Featured Product

    EBA Proposes Policy Actions to Address Risks of Non-Bank Lending

    May 04, 2022

    The European Banking Authority (EBA) published a report that examines risks associated with the provision of non-bank lending and presents proposals that aim to address supervision, consumer protection, anti-money laundering and countering the financing of terrorism (AML/CFT), and macro- and micro-prudential risks.

    This report, which is in response to a February 2021 Call for Advice from the European Commission, also outlines the most recent trends and market developments on non-bank lending and provides an overview of the presence of certain business models (Peer-to-Peer lending platforms and marketplaces, Buy-Now-Pay-Later, pawnshops, leasing, factoring, balance sheet lending, crowdlending) across different member states. The different formats in which crypto-asset lending and borrowing activities can happen, including in decentralized form, have been analyzed too. EBA proposed the following key policy actions to address the identified risks:

    • Harmonize and strengthen the authorization and supervision requirements in the Consumer Credit Directive (CCD) and the the Mortgage Credit Directive (MCD) 
    • Revise the definitions dealing with the entities to be included in the scope of prudential consolidation, in particular for the ancillary services undertakings, as well as the definition of activities that are not considered outside the financial sector 
    • Consider the extension of consolidation rules (through adapting the existing CRR/CRD or new bespoke rules) to ensure that they adequately capture the specific nature and inherent risks of non-bank groups carrying out financial services, including lending 
    • Improve rules on reporting credit activity carried out by non-bank lenders
    • Clarify the identification of the responsibilities of the home and host supervisory authorities regarding the provision of cross-border non-bank lending
    • Strengthen the requirements for creditworthiness assessment and ensure that it is conducted also in the interest of consumers, particularly when innovative artificial intelligence tools are used
    • Modify the definition of financial holding company, ancillary services undertaking, and financial institution to close existing loopholes with regard to prudential consolidation
    • Retain the European Commission proposal amending the Consumer Credit Directive (CCD) to cover the entities outside its scope
    • Enhance the disclosure requirements and ensure that they are fair, effective, and well-suited to new forms of lending and more innovative business models
    • Cover all non-bank lenders in a more comprehensive way in the European Union-wide AML/CFT framework, to ensure greater harmonization and capture entities such as "obliged entities"
    • Establish an oversight and monitoring system at the European Union level for regulated and unregulated non-bank lenders to help assess on a timely basis the build-up of systemic risks as well as to identify and address the most compelling risks at macro level 
    • Review the setup of a standardized reporting infrastructure at European Union level to enable an appropriate mapping and obtain one integrated overview of macro-prudential risks and vulnerabilities
    • Consider the possibility of an introduction of activity-based macro-prudential measures to cover all credit providers, based on a minimum harmonization of the tools that are already widely applied across the European Union


    Related Links


    Keywords: Europe, EU, Banking, Lending, Credit Risk, Basel, P2P Lending, AML CFT, Crypto-Assets, CCD, Artificial Intelligence, Regtech, Fintech, Crowdfunding Service Providers, Platform Businesses, Macro-Prudential Policy, EBA, Headline

    Featured Experts
    Related Articles

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582