Supervisory judgement is a second key feature of the SSM SREP. There will always be institutions with idiosyncrasies which cannot be captured by automated algorithms. That is why the SSM SREP should not (and cannot) be a “push-the-button” method. Rather, we are fully aware of and account for the fact that all standardised rating methodologies are, by their very nature, limited.
The Good Practices are intended to be used primarily as a diagnostic tool to answer the question, “How does a country’s legal and regulatory framework for financial consumer protection compare to international practice?” Our own recent financial turmoil arising from the failure of CLICO, CLICO Investment Bank and the Hindu Credit Union suggests that financial consumer protection, financial literacy and financial education are key priorities for regulators.