Warnings and recommendations
Warnings and recommendations: The primary policy instrument at the disposal of the
FSC is its ability to issue warnings or ‘comply or explain’ recommendations to public
sector authorities. The authorities emphasise that there should be no mechanistic
threshold or predetermined criteria to trigger such actions.
Given the nature and
diversity of factors that could impinge on financial stability, a certain amount of
flexibility and discretion in this area is desirable. At the same time, however, the FSC
should be able to form a consistent view on the conditions that would prompt the
issuance of a warning or a recommendation. This would necessitate the development
of an analytical framework setting out the relevant considerations to determine the
potential need for specific warnings and recommendations before a decision is made.
Moreover, while the FSC has not yet issued any warnings or recommendations, it
would be useful to develop the framework underpinning the ‘comply or explain’
mechanism, such as the parameters and criteria that will be used to determine that a
warning or recommendation has been complied with or that an explanation about non-
compliance is acceptable (and on how to proceed if it is not), and to assess the impact
of the policy measure and whether it has been effective.
EU Forecast
euf:ba.18.j:15/nws-01