DELEGATED RULEMAKING IN BANKING REGULATION IN SPAIN

Detailed Legal Study with Spanish and European Union Laws, Judicial Case Laws, Constitutional Principles, Regulatory Framework, Critical Analysis, Conclusion and References

1. INTRODUCTION

Delegated rulemaking is an important feature of modern banking regulation in Spain. It refers to the exercise of regulatory powers by administrative authorities, central banks, supervisory institutions, and other authorized bodies pursuant to powers granted by legislation.

The banking sector is technically complex and requires continuous regulatory adaptation. Legislatures cannot practically prescribe every operational, prudential, supervisory, and compliance requirement in primary legislation. Consequently, legislative frameworks authorize specialized institutions to adopt detailed regulatory measures.

In Spain, delegated banking rulemaking operates within a multilayered legal structure comprising:

The Spanish Constitution of 1978.

Spanish parliamentary legislation.

Royal Decrees and ministerial regulations.

Circulars and other regulatory instruments issued by Banco de España.

European Union regulations and directives.

European Banking Authority technical standards and guidelines.

European Central Bank supervisory regulations and decisions.

Judicial review by Spanish courts and the Court of Justice of the European Union.

Delegated rulemaking is especially important in relation to capital adequacy, liquidity management, credit-risk assessment, banking supervision, corporate governance, consumer protection, financial stability, and anti-money-laundering compliance.

However, delegated powers are not unlimited. Regulatory authorities must act within their statutory mandates, respect constitutional principles, comply with European Union law, and remain subject to judicial scrutiny.

The central legal issue is how Spain can maintain technically effective banking regulation while ensuring democratic legitimacy, legal certainty, proportionality, accountability, and judicial control over delegated regulatory authority.

2. MEANING AND NATURE OF DELEGATED RULEMAKING

Delegated rulemaking refers to the creation of generally applicable legal norms by an institution other than the primary legislature, pursuant to a legally recognized delegation or conferral of regulatory authority.

In Spanish administrative law, the concept is closely associated with potestad reglamentaria, meaning regulatory or rulemaking power.

It must be distinguished from delegación legislativa, which concerns the delegation of legislative authority to the Government under specific constitutional provisions.

The principal forms include:

2.1 Executive Rulemaking

The Spanish Government adopts subordinate regulations, including Royal Decrees, within its constitutional and statutory authority.

2.2 Ministerial Rulemaking

Competent ministers may issue ministerial orders where authorized by the applicable legal framework.

2.3 Independent or Specialized Regulatory Rulemaking

Specialized authorities, including Banco de España, may issue binding regulatory instruments within their legally conferred powers.

2.4 European Union Delegated Acts

Under Article 290 of the Treaty on the Functioning of the European Union, the European Commission may adopt delegated acts supplementing or amending certain non-essential elements of legislative acts.

2.5 European Union Implementing Acts

Under Article 291 TFEU, implementing powers may be conferred where uniform conditions for implementing legally binding Union acts are needed.

2.6 Supervisory Guidelines

Supervisory institutions may publish guidelines, recommendations, opinions, and other instruments that influence regulatory compliance.

Such instruments must be distinguished from binding legislation because their legal effect varies.

3. CONSTITUTIONAL FOUNDATION IN SPAIN

3.1 Article 9.3 of the Spanish Constitution

Article 9.3 guarantees important constitutional principles, including:

Legality.

Hierarchy of norms.

Publicity of legal provisions.

Legal certainty.

Responsibility of public authorities.

Prohibition of arbitrariness by public authorities.

These principles establish fundamental limitations on delegated rulemaking.

A banking regulation cannot validly contradict superior legal norms or exceed the authority granted by legislation.

3.2 Article 97 — Regulatory Power of the Government

Article 97 provides that the Government exercises executive functions and regulatory power in accordance with the Constitution and the laws.

This provision is a central constitutional basis for governmental rulemaking.

It does not mean that every independent supervisory authority possesses unrestricted regulatory power.

The powers of specialized regulators must be established by applicable legislation.

3.3 Articles 82–85 — Legislative Delegation

Articles 82–85 govern the delegation of legislative power by the Cortes Generales to the Government.

Delegated legislation adopted through this mechanism may take the form of a Legislative Royal Decree (Real Decreto Legislativo).

This constitutional mechanism differs from ordinary administrative rulemaking through Royal Decrees, ministerial orders, or Banco de España circulars.

3.4 Article 103 — Principles of Public Administration

Article 103 requires public administration to serve the general interest objectively and act according to principles including effectiveness, hierarchy, decentralization, coordination, and full submission to law.

These principles are relevant to banking supervisory authorities when exercising public administrative functions.

3.5 Article 106 — Judicial Control

Article 106 establishes judicial control over regulatory power and the legality of administrative action.

This provision is fundamental to challenges against unlawful delegated banking regulations.

3.6 Article 149.1.11 — State Competence

Article 149.1.11 reserves to the Spanish State competence over the monetary system and the bases of credit, banking, and insurance regulation.

This constitutional allocation supports national banking legislation and must be interpreted in the context of Spain's participation in the European Union.

4. PRINCIPAL SPANISH LAWS GOVERNING BANKING RULEMAKING

4.1 Law 10/2014 on the Organization, Supervision and Solvency of Credit Institutions

Ley 10/2014, de 26 de junio, de ordenación, supervisión y solvencia de entidades de crédito

This is a principal Spanish statute governing the organization, supervision, and solvency of credit institutions.

It provides a legal framework concerning:

Authorization and supervision of credit institutions.

Prudential requirements.

Governance arrangements.

Supervisory powers.

Regulatory compliance.

Administrative sanctions.

Coordination with European supervisory arrangements.

The statute is especially important because it establishes the legislative foundation for detailed implementing measures.

Its provisions must be read alongside directly applicable EU regulations and subsequent amendments.

4.2 Royal Decree 84/2015

Real Decreto 84/2015, de 13 de febrero

Royal Decree 84/2015 develops Law 10/2014.

It provides more detailed rules concerning the legal regime applicable to credit institutions.

The Royal Decree illustrates how primary banking legislation is supplemented by executive regulation.

It cannot lawfully override the statute under which it operates.

4.3 Law 13/1994 on the Autonomy of Banco de España

Ley 13/1994, de 1 de junio, de Autonomía del Banco de España

Law 13/1994 establishes the institutional framework for Banco de España.

It addresses the bank's functions, autonomy, and regulatory powers.

Banco de España may issue circulars within the scope of powers legally conferred upon it.

The distinction between technical regulatory authority and general legislative power is essential.

4.4 Law 39/2015 on Common Administrative Procedure

Ley 39/2015, de 1 de octubre, del Procedimiento Administrativo Común de las Administraciones Públicas

Law 39/2015 establishes general principles and procedures relevant to administrative action and regulatory development.

Important provisions include:

Article 128 — Regulatory Power

Addresses the exercise of regulatory power within the applicable constitutional and statutory framework.

Article 129 — Principles of Good Regulation

Sets out principles such as necessity, effectiveness, proportionality, legal certainty, transparency, and efficiency.

Article 130 — Regulatory Evaluation

Concerns review and evaluation of regulatory frameworks.

Article 133 — Public Participation

Addresses participation in the development of laws and regulations, subject to applicable exceptions and constitutional interpretation.

These principles are important in assessing the legality and quality of delegated banking regulations.

4.5 Law 40/2015 on the Legal Regime of the Public Sector

Ley 40/2015, de 1 de octubre, de Régimen Jurídico del Sector Público

Law 40/2015 governs important aspects of public-sector organization, administrative competence, and institutional functioning.

It provides general administrative-law context for regulatory authorities.

4.6 Law 29/1998 on Contentious-Administrative Jurisdiction

Ley 29/1998, de 13 de julio, reguladora de la Jurisdicción Contencioso-Administrativa

This statute governs judicial review of administrative action and subordinate regulations.

Article 25 is particularly relevant to the scope of contentious-administrative review.

Articles 26 and 27 address important aspects of challenges concerning general administrative provisions.

Courts may review the legality of subordinate regulations and, where appropriate, declare them invalid.

4.7 Law 19/2013 on Transparency

Ley 19/2013, de transparencia, acceso a la información pública y buen gobierno

This statute provides a general framework concerning transparency, access to public information, and good governance.

Its application to particular banking supervisory information is subject to relevant confidentiality and statutory exceptions.

5. ROLE OF BANCO DE ESPAÑA

Banco de España is Spain's national central bank and an important banking supervisory institution.

Its responsibilities must be understood within the European System of Central Banks and the Single Supervisory Mechanism.

Banco de España exercises functions involving:

Financial stability.

Banking supervision within the applicable allocation of responsibilities.

Prudential information and reporting.

Regulatory implementation.

Supervisory cooperation.

Payment systems.

Financial statistics.

Consumer-related banking conduct within its legal competence.

5.1 Banco de España Circulars

Circulars are an important regulatory instrument.

They may establish detailed requirements concerning matters such as:

Accounting and financial reporting.

Prudential information.

Risk classification.

Supervisory reporting.

Internal controls.

Certain transparency and customer-information obligations.

For example, Banco de España Circular 4/2017 addresses accounting rules and financial reporting requirements for credit institutions.

The legal validity of a circular depends on the applicable enabling authority and compliance with superior norms.

5.2 Limits on Banco de España Rulemaking

Banco de España cannot use circulars to create unrestricted legislative obligations.

Its regulations must respect:

The Spanish Constitution.

Applicable Spanish legislation.

European Union law.

Statutory competence.

Procedural requirements.

Proportionality.

Legal certainty.

Where a circular exceeds the legally conferred power, its validity may be challenged through the appropriate judicial process.

6. EUROPEAN UNION BANKING REGULATORY FRAMEWORK

Spain's banking regulatory system is deeply integrated with European Union law.

6.1 Treaty on the Functioning of the European Union

The TFEU establishes the legal framework for EU institutional powers.

Article 127(6) permits the conferral of specific prudential supervisory tasks upon the European Central Bank.

Article 290 governs delegated acts.

Article 291 governs implementing acts.

These provisions are central to understanding European delegated banking rulemaking.

6.2 Capital Requirements Regulation

Regulation (EU) No 575/2013 — CRR

The Capital Requirements Regulation establishes directly applicable prudential requirements for covered institutions.

It concerns areas including:

Own funds.

Capital requirements.

Credit risk.

Market risk.

Operational risk.

Large exposures.

Liquidity.

Leverage.

Disclosure.