EBA published the first report examining the way industry has implemented the EBA requirements on the guideline on product oversight and governance arrangements. EBA issued the guideline in 2015 to address large-scale retail conduct failure and mis-selling that was observed in the banking sector at the time. The report identifies a number of good and bad practices and outlines the next steps that EBA will take to fulfill its supervisory convergence mandate. EBA will reflect on the findings in this report to identify specific actions, such as guidance and further clarifications, which may be needed to address the issues raised.
This assessment, which uses a small sample of credit institutions from six member states, shows that manufacturers have made welcome changes, particularly in terms of processes and governance. However, in a large number of cases, customer interests may not quite receive the same attention as the manufacturer's commercial interests and prudential concerns. The EBA assessment also suggests that the industry may have different understanding of the guideline and that further clarification may be warranted to ensure further convergence across Europe. One of the identified priorities, as stated in the EBA work program for 2019, is for EBA to ensure a consistent implementation of the EBA consumer protection requirements by financial institutions.
EBA has developed these detailed guidelines on product oversight and governance arrangements for the retail banking products to address some of the conduct risks, which result in fines, settlements, and redress payments. The guidelines cover retail banking products that fall into the EBA consumer protection remit, which are mortgages, personal loans, deposits, payment accounts, payment services, and electronic money. The guideline is intended to ensure that products are developed and brought to market in a way that focuses on the needs and interests of the consumer and, in so doing, to reduce conduct costs and contribute to market confidence. EBA promotes a transparent, simple, and fair internal market for consumer financial products and services and seeks to foster consumer protection across EU.
Keywords: Europe, EU, Banking, Conduct Risk, Product Governance, Guidelines, POG, Operational Risk, EBA
Previous ArticleRBI Circular on FALLCR Against Credit Disbursed to HFCs and NBFCs
PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).
EIOPA published the financial stability report that provides detailed quantitative and qualitative assessment of the key risks identified for the insurance and occupational pensions sectors in the European Economic Area.
EBA published its risk dashboard for the first quarter of 2020 together with the results of the risk assessment questionnaire.
EBA announced that the next stress testing exercise is expected to be launched at the end of January 2021 and its results are to be published at the end of July 2021.
PRA published the consultation paper CP11/20 that sets out its expectations and guidance related to auditors’ work on the matching adjustment under Solvency II.
MAS published a statement guidance on dividend distribution by banks.
APRA updated its capital management guidance for banks, particularly easing restrictions around paying dividends as institutions continue to manage the disruption caused by COVID-19 pandemic.
FSB published a report that reviews the progress on data collection for macro-prudential analysis and the availability and use of macro-prudential tools in Germany.
EBA issued a statement reminding financial institutions that the transition period between EU and UK will expire on December 31, 2020; this will end the possibility for the UK-based financial institutions to offer financial services to EU customers on a cross-border basis via passporting.
SRB published guidance on operational continuity in resolution and financial market infrastructure (FMI) contingency plans.