Changes from report parliamentary committee draft to plenary report

Added1. The entities as referred to in Article 91(1) shall have the primary responsibility for ensuring that key function holders are of good repute, have honesty and integrity and possess the knowledge, skills and experience necessary to perform their duties at all times.

Added2. Where the entities conclude, based on the assessment referred to in paragraph 1, that the person does not fulfil the requirements set out in that paragraph, they shall not appoint that person as a key function holder. The entities shall take all measures necessary to ensure the appropriate functioning of that position, including replacing the key function holder if that person ceases to comply with the suitability criteria.

Added3. The entities shall ensure that information about the suitability of the key function holders remains up-to-date. Where requested, the entities shall communicate that information to competent authorities.

AddedArticle 91d Suitability assessment by competent authorities of the heads of internal control functions and chief financial officer

Added1. Member States shall ensure that competent authorities assess before the heads of internal control functions and the chief financial officer take up their positions whether they fulfil the suitability criteria set out in Article 91c(1), where those heads or officer are to be appointed for roles in the following entities:

Added(a) the EU parent institution that qualifies as large institution;

Added(b) the parent institution in a Member State that qualifies as large institution, except if it is affiliated to a central body, in which case, only the suitability of the heads of internal control functions and the chief financial officer of the central body shall be assessed;

Added(c) central body that qualifies as large institution or that supervises large institutions affiliated to it;

Added(d) stand-alone institution in the EU that qualifies as a large institution;

Added(e) relevant subsidiary when they are parent institutions in a Member State.

Added2. For the assessment of the suitability of the heads of internal control functions and chief financial officer as referred to in paragraph 1, the entities referred to in that paragraph shall submit the initial application of the person concerned to the competent authorities without undue delay after the internal suitability assessment is completed. That application shall be accompanied by all the information and documentation necessary to competent authorities to carry out the suitability assessment effectively.

Added3. Competent authorities shall acknowledge in writing the receipt of the application and the documentation required in accordance with paragraph 2 within two working days.

AddedCompetent authorities may request the competent authority for the supervision of anti-money laundering in line with Directive (EU) 2015/849, to consult, in the context of their verifications, and on a risk-sensitive basis, the relevant information concerning the heads of internal control functions and the chief financial officer. Competent authorities may also request to have access to the Central AML/CFT database referred to in Article 11 of Regulation [please insert reference – proposal for establishment of an Anti-Money Laundering Authority - COM/2021/421 final]. The competent authority for the supervision of anti-money laundering in line with Directive (EU) 2015/849 shall decide on whether or not to grant such request.

AddedCompetent authorities shall assess the suitability of the heads of internal control functions and chief financial officer within 60 working days (‘assessment period’) as from the date of the written acknowledgement referred to in the first subparagraph.

Added4. Competent authorities that request ▌ additional information or documentation from the entities referred to in paragraph 1 or from other authorities or which conduct interviews or hearings, may extend the assessment period for maximum 20 working days. However, the assessment period shall not exceed 90 working days. Request for additional information or documentation shall be made in writing and shall be specific. The entities referred to paragraph 1 shall acknowledge receipt of request for additional information or documentation within two working days and provide the requested additional information or documentation within 10 working days as of the date of the written acknowledgement of the request from competent authorities. Failure by the entities to provide the requested information within this deadline shall result in the procedure being closed without any further assessment by the competent authority. The closure of the procedure shall be without prejudice to the possibility for the entity to submit a new application.

Added5. As soon as any new facts or other issues that may affect the suitability of the heads of internal control functions and the chief financial officer are known to the entities referred to in paragraph 1 or to those heads or officer, the entities referred to in that paragraph shall inform without undue delay the relevant competent authorities thereof.

Added5a.Where the competent authority becomes aware that relevant information concerning the suitability of the heads of internal control functions and the chief financial officer has changed and such change may affect the suitability of the heads or officer concerned, the competent authority shall reassess their suitability.

Added6. Where the heads of internal control functions and chief financial officer do not fulfil the requirements set out in Article 91c(1), or where the entities referred to paragraph 1 of this Article do not comply with the obligations and deadlines in paragraphs 2 and 4 of this Article, Member States shall ensure that competent authorities have the necessary powers to:

Added(a) prevent such heads or officer to exercise their functions;

Added(b) suspend or remove such heads or officer;

Added(c) require the entities referred to paragraph 1 to take the appropriate measures to ensure that such heads or officer concerned are suitable for the position considered.

Added7. For the purposes of this Article, EBA shall develop draft regulatory technical standards specifying information or accompanying documents required to be submitted to the competent authorities for performing the suitability assessment.

AddedEBA shall submit those draft regulatory technical standards to the Commission by [OP please insert the date = 12 months after the date of entry into force of this amending Directive].

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

Added8. EBA shall develop draft implementing technical standards on standard forms, templates and procedures for the provision of the information referred to in paragraph 2. When developing the draft implementing technical standards, EBA shall take into account existing practices and tools.

AddedEBA shall submit those draft implementing technical standards to the Commission by [OP please insert the date = 12 months from date of entry into force of this amending Directive].

AddedPower is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1093/2010.

Added▌9. EBA shall issue guidelines, in accordance with Article 16 of Regulation (EU) No 1093/2010, on the fulfilment of the requirements of Article 91c and on facilitating the implementation and consistent application of procedural requirements laid down in Articles 91a to 91d of this Directive and the application of powers and actions to be taken by the competent authorities referred to in Article 91b(7) and 91d(6) of this Directive. EBA shall issue those guidelines by [OP-please insert the date = 12 months from date of entry into force of this Directive].’;

Added(22) Article 92 is amended as follows:

Added(a) in paragraph 2, points (e) and (f) are replaced by the following:

Added‘(e) staff engaged in internal control functions are independent from the business units they oversee, have appropriate authority, and are remunerated in accordance with the achievement of the objectives linked to their functions, independent of the performance of the business areas they control;

Added(f) the remuneration of the senior staff in the internal control functions is directly overseen by the remuneration committee referred to in Article 95 or, if such a committee has not been established, by the management body in its supervisory function;’;

Added(b) in paragraph 3, point (b) is replaced by the following:

Added‘(b) staff members with managerial responsibility over the institution's internal control functions or material business units;’;

Added(23) Article 94 is amended as follows:

Added(-a) in paragraph 1, point (a) is replaced by the following:

Added‘(a) where remuneration is performance related, the total amount of remuneration is based on a combination of the assessment of the performance of the individual and of the business unit concerned and of the overall results of the institution and when assessing individual performance, financial and non-financial criteria are taken into account, including the treatment of risks referred to in Article 76, paragraph 2;’;

Added(a) in paragraph 1, point (g)(ii), the fifth indent is replaced by the following:

Added‘- the institution shall, without delay, inform the competent authority of the decisions taken by its shareholders or owners or members, including any approved higher maximum ratio pursuant to the first subparagraph of this point, and the competent authorities shall use the information received to benchmark the practices of institutions in that regard. The competent authorities shall provide EBA with the benchmarks and EBA shall publish them on an aggregate home Member State basis in a common reporting format. EBA may elaborate guidelines to facilitate the implementation of this indent and to ensure the consistency of the information collected;’;

Added(b) in paragraph 2, third subparagraph, point (a) is replaced by the following:

Added‘(a) managerial responsibility and internal control functions;’;

Added(c) in paragraph 3, point (a) is replaced by the following:

Added‘(a) an institution that is not a large institution and the value of the assets of which is on average and on an individual basis in accordance with this Directive and Regulation (EU) No 575/2013 equal to or less than EUR 5 billion over the four-year period immediately preceding the current financial year;’;

Added(23a) in Article 97(4), the second subparagraph is replaced by the following:

Added‘When conducting the review and evaluation referred to in paragraph 1 of this Article, competent authorities shall apply the principle of proportionality in accordance with the criteria disclosed pursuant to point (c) of Article 143(1). In particular, competent authorities shall take into account the following elements:

Added(a) whether the entity is not a G-SII according to point 133 of Article 4, paragraph 1, of Regulation (EU) 575/2013;

Added(b) whether the entity and its subsidiaries are linked according to Article 22, paragraph 7, of Directive 2013/34/EU and applicable national laws require affiliated undertakings to allocate profits mainly to the common interests of members;

Added(c) whether the subsidiaries are small and non-complex institutions according to point 145 of Article 4, paragraph 1, of Regulation (EU) 575/2013, or less significant institutions according to Article 6, paragraph 4, of Regulation (EU) 1024/2013.’;

Added(23b) in Article 98(1), the following point is added:

Added‘(ia) the extent to which the institutions have put in place appropriate policies and operational actions related to the targets and milestones defined in the plans referred to in Article 76(2).’;

Added(24) in Article 98, the following paragraph 9 is added:

Added‘9. The review and evaluation performed by competent authorities shall include the assessment of institutions’ governance and risk management processes for dealing with environmental, social and governance risks, as well as of the institutions’ exposures to environmental, social and governance risks. In determining the adequacy of institutions’ processes and exposures, competent authorities shall take into account the business models of those institutions.

AddedInstitution’s exposures to environmental, social and governance risks shall be assessed also on the basis of institutions’ plans as defined in Article 76(2). Institutions’ governance and risk management processes with regard to environmental, social and governance risks shall be brought into line with the objectives set out in those plans.

AddedThe review and evaluation performed by competent authorities shall include the assessment of the institutions’ plans and targets, as referred to in Article 76(2), as well as the progress made towards addressing the environmental, social and governance risks arising from the process of adjustment towards climate neutrality by 2050, as set out in Regulation (EU) 2021/1119, as well as towards other relevant Union policy objectives in relation to environmental, social and governance factors.’;

Added(25) in Article 100 the following paragraphs 3 and 4 are added:

Added‘3. Institutions and any third parties acting in a consulting capacity to institutions shall refrain from activities that can impair a stress test, such as benchmarking, exchange of information among themselves, agreements on common behaviour, or optimisation of their submissions in stress tests. Without prejudice to other relevant provisions laid down in this Directive and in Regulation (EU) No 575/2013, competent authorities shall have all information gathering and investigatory powers that are necessary to detect those actions.

Added4. EBA, EIOPA and ESMA shall, through the Joint Committee referred to in Article 54 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010, develop guidelines to ensure that consistency, long-term considerations and common standards for assessment methodologies are integrated into the stress testing of environmental, social and governance risks. The Joint Committee shall publish those guidelines by ... [12 months from the date of entry into force of this amending Directive]. EBA, EIOPA and ESMA shall, through the Joint Committee referred to in Article 54 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010, explore how social and governance related risks can be integrated into stress testing.’;

Added(26) Article 104 is amended as follows:

Added(a) paragraph 1 is amended as follows:

Added(i) the introductory sentence is replaced by the following: