Financial Sector Supervisors' Accountability: A European Perspective

Abstract

Financial sector supervisors’ accountability is widely accepted as a sine qua non condition of good governance and as a guarantor of supervisory independence. An arsenal of accountability-inspired control instruments aims to ensure that supervisors are accountable to the legislature, the executive, stakeholders and, last but not least, the judiciary. While the general right to damages for losses arising from civil wrongs is well established, liability for faulty supervisory acts or omissions is, in many respects, limited in scope. This paper examines the conceptual underpinnings of financial sector supervisors’ liability and the current legal situation on supervisory liability in the European Union, under both national and Union law. It also inquires into an aspect of the debate that has attracted less attention than it deserves, but which is likely to take on greater importance as the structure of financial supervision undergoes reforms, both at the European Union level and in the Member States: the specificity of the Member States’ national central banks as banking supervisors and, in particular, the tension between their independence and their potential third party liability for damages for supervisory faults.

Keywords: supervisors, accountability, tortious liability, supervisory faults, national central banks

JEL Classification: K1, K13, K2, K23