact on the regulatory requirements in force.

Next Steps

This consultation is open for feedback until 26 June 2025.

EIOPA will consider the feedback received and will then publish a final report on the consultation and submit the revised opinion  to the Board of Supervisors for adoption. 

On 3 April 2025, the European Securities and Markets Authority (“ESMA”) launched a consultation (“Consultation”) on proposals specifying the transparency requirements for derivatives, the regulatory technical standards (“RTS”) on package orders, and the RTS on input / output data for over-the-counter (“OTC”) derivatives consolidated tape, under the markets in financial instruments regulation (“MiFIR”).

The Consultation stems from the review of MiFIR. The amending regulation and amending directive were published in the official journal of the European Union on 8 March 2024.

Consultation

The Consultation sets ESMA’s proposals as follows:

• proposals on the new MiFIR transparency regime for exchange traded derivatives (“ETD”) and OTC derivatives, setting out the new scope of derivatives subject to transparency. The Consultation also proposes to apply the new liquidity determination to pre-trade waivers and introduces amendments to post-trade transparency fields and flags.

  In addition, ESMA also proposes a new deferral regime for ETD and OTC derivatives, including the different size thresholds and deferral durations to be applied for post-trade transparency;

• proposals regarding a review of commission delegated regulation (EU) 2017 / 2197 – the Package order RTS  - in particular, taking account of the new scope and liquidity determination; and
• proposals stemming from ESMA’s new mandate to develop draft RTS setting out data quality requirements for prospective consolidated tape providers and data contributors, covering the OTC derivatives tape.

Next Steps

ESMA has stated that the Consultation will be mainly of interest to firms that are subject to MiFIR and MiFID, particularly trading venues and investment firms. In addition ESMA highlighted the importance of the Consultation for trade associations and industry bodies, institutional investors and data reporting service providers.

The Consultation is open for feedback until 3 July 2025. ESMA plans to publish a final report and submit the draft technical standards to the European Commission by the end of Q4 2025. 

1. EBA publishes official translations of guidelines on reporting templates under MiCA

On 26 March 2025, the European Banking Authority (“EBA”) published the official translations of its guidelines (“Guidelines”) on templates to assist competent authorities in performing their supervisory duties regarding issuers’ compliance under the regulation on markets in crypto-assets (“MiCA”), on its website.

The Guidelines are addressed to competent authorities and issuers of asset-referenced tokens (“ARTs”) and e-money tokens (“EMTs”).  The Guidelines apply to the exercise of supervisory powers of competent authorities in the context of ensuring compliance of issuers of ARTs and  EMTs with the requirements set out in Titles III and IV of MiCA.

The Guidelines specify the content and uniform formats for the submission of information used by competent authorities, and the EBA, when exercising their supervisory powers under MiCA.

The aim of the Guidelines is to close the reporting gaps identified by the EBA and to enhance supervisory convergence which will facilitate a common supervisory approach across the EU while also ensuring a level playing field in the single market. The EBA has stated that the Guidelines will provide competent authorities with the necessary comparable information to supervise compliance of issuers with MiCA requirements. In addition, the Guidelines will ensure that the EBA has the requisite information to carry out the annual significance assessment under MiCA.

The Guidelines also include common templates and instructions that issuers should use to collect the data they need from the relevant crypto-asset service providers, in line with the data sharing approach implemented by the Commission Implementing Regulation (EU) 2024/2902.

Next Steps

The Guidelines will apply from 26 May 2025, being two months from the date of the publication of the official translations on the EBA’s website. National competent authorities must notify the EBA as to whether they comply or intend to comply with the Guidelines, or otherwise with reasons for non-compliance, by 26 May 2025.

2. ECB decision amending decision on provision of supervisory data reported to NCAs under SSM published in OJEU

On 4 April 2025, the decision (“Amended Decision”) of the European Central Bank (“ECB”) amending its decision (EU) 2023/1681 regarding the provision, to the ECB, of supervisory data reported to national competent authorities (“NCAs”), was published in the official journal of the European Union (“OJEU”).

The Amended Decision sets the procedures for the submission, to the ECB, of supervisory data reported to NCAS by supervised entities in accordance with the single supervisory mechanism (“SSM”).

The Amended Decision now includes provisions for reporting data on significant risk concentrations and significant intra-group transactions at the level of the financial conglomerate. The Amended Decision states that, as with other information reported on a regular basis in accordance with relevant EU law, data on significant risk concentrations and significant intra-group transactions should be submitted by significant supervised entities to the NCAs. NCAs should perform the initial data checks and make the information available to the ECB.

Next Steps

The Amended Decision will take effect on the day of its notification to the addresses, being NCAs of participating member states.