Tabular has now been extended to meet the XBRL filing requirements for FICOD.
FICOD sets out a prudential regime for financial conglomerates. Large financial groups that operate in the insurance sector and banking sectors fall within the scope of FICOD.
As of 31 December 2023, the first application date for reporting, insurance companies who are part of a financial conglomerate will need meet the requirements for regulatory reporting under this directive.
FICOD DPM and XBRL taxonomy package release 2.8.1 is available to download from the EIOPA website.
The 2.8.1 release for FICOD is a standalone cross-sectoral version to be used for reporting of insurance-led conglomerates. Final version published on 31 July 2023, with a Hotfix on 6 November 2023. First reporting due in 2024.
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More Details & Background of FICOD
The Financial Conglomerates Directive (FICOD) is a piece of European Union legislation designed to ensure effective supervision of financial conglomerates. These conglomerates are large, complex groups that operate across different sectors of the financial system, typically including both insurance and banking activities. FICOD was first adopted in 2002 and later revised through Directive 2011/89/EU, known as FICOD II, in response to shortcomings revealed during the 2008 financial crisis.
The main purpose of FICOD is to provide an additional layer of regulatory oversight at the level of the financial conglomerate. While individual financial entities within a group may already be subject to sector-specific supervision (such as Solvency II for insurers or CRD for banks), FICOD ensures that the group as a whole is supervised in a coherent and integrated manner. This is critical because risks and capital can be transferred across sectors and jurisdictions within conglomerates, potentially obscuring vulnerabilities at the consolidated level.
FICOD establishes the concept of supplementary supervision. This involves a set of prudential requirements that apply at the conglomerate level in addition to existing sectoral regulations. Key aspects of this supplementary supervision include group-wide solvency assessments, risk concentration analysis, intra-group transaction monitoring, and robust governance and internal control systems. The goal is to detect and mitigate systemic risks that may arise from the conglomerate’s overall structure, operations, and interdependencies.
One of the central regulatory tools under FICOD is the capital adequacy test, which ensures that a financial conglomerate holds sufficient capital to meet its obligations across all business lines. This is assessed using a method that aggregates sectoral capital requirements, adjusted for intra-group participations, double gearing, and other cross-holdings. The test aims to prevent capital from being counted multiple times within a group and to ensure that capital buffers are truly available at the group level in times of stress.
FICOD also emphasizes the importance of sound governance arrangements. Conglomerates are expected to maintain effective risk management frameworks, internal controls, and reporting systems that enable group-wide oversight. The directive encourages transparency across entities and sectors and mandates coordination between different supervisory authorities responsible for banking, insurance, and investment activities.
Following the financial crisis, FICOD II was introduced to address weaknesses in the original directive. It clarified the definitions of a financial conglomerate, strengthened supervisory cooperation, and enhanced the role of the coordinator, the lead supervisory authority responsible for coordinating the supplementary supervision process. FICOD II also allowed for better alignment with the Capital Requirements Directive (CRD) and the Solvency II Directive, fostering greater regulatory consistency across sectors.
In the years since its adoption, FICOD has continued to evolve. The European Supervisory Authorities (EBA, EIOPA, and ESMA) have published joint guidelines and technical standards to support its implementation, particularly on issues such as risk concentration reporting, internal governance, and the scope of application. FICOD has also informed discussions on systemic risk oversight and macroprudential policy, given the potential role of large financial conglomerates in amplifying financial shocks.
In summary, the FICOD regulation plays a crucial role in safeguarding the stability and integrity of the EU financial system by ensuring that risks within complex financial groups are identified, measured, and managed on a consolidated basis. It complements sectoral regulations and promotes coordinated supervision, helping regulators maintain a comprehensive view of financial soundness across interconnected institutions. While not a front-line regulation like Solvency II or CRR/CRD, FICOD provides essential structural oversight where sectoral boundaries alone are insufficient.