Authority for Prudential Regulation and Resolution (ACPR) – Finance for all

The financial crisis of 2007-2008 prompted new considerations for the organization of the French supervisory framework for the regulation of the banking and financial sector. In this context, there is the creation of the Office for Prudential Control, which was created in 2010 and which in 2013 became the ACPR, which is mainly responsible for the supervision, monitoring and control of French banks.

Prudential Supervision and Resolution Authority: Definition and Organization

The ACPR is a direct result of the merger of two supervisory bodies: Banking Commission andInsurance and Mutual Insurance Supervision Office (ACAM) and two approval bodies ( Insurance Committee (CEA) a Committee of credit institutions and investment companies (CECEI) of the banking and financial sector.

ACPR is a independent administrative authority supported by the Banque de France. Unlike the Financial Markets Authority (AMF), it does not have legal personality, but it does have financial autonomy.

Its organization reflects the diversity of its areas of operation, whether in banking, insurance or purely financial. There are mainly four structures:

  • High School : in plenary formation (18 members including the governor of the Banque de France and the president of the AMF) is responsible for establishing general guidelines for the supervision and functioning of the authority.

  • Sanctions Commission : its main mission is to prosecute breaches of legislative and regulatory provisions by establishments under the control of the ACPR.

  • Advisory Committee : there are three of them (prudential matters, anti-money laundering, business practices), these commissions were created to assist the college on specific topics, in particular by involving experts from the sectors concerned.

  • Scientific Committee : this committee is responsible for the development of relations and exchanges between prudential supervision on the one hand and research carried out in the banking and financial field on the other. Its mission essentially consists in providing scientific monitoring of topics directly dependent on the control of the ACPR.

Mission of the Office of Prudential Supervision

ACPR is responsible for two main missions: to contribute to strengthening stability of the banking and financial sector AND protect customers as defined in Article L.612-1 of the Monetary and Financial Code: “ The Authority for Prudential Control and Crisis Resolution ensures the preservation of the stability of the financial system and the protection of clients, policyholders, members and authorized persons of persons subject to its control “.

To accomplish these two missions, the ACPR has “ control authority, authority to take administrative police measures and sanction authority “. It may also disclose certain information relating to credit institutions and investment and insurance companies under its control in order to fulfill its mission, provided that professional secrecy cannot be enforced against it.

As the regulation and implementation of legislative and regulatory provisions also apply at other levels, the responsibility of the ACPR strengthen France’s influence on the European and international scene.

Strengthening financial stability

Strengthening financial stability is one of the basic missions of ACPR. For households, this mission takes a concrete form through the establishment of a deposit insurance mechanism. It is also about ensuring a regulated and controlled banking and financial sector for businesses and individuals.

As such, the ACPR serves two main functions:

  • Issuing accreditation (“permit to exercise activity”) credit institutions (banks and financial companies), investment companies, insurance and reinsurance companies, mutual insurance companies and mutual associations, institutions providing supplementary pension insurance and insurance group companies (mixed or not).

While most companies in the banking and insurance sectors (credit institutions and investment companies) are approved by the ACPR, management companies (asset management companies, securitization organizations, civil society real estate investment trusts (SCPI), entities for collective real estate investment (OPCI)) are approved by the AMF .

  • She is responsible for monitoring and compliance with financial rules and standards defined at national and international level. In this capacity, he mainly supervises the application of the solvency rules established by the Basel Committee by credit and payment institutions, investment companies, insurance and reinsurance companies, financial companies, mutual insurance companies and insurance institutes.

Unbundling law and regulation of banking activities: strengthened ACPR powers

A reform of the Banking Act in August 2013 gave new powers to the former ACP, in this context renamed the Office for Prudential Review and Resolution (ACPR).

This body is mainly entrusted with crisis management and crisis resolution. For this purpose, in particular, it is planned to create a college for solving bank problems. In the case of proven difficulties of the credit institution or securities trader, it will be responsible for imposing so-called “resolution” measures (reorganization of the structure, termination of activity, spin-off, etc.). Similarly, ACP countries may also decide to ban financial transactions deemed unsafe or systemic in nature. Finally, it can decide to suspend or refuse to appoint directors of credit institutions, investment companies or insurance organizations if it deems it necessary (lack of experience or required skills).

Protect customers

ACPR also has a mission to ensure the protection of customers of the establishments under its control. This mission includes monitoring compliance with the application:

  • legislative and regulatory provisions regarding consumer protection,

  • rules and codes of conduct and good practice issued and approved at the request of professional associations,

  • ACPR recommendations.

As stated in Article L612-1, “ it also ensures the adequacy of the means and procedures these people put in place to comply with Book I of the Consumer Code “.

This function is performed by the Business Practices Control Department within the ACPR. He works in close cooperation with the AMF as part of their joint focus on consumer protection. Together, they are responsible for the control of banking and financial products, including insurance products, marketed on French territory.

To represent France on the European and international regulatory scene

One of the missions of the ACPR is also to represent France in the main international banking and insurance bodies. In addition, ACPR ensures that it is heard in organizations such as the European Banking Authority (EBA) or the Basel Committee. These bodies are responsible for the development of international norms and standards in terms of regulation.

High Council for Financial Stability (HCSF), prevention of systemic risks on a national and international scale

If the ACPR aims to strengthen the weight of France in international decisions regarding the introduction of accounting standards in regulatory bodies, the HCSF (formerly Corefris) is responsible for issuing recommendations regarding the management of risks in the banking and financial sector, in particular systemic risks, both nationally and internationally.

This representation also includes cooperation agreements signed with counterparts operating in other countries around the world, notably through the exchange of information “subject to at least equivalent rules of professional secrecy”.

Within the European Union or the European Economic Area, it is not necessary to sign a written agreement. A directive (2006/48) is drawn up for this purpose. On the other hand, it is necessary for anything that involves cooperation between the ACPR and other counterparts that are not members of the European Union or the European Economic Area.

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