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
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    News

    FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates

    The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.

    December 20, 2022 WebPage Regulatory News
    News

    FSB Reports Assess NBFI Sector and Progress on LIBOR Transition

    The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.

    December 20, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8697