FAQs on the draft ECB Regulation on infringement procedures in cases of non-compliance with statistical reporting requirements and repealing Decision ECB/2010/10
Q1. Why is this Regulation on non-compliance with statistical reporting necessary?
The Regulation is necessary to ensure a uniform approach when monitoring compliance with statistical reporting requirements and assessing alleged infringements procedures to ensure transparency and equal treatment of reporting agents. All procedural provisions concerning the initiation of an infringement procedure and the imposition of a sanction in the area of statistics must be clearly defined in order to ensure due process and protect the rights of the reporting agents concerned.
The ECB considers the choice of a regulation to be justified and it requires a public consultation.
Q2. What is the purpose of the non-compliance procedure?
This proposed Regulation belongs to a wider legal framework that aims to ensure that the European System of Central Banks (ESCB) has high-quality statistics available to support its tasks. The ESCB attaches great importance to the quality of its statistics and is committed to good governance in their collection.
This importance was underlined in the Treaty on the Functioning of the European Union (TFEU), which mandated the Council of the European Union to define “the natural and legal persons subject to reporting requirements, […] and the appropriate provisions for enforcement”.
Enforcement provisions are an important cornerstone of the ECB’s power to collect statistical information to support the ESCB’s tasks and objectives.
Q3. Which other legal acts are relevant to and complement this framework?
The legal framework for addressing non-compliance with statistical reporting requirements and imposing sanctions consists of the following legal acts and provisions.
- Articles 5 and 34(3) of the Statute of the ESCB and Article 299 TFEU
- Council Regulation (EC) No 2533/98 of 23 November 1998 concerning the collection of statistical information by the European Central Bank (Council Regulation 2533/98 on statistics), in particular Article 7
- Council Regulation (EC) No 2532/98 of 23 November 1998 concerning the powers of the European Central Bank to impose sanctions (Council Regulation No 2532/98 on sanctions)
- ECB Regulation (EC) No 2157/1999 of 23 September 1999 on the powers of the European Central Bank to impose sanctions (ECB/1999/4) (Regulation ECB/1999/4)
- Decision of the European Central Bank of 19 August 2010 on non-compliance with statistical reporting requirements (ECB/2010/10) (Decision ECB/2010/10)
The adoption of this Regulation is needed to further harmonise infringement procedures for statistical reporting requirements and to ensure transparency, which is key given its clear impact on the rights and obligations of reporting agents. The Regulation is in line with the provisions and procedural rules of the aforementioned legal acts and will lead to the repeal of the Decision of the European Central Bank on non-compliance with statistical reporting requirements (ECB/2010/10).
It will be complemented by an ECB Decision on the sanction calculation methodology, which will be adopted at the same time as this Regulation. The ECB Decision is not part of this public consultation.
Q4. What is the scope of this Regulation?
The Regulation applies to all reporting agents that have a legal obligation to meet the ECB’s statistical reporting requirements. The reporting requirements embedded in the statistical regulations adopted by the ECB entail a need to monitor compliance with minimum quality standards, including standards for transmission, accuracy, conceptual compliance and integrity as defined in the Annex to each ECB Regulation imposing statistical reporting obligations. At the same time, reporting agents remain encouraged to report revisions in accordance with relevant policies to improve overall data quality.
Q5. How are responsibilities divided between Eurosystem central banks?
In principle, the institution responsible for taking the lead in the sanctioning procedure is the competent Eurosystem central bank to which reporting agents report directly. This means the relevant national central bank (NCB) when reporting is done via an NCB, or the ECB when reporting agents report directly to it.
However, this is without prejudice to Article 3 of Council Regulation (EC) No 2532/98 on sanctions, which provides that the ECB shall initiate an infringement procedure, acting on its own initiative or on the basis of a motion addressed to it to that effect by the national central bank of the Member State in whose jurisdiction the alleged infringement has occurred. Moreover, sanctions are ultimately imposed by the ECB.
Q6. Why do competent Eurosystem central banks engage in cooperation arrangements with other competent authorities?
The Regulation makes reference to local cooperation arrangements with other competent authorities, as a number of ECB Regulations allow NCBs to derive the necessary statistical information from other EU or national sources in line with Article 5.1 of the Statute. Articles 3 and 3a of Council Regulation (EC) No 2533/98 outline the modalities for the definition of statistical reporting requirements and the statistical principles underlying European statistics produced by the ESCB, which provide for the need to use existing statistics whenever possible and the need to minimise the reporting burden. These are also supported by Principles 8 and 9 of the Public commitment on ESCB statistics.
The draft Regulation therefore requires the competent Eurosystem central bank to liaise with said competent authority to do the following things.
- Obtain the relevant information necessary for effective compliance monitoring of the reporting agent.
- Report when a remedial plan has entered into force, as well as the outcome.
- Ensure that no more than one infringement procedure is initiated against the same reporting agent based on the same facts. For this purpose, no decision on whether to initiate an infringement procedure should be taken by the ECB or by the competent NCB until they have informed and consulted with one another.
Q7. What are the main procedural steps taken before initiating an infringement procedure?
The main steps involve the monitoring of compliance, the sharing of reports of alleged infringements between the ECB and competent NCBs, the notification to the reporting agent and, where relevant, the adoption of a remedial plan.
In terms of monitoring, the competent Eurosystem central bank shall record each alleged infringement separately in its own dedicated system. Cases in which the reporting agent claims that the alleged infringement is due to circumstances beyond the reporting agent’s control should also be recorded.
The competent Eurosystem central bank shall report to the ECB cases of alleged infringement and serious misconduct as specified in the draft Regulation. The reverse reporting process shall apply in the case of direct reporting to the ECB, with the ECB informing the relevant NCB.
Before initiating an infringement procedure, the competent Eurosystem central bank shall notify the reporting agent about the nature of the alleged cumulative infringement, the possibility of a sanction if said infringement is not corrected and, where applicable, that a remedial plan may be agreed between the competent Eurosystem central bank and the reporting agent. It shall also separately notify the reporting agent when serious misconduct is observed. Notification shall not prevent the inclusion of additional alleged infringements, identified after the notification, in the procedure.
See the question below about remedial plans.
Q8. Why has the remedial plan been introduced?
The possibility for competent Eurosystem central banks to enter into remedial plans with the reporting agents concerned will enable them to resolve issues to their satisfaction and could remove the need to initiate an infringement procedure.
Such remedial plans need to be organised and executed in an efficient and timely manner, and only when the relevant competent Eurosystem central bank considers that there is a realistic possibility that the alleged infringement will be remedied.
The decision to enter into remedial plans is left to the discretion of the competent Eurosystem central banks and is not a mandatory step in the framework, nor is it envisaged in cases of serious misconduct and/or cumulative alleged infringement of any of the minimum standards laid down in Annex IV to Regulation (EU) No 1333/2014 of the European Central Bank. Moreover, remedial plans can only be entered into in agreement with the reporting agent.
Q9. How can a level playing field be ensured for all reporting agents?
Decentralised recording of alleged infringements is an efficient and transparent process for the recording of alleged infringements. The Regulation, however, requires that alleged infringements be recorded in the system maintained by the ECB. This provides the ECB with an overview of compliance by reporting agents across statistical domains and ensures a level playing field for all reporting agents.
Q10. When is an infringement procedure initiated?
An initiation of an infringement procedure is mandatory:
- When a cumulative alleged infringement has occurred and, if there is a remedial plan, if the reporting agent does not comply with it;
- In cases of serious misconduct.
The Regulation sets the minimum threshold of non-compliance cases after which a competent central bank must initiate an infringement procedure. Eurosystem central banks also have the option to initiate an infringement procedure even if the alleged infringement was not recorded according to Articles 3 or 5.
Q11. In what cases can an exception be made to initiating an infringement procedure?
An exception may be made to the requirement to initiate an infringement procedure if (a) one or more cases of non-compliance are beyond the reporting agent’s control or (b) in certain cases where another infringement procedure has been initiated or a sanction has been imposed.
The Regulation specifies cases that can be used to assess what qualifies as being “beyond the reporting agent’s control”. This is necessary to ensure that the Eurosystem central bank objectively assesses the existence of such grounds. In particular, delayed transmission caused by IT system upgrades or changes and related testing is not considered to be “beyond the reporting agent’s control”.
Q12. What are the time limits for initiating an infringement procedure?
Article 4 of Council Regulation (EC) No 2532/98 on sanctions specifies that the competent Eurosystem central bank has one year after the existence of the alleged infringement first becomes known to initiate an infringement procedure.
This is the reason why the draft Regulation requires the competent Eurosystem central bank to ensure transparency and incentivise reporting agents to cooperate in a timely manner.
Q13. What are the criteria underlying the methodology used to calculate the sanctions?
The draft Regulation sets out the criteria used to define the amount of the sanction. These are guided by the principle of proportionality in line with Article 2(3) of Council Regulation (EC) No 2532/98 on sanctions. A separate ECB Decision on the sanction calculation methodology, which will be adopted at the same as this Regulation, will set out further details on the methodology used to calculate the sanctions.
Q14. Are there transitional provisions?
Reflecting the current practice, the draft Regulation provides a transitional period of 12 months (also known as the “grace period”) regarding the articles on the initiation procedure and calculation of the sanctions in certain circumstances, except in cases of serious misconduct.
Q15. What are the benefits of this Regulation for reporting agents?
Transparent information on the procedural aspects related to the non-compliance procedure and on the authorities involved is crucial for the reporting agents to better understand the procedure and their rights and obligations.
Q16. Who is involved in drafting the Regulation?
The Regulation has been drafted carefully and transparently, taking into account the opinions of the competent Eurosystem central banks, and will consider all relevant comments made in the open public consultation. Once finalised it will be adopted by the ECB’s Governing Council.
Q17. When will this new Regulation enter into force?
The new Regulation will enter into force on the 20th day after its publication in the Official Journal of the European Union. The Regulation will be binding in its entirety and directly applicable to the Member States in accordance with the Treaties.
- Treaty on the functioning of the European union
- Council Regulation (EC) No 2533/98
- Council Regulation (EC) No 2532/98
- European Central Bank regulation (EC) No 2157/1999
- Decision of the European Central Bank (ECB/2010/10)
- E.g. the Regulation on statistical reporting on insurance corporations imposes statistical reporting requirements that can be derived from supervisory requirements. To avoid the duplication of reporting requirements, the reporting agent reports data to the national competent authority (NCA) for supervisory purposes and the NCA then transmits the derived statistical requirements to the ECB via the NCB.
- Principle 8 Appropriate statistical procedures and Principle 9 Minimisation of the reporting burden.
- Governance and quality framework
- Regulation (EC) 1333/2014 concerning statistics on the money markets