With respect to the conglomerates directive, we understand that the impetus for the directive came from the Joint Forum’s principles for the supervision of financial conglomerates.
The three parent bodies of the Joint Forum (the Basel Committee, IOSCO and the IAIS) were concerned that, although individual financial companies within a group might be subject to prudential supervision, the consolidated financial group might not be subject to appropriate oversight. This in turn could lead to relationships or transactions that could pose financial risk to the regulated parts of the group.