Executive summary

AuthorBrito Bastos, Filipe; Zeitlin, Jonathan
SSM and the SRB accountabil ity at European leve l: room f or improvem ents?
PE 64 5.747 9
In this paper, we were asked (a ) to assess whether t he curre nt accoun tability regime an d scrut iny
instruments (ranging from hearings to judicial review) are effective in counterbalancing the powers
given to the SRM and the SRB; and (b) to make proposals of additional scrutiny instruments or
procedures for improvement to increas e accountability a t European level, while respecting the
institutions’ independence and within the current legal framework.
In responding to these questions, the paper begins by distinguishing between two contrasting models
of acco untabilit y. Th e firs t mo del, bas ed on pr incipal-agent relations, is backward-looking, focused on
whether an agent has used its discretion in ways authorised and intended by the principal. Its
effectiveness depen ds on the principal’s capacity t o define goals clearly en ough ex ante to provide
author itative guidance to the agent, as well as to assess a nd where necessary s anction the latter’s
actions in pursuing those goals ex post. The second model is dynamic and forward-loo king , based on
asking actors to explain how they have used the discretion granted to them within a given legal
framework to advance the goals for which the institution in question was established, subject to review
by peers k nowledgeable enough to challenge such explanations, as well as to explain what revisions
they have made to their internal policies and practices in respo nse to problems r evealed by such
reviews. We argue that this second model of dynamic accountability is more appropriate for
independent bodies like the ECB/SSM and the SRB, ope rat ing in t echnica lly com plex, ra pidly evolv ing
environments under conditions of high uncertainty, where parliaments and other political authorities
hav e very limited san ctionin g powe rs.
The paper th en goes on t o review t he natur e and effectiveness o f thre e ma in fo rm s or mec han isms of
accou ntab ility as applie d to t he SSM a nd SRM: ( 1) adm inistrativ e account ability, focusing on the r ole of
internal boa rds of rev iew or appeal panels, and the r ight to be heard of pa rties affected by decisions of
the SSM and the S RB; ( 2) judicial a ccoun tabilit y, fo cusing on the r ole o f cour ts in rev iewing d ecisions of
thes e ins titut ions; a nd (3) polit ical acco unta bility, fo cusing o n the r eporting and in formation-p rov ision
duties of the SSM and the SRB, a nd the role of the European Parliament and the Council, along with
nat ional p arliam ents, in scru tinizin g and inter rog ating th e work of t hese in stit utio ns. It als o exam ines
the contribution of external review bodies, notably the European Court of Auditors and the European
Ombudsman, to the accountability of the SSM and th e SRB at Eu ropean level.
The paper’s assessment of legal accountability within the Banking Union is largely positive. Both the
ECB and th e SRB are judicially accountable to t he EU Courts, which have been faced with i nc re asing
litiga tion. There is no w a growing bo dy of case la w that fa cilitates th e judicial r eview o f decision-m aking
processes in the SSM and SRM, and which shed light on previously disputed questions of division of
judicial competences b etween national and Un ion co urts. Be sides judic ial accou ntability, b oth the ECB
and t he SR B ar e subject to admin istrative acco untability before t he Adminis trative B oard of Re view and
the Appeal Panel respectively. Both bodies perform a quas i-judicial f unction a nd offer an addit ional
remedy, bes ides EU courts, to credit institutions affected by supervisory or resolution measures. Lastly,
the legal framework of the SSM and SRM also provides for some protection of procedural rights of credit
inst itution s and affect ed individuals, such as the right to be hea rd before a supervisory or resolution-
related decision regar ding them is taken and the right to receive a statem ent of r easons for that
decision. Neverth eless, we arg ue that there a re significant accountability issu es in the SSM and SRB
which appear unlikely t o be resolved without legislative reform. Those issues concern, for example, the
exact remit of the ECB’s mandate to apply national law, the dubious mandate of the ABoR to review
ECB decisions taken in applying national law, and t he lack o f clear indica tions in the SRM’s legal
framework as to how the SR B should observe the right to be heard, e.g. of credit institutions concerned
by de cisions on ex ante contributions to the SRF.

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