Asking questions to the ESAs – When is the Commission involved?

Some time ago, the European Commission published a Decision on the adoption of the answers to be provided to questions submitted to the European Supervisory Authorities under Article 16b (5) of the EIOPA Regulation, the EBA Regulation and the ESMA Regulation in the period from 1 January 2021 to 30 January 2021.

Without going into the content of the Decision – it concerned Q&As regarding sustainability-related disclosures as laid down in Regulation (EU) 2019/2088 or the SFDR – the fact that the Commission published answers to questions submitted to the ESAs as a Decision deserves some comments in the saga of increased Q&A transparency (hereafter QA).

In the 2019 review of the ESA regulations, a new Article 16b on QA was added. It explains for example that the answers by the Authority shall be non-binding, that a web-based tool must be made available on the Authority’s website both for admissible questions as well as for the answers, that rejected questions shall be published on its website for 2 months, and that advice from the Stakeholder Group can be asked by three voting members of the Board of Supervisors.

Article 16b(5), adopted word for word as proposed by the Commission, states that questions that require the interpretation of Union law must be forwarded to the Commission. The Authority shall publish any answer provided by the Commission. No time limit is given by which the question must be forwarded or answered. The evaluation whether the question requires interpretation of Union law is entirely up to the discretion of the Authority. It is also up to the discretion of the Commission to determine if a given question will be answered or not. In exercising this discretion, the Commission will take into account the importance of the question for the Single Market. But it can be expected that there will be future answers to questions which fall under Article 16b(5) that will also be adopted by a Decision.

There is, as for now, no overview available of Decisions taken by the Commission, published in the Official Journal, providing answers to forwarded questions from the ESAs. However, the Commission’s Decision of 6 July 2021 was not the first one.

In compliance with Article 16b(5), the ESAs since 1 January 2020 must inform which answers have been provided by the Commission. Each ESA does so differently. It should be noted that not all QA concern level 1 legislation. Old questions, answered prior to the entry into force of Article 16b(5), were not subject to the current process.

• Examining EIOPA’s QA excel database, there are 11 answers in the total database which refer to the Commission as the provider of the answer in 2020 and 2021. There are more than 1570 QA since 2016, of and more than 270 QA have been answered since 1 January 2020. These replies have not been the subject of a Decision. No replies in the database prior to 2020 refer to an answer from the Commission, despite the fact that such has been the case prior to 2020.
• ESMA’s workbook with Questions received for 12 key legislations features two relevant columns, one titled ‘type of question’ such as new question, or published (answer), and a second column titled ‘categorization’. The categories are: for the Commission, for ESMA, rejected, pending. The sheets do not contain a date of submission or reply. In the consolidated QA documents on individual legislation, which ESMA publishes and updates frequently, it is explained if the answer is provided by the Commission.
• EBA QA database of 2801 questions can be searched for “answer prepared by the European Commission because it is a matter of interpretation of Union Law”. It contains today 571 QAs subject to review by the European Commission of which 311 have received a final answer and 254 are still under review. Since 1/1/2020, there are 51 submitted QA under review by the Commission implying that also prior to the new article 16b(5) EBA submitted frequently questions to the Commission.
• In the case of the Joint Committee, only the QA on the SFDR refers to a Commission Decision (see for example ESMA’s website). Some answers e.g. on EMIR QA have been provided by the Commission, but these are embedded in the consolidated QA document compiling all QAs on EMIR.

Clearly, the large majority of answers provided by the Commission, when forwarded by the ESAs, are not answered with a Decision.

Answers published by the ESAs carry a disclaimer: the Court of Justice of the European Union has the last word concerning authoritative interpretation of Union law. This is true for all replies, whether provided by the ESA or the Commission.

Lieve Lowet