In a public debate, financial supervision is occasionally presented as a ‘brake’ or a barrier to the development of the financial market. Such a statement is based on a somehow intuitively justified view that regulations often increase the cost of functioning of supervised entities, while its implementation requires time and limits willingness to take risk. However, the experience of the last two decades shows that the key question should not be ‘Should we regulate/supervise?’ but ‘How to do that?’. 

The European Union is witnessing the continued macrotrend of regulatory simplification, including in relation to regulations on sustainability, in the face of efforts to increase the competitiveness of the EU economy. Notwithstanding the amendments to regulations in this regard, in particular through the Omnibus I package, regulations such as Corporate Sustainability Reporting Directive (CSRD), Taxonomy Regulation or EBA Guidelines on the management of environmental, social and governance (ESG) risks (EBA/GL/2025/01) still force banks to work with enormous sets of data from various dispersed sources and to process such data under pressure. For this reason, using solutions based on AI systems in banks’ sustainability reporting and, more widely, in ESG risk management, may bring substantial benefits.

When proposing amendments to Recommendation WFD, the UKNF has not changed its supervisory perspective or overarching assumption. The purpose of Recommendation WFD remains to mitigate the risk associated with the structure of mortgage loan funding. The risk is mitigated by increasing the share of long-term funding in the banks’ equity and liabilities in relation to the value of mortgage loans granted. The amendments proposed by the supervisory authority have not lowered supervisory expectations, but they stem from a modified WFD calculation method.