Global insurance and securities supervisors released a consultation paper Monday that proposes principles for supervising financial conglomerates.
The proposed principles, which were published by the Joint Forum comprised of banking, insurance and securities regulators, provide national authorities, standard setters and supervisors with a set of internationally agreed principles that support consistent and effective supervision of financial conglomerates, particularly conglomerates that are active across borders.
It notes that the financial crisis exposed situations in which regulatory requirements and oversight did not fully capture all the activities of financial conglomerates, or fully consider the impact and cost that these activities may pose to the financial system.
“These principles should, over time, help strengthen the global financial system through more effective and consistent oversight and supervision of financial conglomerates notably including risks arising from unregulated financial activities and entities,” said Tony D’Aloisio, chairman of the Joint Forum.
The proposed principles focus on: supervisory powers and authority, supervisory responsibility, corporate governance, capital adequacy and liquidity, risk management.
Comments on the report are due by March 16, 2012.