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

    EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation

    The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).

    May 23, 2022 WebPage Regulatory News
    News

    EBA Publishes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.

    May 23, 2022 WebPage Regulatory News
    News

    EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks

    May 20, 2022 WebPage Regulatory News
    News

    EC Publishes Results on Review of Web Accessibility Directive

    The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.

    May 19, 2022 WebPage Regulatory News
    News

    NGFS Report Explores Quantification of Climate Risk Differentials

    The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations

    May 19, 2022 WebPage Regulatory News
    News

    MAS Consults on Adjustment Spreads for Conversion of SOR Contracts

    The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.

    May 18, 2022 WebPage Regulatory News
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8206