FIG Top 5 at 5 – 30/10/2025

On 24 October 2025, the European Banking Authority (“EBA”) launched a consultation (“Consultation”) on draft guidelines (“Guidelines”) on common procedures and methodologies for the supervisory review and evaluation process (“SREP”) and supervisory stress testing under directive 2013/36/EU (“CRD”).

The Guidelines are addressed to competent authorities and aim to strengthen supervisory convergence across the EU, improve clarity, and ensure that the SREP remains fit for purpose taking account of regulatory developments and supervisory experience.

The Consultation explains that the Guidelines are being revised due to a number of factors such as:

• the evolution of the regulatory framework since the previous SREP guidelines were published, taking account of the banking package, DORA and various technical standards on interest rate risks for banking book (“IRRBB”) and credit spread risk arising from non-trading book activities (“CSRBB”); and
• ten years of the SREP implementation, dedicated peer reviews and lessons from past financial market turmoil have highlighted areas where the SREP framework could be improved.

Contents

The Guidelines combine all relevant SREP provisions into one comprehensive framework and retain the core elements but also integrate new aspects such as:

• ESG matters;
• operational resilience;
• third country branches; and
• clarifications on the interaction between the revised Pillar 1 and Pillar 2 capital requirements, including the output floor.

The Guidelines fulfil the EBA’s mandate to issue guidelines on the SREP for third-country branches and to issue guidelines to operationalise the requirements where an institution becomes bound by the output floor.

Repeal

The Guidelines repeal the separate ICT SREP guidelines due to the fact that the ICT risk assessment has been integrated into the Guidelines in the interests of simplification and consistency.

Next Steps

The Consultation is open for feedback until 26 January 2026.  The EBA will hold a virtual public hearing on 4 December 2025, which interested parties can register for here. Once the final Guidelines are published, the existing SREP guidelines and the guidelines on ICT risk assessment under the SREP will be repealed and replaced. The Guidelines are expected to apply from 1 January 2027.

On 22 October 2025, the European Banking Authority (“EBA”) published its fifth report (“Report”) on the functioning of anti-money laundering and countering the financing of terrorism (“AML / CFT”) colleges under the fourth money laundering directive (“MLD4”).

The Report, which covers the period 1 January 2025 to 31 May 2025, details that the EBA actively monitored nine AML / CFT colleges and gathered data on the functioning of 258 colleges.

Overall, the Report shows that the colleges framework has remained stable since December 2023, specifically that:

• the number of colleges has remained broadly the same; and
• competent authorities are still using the colleges as a way to effectively exchange information.

The Report does highlight that there has been limited progress as regards addressing two priorities identified by the EBA in its fourth report on the functioning of AML /CFT colleges, as follows:

• implementing the risk based approach to the organisation of colleges – here the EBA found that most supervisors had not adapted the functioning of colleges (the way information is exchanged and the frequency of such exchange) according to the level of money laundering or terrorism financing (“ML / TF”) risk presented. This had the effect that lead supervisors were not always in a position to allocate enough human resources to the most strategic colleges; and
• ensuring that discussions on the need for a common approach are meaningful and systematic – here the Report shows that most colleges that were actively monitored by the EBA did not make sufficient efforts to identify common ML / TF risks and AML / CFT issues and consequently, participating competent authorities were rarely able to identify whether there were risks and / or issues that should be addressed in a coordinated manner.

Next Steps

This is the final such report that the EBA will publish as, from 1 January 2026, monitoring of AML / CFT colleges will be the responsibility of the anti-money laundering authority (“AMLA”). The Report highlights that the AMLA may wish to take account of the findings of the Report as it develops its supervisory framework.

Finally, the Report highlights that under the new AMLD6, AML / CFT colleges will remain a key tool in respect of cooperation and accordingly, lead supervisors and members should continue to focus on enhancing the functioning of existing colleges to ensure that, by the time the new legislation is implemented in July 2027, these colleges are fully functional and effective.

On 24 October 2025, the European Securities and Markets Authority (“ESMA”) published a press release (“Press Release”) stating that cyber risk and digital resilience will drive the agenda of its Union strategic supervisory priorities (“USSP”) for 2026.

Cyber and digital resilience

ESMA commenced its promotion of cyber and digital resilience, as a key strategic supervisory priority, in January 2025 to coincide with the entry into force of DORA – allowing for enhanced supervisory coordination as regards strengthening firms’ ICT risk management and improving the digital resilience of the EU securities market.

ESMA has noted strong initial engagement from national competent authorities (“NCAs”) on cyber risk and digital resilience and calls for continued efforts on the USSPs.

The Press Release highlights that NCAs and ESMA direct supervision has shown commitment regarding the monitoring of financial entities’ compliance with DORA through proactive checks and supervisory capacity building.

Emphasising the importance of a resilient financial sector, the Press Release goes on to call on NCAs to maintain efforts in 2026 regarding effective supervisory implementation across the EU, highlighting that coordination between authorities’ supervisory work and the DORA oversight framework will be essential.

ESG

The Press Release also sets out that NCAs and ESMA have carried out intense supervisory work on ESG disclosures over 2025 which has played an integral role in promoting the application of ESG requirements throughout the sustainable investment ecosystem. ESMA has stated that it will focus on consolidating these achievements under the ESG disclosures USSP, particularly focusing on high risk areas.

Next Steps

ESMA has also highlighted that it will consider new topics in other areas that may require increased supervisory work at Union-wide level in the following years.

On 22 October 2025, the European Securities and Markets Authority (“ESMA”) published its final report (“Report”) on draft regulatory technical standards (“RTS”) for the establishment of an EU code of conduct for issuer sponsored research under the Directive on Markets in Financial Instruments (“MiFID II”).

Background

The Listing Act Directive (“Listing Act”), which entered into force on 4 December 2024, made several amendments to MiFID II, one of which relates to issuer sponsored research, requiring the development of an EU code of conduct for such research aimed at enhancing trust in, and use of, issuer sponsored research.

Consultation

ESMA consulted on the draft RTS in December 2024. The Report summarises and analyses the responses to the consultation and sets out how the responses, together with advice sought and received from the Securities and Markets Stakeholder Group’s (“SMSG”) have been taken into account.

The main issue identified in response to the consultation concerned the information that research providers should make available to investment firms about their agreement with the relevant issuer. On foot of this, ESMA amended the draft RTS to clarify that a summary of the key elements of the agreement and how the research provider is remunerated would be sufficient. Further, providers would not be required to share the complete agreement with issuers.

ESMA recommends reading the Report in conjunction with the consultation in order to have a complete picture regarding the rationale behind the draft RTS.

Contents

The Listing Act adds new paragraphs to article 24 of MiFID II which deals with “General principles and information to clients.” Some of the requirements / areas addressed in the draft RTS are as follows:

• issuer sponsored research must be fair, clear and not misleading and should be clearly identified as such or with similar wording;
• all relevant conditions set out in the MiFID II delegated regulation (EU) 2017/565, and applicable to the research, are required to be met;
• investment firms that produce or distribute research partly or fully paid by the issuer are required to use the label “issuer-sponsored research” only if the research complies with the EU code of conduct for issuer-sponsored research, to be developed by ESMA as RTS;
• the objectivity and independence of the issuer sponsored research;
• contract duration and payments for the issuer sponsored research;
• dissemination of issuer sponsored research; and
• information sharing with investment firms.

Next Steps

ESMA will submit the draft RTS, by 5 December 2025, to the European Commission for adoption, who have three months to decide whether to adopt the draft RTS or not.

The draft RTS state the date of their application as 6 June 2026.

On 21 October 2025, Petra Hielkema, chairperson of the European Insurance and Occupational Pensions Authority (“EIOPA”), delivered a speech  (“Speech”) at a conference focused on the future of insurance.

The main focus of the Speech was centred around simplification and burden reduction and Ms Hielkema considered a number of connected themes and matters in her speech, some of which are as follows:

The European insurance sector

Ms Hielkema set the scene with an assessment of the current state of play of the European insurance industry, noting that it is in a relatively good place in spite of the wider challenging circumstances. Some of the points she highlighted include the following:

• almost 70% of the assets of European insurers are invested in the EU with the remaining 30% held abroad, at a value of around €2.85 trillion. Ms Hielkema acknowledged the importance of diversification while making the point that a partial reallocation of this figure could support the savings and investment union (“SIU”) while also providing reasonable returns for policyholders. She did, however, reference potential difficulty associated with this in terms of the European regulatory environment and the more fragmented market structure;
• the fact that a single European market does not exist for consumers in the way that it does for insurance providers, leaving consumers, and investors, to try and navigate a fragmented market; and
• the conservative stance taken by European savers, with not less than 70% of EU household savings sitting in bank deposits, with the result that such consumers are not able to grow their wealth by engaging with financial markets and investment in alternative products and assets. Ms Hielkema also pointed out that this is against a background where it is predicted that one of five Europeans risks living in poverty by retirement age.

Ms Hielkema went on to consider some of the stumbling blocks preventing further participation in retail investment, citing the following:

• EIOPA’s consumer surveys show that consumers do not believe that their savings and investment products offer value for money / it is difficult to receive unbiased advice / fees paid to intermediaries and advisors are not transparent and clear; and
• value for money and mystery shopping exercises reveal that the forgoing is due to the result of questionable practices by a minority of insurers, leading to a loss in consumer confidence.

Pension gaps

The Speech also covered the issue of pension gaps, highlighting the predicted growing strain on state pension systems and also advocating for a three pillar pension system.

Solutions?

Having laid out some of the challenges, Ms Hielkema tuned her attention to possible solutions, highlighting simplification, burden reduction and supervisory convergence, and considering their role in addressing some of the road blocks facing the insurance and pensions sector. Some of the matters addressed are as follows:

• Ms Hielkema voiced EIOPA’s support for the European Commission’s competitiveness compass and the Draghi report, provided that EIOPA can maintain existing standards for robustness, financial stability and consumer protection;
• EIOPA’s simplification recommendations as regards the Solvency II Directive, for example its overall position that the number of applicable guidelines be reduced by 25%, reporting templates are streamlined and frequency of stress testing for insures and IORPs is reduced;
• Ms Hielkema also reiterated EIOPA’s position as regards the recent proposals for capital relief, expressing the need to maintain adequate capital – for more information, see FIG Top 5 at 5 dated 2 October 2025;
• Ms Hielkema touched on the Insurance Distribution Directive (“IDD”) emphasising that EIOPA is a strong supporter of review measures, particularly those that would simplify the customer journey and facilitate access to insurance based investment products for consumers. She also referred to the fact that some IDD rules may have, unintentionally, put a number of consumers off, by making the insurance sales process more complex while also adding unnecessary administrative burden for providers and insurance intermediaries.

Further, on the subject of IDD, Ms Hielkema pointed to its minimum harmonisation framework and the fact that it has resulted in market fragmentation and regulatory arbitrage, creating obstacles for cross-border business. She confirmed that EIOPA is considering ways in which it can be ensured that IDD’s provisions remain proportionate and effective, while taking account of increasing digitalisation in the distribution framework;

• as regards the pan-European Personal Pension Product Regulation (“PEPP”), Ms Hielkema highlighted that EIOPA is in favour of targeted amendments aimed at simplifying the existing framework, facilitating cross border provision and ensuring that such products are trustworthy; and
• addressing the Institutions For Occupational Retirement Provision Directive (“IORPs”), Ms Hielkema pointed to EIOPA’s proposals as regards streamlining and simplification, for example, clarification as to the IORPs Directive’s scope and definitions / addressing challenges for NCAs posed by implementation / introducing standardised EU-level disclosure and reporting requirements.

Conclusion

Ms Hielkema highlighted the role that simplification and burden reduction have to play, citing them as “essential catalysts for progress” ultimately unlocking market potential and creating a more dynamic, competitive and consumer centric market. She acknowledged that simplification and burden reduction alone cannot achieve this but stated that “they are one piece of a larger puzzle – an essential tool for finding capital and helping to mobilise it so that consumers can invest more.”

Finally, in what is becoming a recurring warning from European regulators, Ms Hielkema cautioned against compromising existing standards.