Featured Product

    EBA on Application of Product Oversight and Governance Arrangements

    November 03, 2020

    EBA published the second report on how the industry has implemented the EBA guidelines on product oversight and governance arrangements. The report identifies good practices of financial institutions and concludes that many of them do not sufficiently put the required focus on ensuring that needs of consumers are met in line with the guidelines. Therefore, EBA encourages financial institutions to ensure that the interests, objectives, and characteristics of consumers are taken into account when applying product oversight and governance arrangements, to avoid consumer detriment. The annex to the report sets out certain good practices, the application of which would contribute to compliance with the EBA guidelines and to the consistency of supervisory and consumer outcomes.

    The report identifies ways for financial institutions to further strengthen the application of the EBA guidelines on product oversight and governance arrangements. It does so by outlining good practices identified in the sample concerning the scope of the EBA guidelines and general governance, also identifying the target market, product testing, product monitoring, remedial actions, and the product oversight and governance arrangements for distributors. The report confirms the conclusions reached in the first report; specifically, while surveyed manufacturers had implemented the internal processes in relation to product oversight for retail products, this was not necessarily done in a way that put the required focus on ensuring that consumer needs are met. Despite the objectives of the EBA guidelines to enhance consumer protection and to address the prudential risks arising from misconduct, financial institutions appeared to focus almost only on the requirements set out in the EBA guidelines on internal governance under the Capital Requirements Directive (CRD IV). The assessment also highlights that the application of the EBA guidelines varies significantly according to the size of the financial institutions, between the member states and also between financial institutions in the same member state. 

    The EBA guidelines on product oversight and governance arrangements consist of a set of eight guidelines for manufacturers and four guidelines for distributors; they are addressed to credit institutions CRD IV, payment institutions under the Payment Services Directive (PSD 1/PSD 2), electronic money institutions under the Electronic Money Directive (EMD), and mortgage creditors under the Mortgage Credit Directive (MCD) to the extent that those are financial institutions under the EBA Regulation. EBA conducted this review with 78 credit institutions, payment, and e-money institutions across 12 member states in EU. The EBA and relevant competent authorities will continue monitoring how financial institutions apply these EBA guidelines and whether they make use of the good practices identified in this report. However, EBA does not plan to carry out another analysis for the purpose of the supervisory convergence work of EBA on the guidelines on product oversight and governance arrangements in the immediate future.

     

    Related Links

    Keywords: Europe, EU, Banking, Product Oversight and Governance, CRD IV, Governance, Digitalization, Good Practices, EBA

    Featured Experts
    Related Articles
    News

    EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package

    EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.

    February 26, 2021 WebPage Regulatory News
    News

    EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway

    The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.

    February 25, 2021 WebPage Regulatory News
    News

    PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks

    In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.

    February 25, 2021 WebPage Regulatory News
    News

    FSB Sets Out Work Priorities for 2021

    In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.

    February 25, 2021 WebPage Regulatory News
    News

    EU Publishes Corrigendum to Revised Capital Requirements Regulation

    EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).

    February 25, 2021 WebPage Regulatory News
    News

    ESAs Issue Statement on Application of Sustainability Disclosures Rule

    ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).

    February 25, 2021 WebPage Regulatory News
    News

    EC Consults on Crisis Management and Deposit Insurance Frameworks

    EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.

    February 25, 2021 WebPage Regulatory News
    News

    HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs

    HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.

    February 24, 2021 WebPage Regulatory News
    News

    EBA Proposes Standards for Supervisory Cooperation Under IFD

    EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.

    February 24, 2021 WebPage Regulatory News
    News

    BoE Addresses Banks in Scope of First Resolvability Assessment

    BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.

    February 24, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6629