11.2.2003 Official Journal of the European Union L 35/1 (Acts whose publication is obligatory) DIRECTIVE 2002/87/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49[EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Article 47(2) thereof, Having regard to the proposal from the Commission (1), Having regard to the opinion of the Economic and Social Committee (%), After consulting the Committee of the Regions, Having regard to the opinion of the European Central Bank (%), Acting in accordance with the procedure laid down in Article 251 of the Treaty (), Whereas: (1)  The current Community legislation provides for a comprehensive set of rules on the prudential supervision of credit institutions, insurance undertakings and investment firms on a stand alone basis and credit institutions, insurance undertakings and investment firms  which are part of respectively a banking/investment firm group or an insurance group, i.e. groups with homogeneous financial activities. (2)  New developments in financial markets have led to the creation of financial groups which provide services and products in different sectors of the financial markets, () O C 213 E, 31.7.2001, p. 227. () O] C 36, 8.2.2002, p. 1. () 0] C 271, 26.9.2001, p. 10. (% Opinion of the European Parliament of 14 March 2002 (not yet published in the Official Journal), Council Common Position of 12 September 2002 (O] C 253 E, 22.10.2002, p. 1) and Decision of the European Parliament of 20 November 2002 (not yet published in the Official Journal). called financial conglomerates. Until now, there has been no form of prudential supervision on a group-wide basis of credit institutions, insurance undertakings and investment firms which are part of such a conglomerate, in particular as regards the solvency position and risk concentration at the level of the conglomerate, the intra-group transactions, the internal risk management processes at conglomerate level, and the fit and proper character of the management. Some of these conglomerates are among the biggest financial groups which are active in the financial markets and provide services on a global basis. If such conglomerates, and in particular credit institutions, insurance undertakings and investment firms which are part of such a conglomerate, were to face financial difficulties, these could seriously destabilise the financial system and affect individual depositors, insurance policy holders and investors. The Commission Action Plan for Financial Services identifies a series of actions which are needed to complete the Single Market in Financial Services, and announces the development of supplementary prudential legislation for financial conglomerates which will address loopholes in the present sectoral legislation and additional prudential risks to ensure sound supervisory arrangements with regard to financial groups with cross-sectoral financial activities. Such an ambitious objective can only be attained in stages. The establishment of the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate is one such stage. Other international forums have also identified the need for the development of appropriate supervisory concepts with regard to financial conglomerates. In order to be effective, the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate should be applied to all such conglomerates, the cross-sectoral financial activities of which are significant, which is the case when certain thresholds are reached, no matter how they are structured. Supplementary supervision should cover all financial activities identified by the sectoral financial legislation and all entities principally