In a press release dated 15 January 2024, the Autorité de Contrôle Prudentiel et de Résolution (“ACPR”) the French supervisor for the banking and insurance sectors, has presented its work programme for 2024.
In particular, this programme is based on the French financial system risk mapping carried out by the ACPR and the Banque de France (the French National Bank to which the ACPR is operationally attached). It involves four major work areas defined and adopted by the Supervisory Board and three priorities defined and adopted by the Resolution Board.
This programme includes the ambition to strengthen the resilience of banks and insurance companies and shares the priorities already set out by some European institutions.
Here is a brief summary of each point:
Concerning the Supervisory Board work areas:
- Maintaining and strengthening the security and soundness of the banking and insurance sectors faced with macroeconomic, financial and geopolitical risks.
The ACPR focuses on banks’ asset/liability management, considering the risks related to interests’ rate levels and fluctuations, inflationary pressures and the volatility of property and financial asset prices. For the insurance sector, ACPR's priority is to ensure that savers are rewarded, while paying close attention to the gradual redistribution of the profit-sharing reserve built up in recent years.
In view of the fall in the value of certain real estate assets, the ACPR will be vigilant about the risk of policyholders surrendering units in life assurance contracts whose underlying assets are invested in real estate funds.
Lastly, the ACPR will be paying close attention to the insurance sectors that are most exposed to the economic climate, such as credit insurance, health and provident insurance.
- Address structural vulnerabilities and be proactive in identifying, preventing and monitoring new and developing risks.
For 2024, the ACPR confirms its commitment to climate change by continuing its efforts to develop transition plans and incorporate them into prudential regulations.
The ACPR also confirms that it will continue the regulatory work underway at international level (i.e. the revision of the Solvency II Directive and the Directive on the recovery and resolution of insurance and reinsurance undertakings), as well as continuing to monitor the risks associated with new technologies (cyber risks and risks linked to the protection of information systems).
- Identify and address misconduct risks and maintain high-quality AML-CFT mechanisms.
The ACPR has announced the deployment of new monitoring tools to support the development of AML-CFT measures (e.g. a campaign to monitor digital asset service providers (DASP), work on automated transaction monitoring systems, etc.).
The ACPR will also work on the new European AML-CFT regulations in cooperation with the other European supervisors, as part of the creation of the forthcoming Anti-Money Laundering Authority (AMLA).
- Furthering the modernisation of the ACPR and increasing its efficiency, contributing to the strategic plan of the Banque de France.
The ACPR will pursue its ambition to make its supervision more effective in particular by modernising its supervisory tools.
Regarding the main priorities adopted by the Resolution Board:
- Taking an active role in the 2028 strategic plan of the Single Resolution Board (SRB ).
The ACPR will contribute to the SRB's 2024 priorities, and to the implementation of the 2028 strategy to be announced on 13 February. As part of the implementation of this strategy, the ACPR will participate in the development and reinforcement of resolvability analysis tools, including deep dive analyses, dry runs and on-site inspections.
- Enhancing expertise in insurance resolution.
As part of its remit in insurance resolution, the ACPR will conduct horizontal analyses of the preventive recovery plans submitted by insurance groups, on the sections relating to critical functions, their severability and their various interconnections, in order to identify best practices that can be shared with insurance groups.
The ACPR has also announced that it will continue to develop its methods for implementing resolution tools.
This comes under the framework of the resolution procedure introduced in France by Order 2017-1608 of 27 November 2017. It created a comprehensive and innovative regime by providing the ACPR with a wide variety of tools to prevent insurers’ failure.
- A continued influence strategy.
Lastly, the ACPR announced that it is stepping up its analysis and interaction with banks, by providing comparative reports on their degree of preparedness for resolution.
For the insurance sector, the ACPR will play an active role in international work and will develop bilateral exchanges with the authorities involved to share experiences in resolution.
