Regulatory Updates: What’s Happening in the EU Financial Sector

The European Banking Authority (EBA) has recently revised its technical standards on supervisory colleges, with a primary emphasis on improved information exchange within the colleges, effective identification of emerging risks, and appropriate delegation of responsibility. These updates are designed to enhance the functioning of supervisory colleges under the Capital Requirements Directive (CRD). Concurrently, the European Supervisory Authorities (ESAs) have been actively seeking input on technical standards related to the European Single Access Point (ESAP), as part of the Capital Markets Union Action Plan. The ESAP is anticipated to launch in July 2026 and will primarily facilitate access to publicly available financial and sustainability information.

Moreover, the European Securities and Markets Authority (ESMA) has been addressing climate-related stress testing and greenwashing controversies in the financial sector. Their efforts include the development of methodological approaches to model climate-related shocks in the fund sector and the monitoring of potential reputational risks associated with greenwashing. ESMA has also been soliciting feedback on guidelines for the supervision of sustainability information, with the aim of ensuring a consistent and harmonized supervisory approach for listed companies required to disclose sustainability information.

The European Insurance and Occupational Pensions Authority (EIOPA) has been seeking input on value-for-money benchmarks for unit-linked and hybrid insurance products, to identify products that may not provide fair value for money. Furthermore, EIOPA has been focusing on the prudential treatment of sustainability risks, recognizing their increasing importance for the investment and insurance activities of insurers.

In line with these regulatory developments, the ESAs have also been working on amendments to sustainability disclosures for the financial sector, highlighting the necessity for transparency and protection of customers and consumers.

Additionally, the regulatory landscape in the EU has seen a strong emphasis on crypto-assets, with consultations and guidelines being issued by both the EBA and ESMA. These consultations cover various aspects, including own funds requirements, stress testing, and suitability assessment of management bodies and shareholders in issuers of crypto-assets and related services.

Furthermore, the ESAs have been scrutinizing the voluntary disclosure of principal adverse impacts under the Sustainable Finance Disclosure Regulation, with the goal of evaluating the current status of disclosure at company and product levels and identifying best practices and areas for improvement.

Collectively, these significant regulatory developments in the EU underscore a robust focus on enhancing supervisory practices, addressing sustainability risks, and ensuring transparency and integrity in the financial sector. Stakeholders in the EU financial industry should vigilantly monitor these developments and actively engage in consultations to guarantee a well-informed and collaborative approach to regulatory compliance and risk management.