16 October 2018

ECB publishes guide to on-site inspections and internal model investigations

On 21 September 2018, the European Central bank (ECB) published a guide to on-site inspections and internal model investigations (referred to together as “inspections”). The guide provides an overview of the inspection process, from the initial decision to launch an on-site inspection, to the follow up stage. It further sets out the principles and practices which should be followed by both inspected entities and inspection teams. Legal entities subject to inspections should take note of the guide and review their internal policies or procedures.

The guide aims to be a reference point for legal entities which could be subject to inspections. It gives a general overview of the legal and supervisory framework for inspections (chapter 1), describes the inspection process (chapter 2) and sets out the applicable principles for inspections (chapter 3).

The ECB consulted a draft of the guide over a year ago, in the summer of 2017. A separate feedback statement has been published together with the final guide. The feedback statement summarises the responses to the public consultation on the draft guide and explains any amendments made in response to those comments; for example, the flagged issue of external consultants’ compliance with the ECB’s strict professional secrecy requirements and their access to confidential data (see paragraph 3.4 of the feedback statement and page 21 (Professional secrecy) of the finalised guide).

The guide applies to ECB inspections of significant institutions, less significant institutions (in cases where the ECB decides to exercise its right to take on the direct supervision of such institutions) and other legal entities referred to in the Single Supervisory Mechanism Regulation. This includes third parties to whom these entities have outsourced functions or activities.

Click here for the press release, here for the guide, here for the feedback statement and here for the consultation documents (including these FAQs).