Gustaf Sjöberg

Project summary

Financial supervision in light of the European Convention on Human Rights

Regulatory supervision and the measures that authorities can take against those they supervise have become increasingly important in society. Supervision of the financial sector has a particularly significant role, both in Sweden and internationally. Following the financial crisis, supervisory authorities around the world have been given greater powers and stronger tools to intervene against both financial institutions and individuals. An EU directive introducing major changes in this area is currently being implemented in Sweden.

 

The extensive powers of financial supervisory authorities, combined with the often relatively broad mandates on which these powers are based, can create tensions with the safeguards for legal certainty provided by the European Convention on Human Rights.

 

One trend in banking regulation is towards more qualitative supervision, giving supervisory authorities greater discretion in their assessments. This reflects the complexity of banking activities and the difficulty of assessing both the financial strength of banks and the risks they take.

 

However, supervision based on qualitative assessments can be difficult to reconcile with the requirements of the Convention. At the same time, restricting authorities’ ability to make flexible and discretionary assessments, and requiring them instead to rely primarily on quantitative measures, may make financial supervision less effective.

 

The project examines this tension between effective financial supervision – particularly supervision based on qualitative assessments – and the requirements of the European Convention on Human Rights concerning due process and predictability.