Following the Great Financial Crisis, many supervisors have been tasked with a multitude of new objectives layered atop the core safety and soundness (S&S) mandate, which is difficult to define. Some of these new remits are broad and driven by governmental priorities, clouding the demarcation between prudential and political spheres.
As supervisory remits multiply and converge with political interests, the potential for conflicts between S&S and other mandates grow. Actions taken by supervisors to fulfil their expanded role affect broader segments of society. This calls for a robust accountability regime to assess supervisors' performance. In practice, such mechanisms are difficult to implement due to challenges in prioritising, defining, measuring, and overseeing multiple supervisory mandates.
Legislative bodies can strengthen the accountability of supervisors by prioritising the S&S mandate and setting clear objectives that supervisors can report on. The establishment of independent oversight bodies to assess supervisors' performance can further enhance accountability.
Banking authorities can also foster accountability by publishing statements on their interpretation of S&S and other remits and how they plan to fulfil them. Self-assessments – backed by a range of well designed metrics that consider outcomes – can help stakeholders better evaluate how they deliver the S&S and other remits.
Robust accountability regimes need to be balanced with mechanisms to shield supervisors' from undue political or industry interference and to preserve their operational independence.