The EBA welcomes European Court of Justice ruling supporting EBA guidelines on product oversight and governance 

The European Banking Authority (EBA) welcomed today’s judgment by the European Court of Justice establishing the validity of its Guidelines on Product Oversight and Governance. This Court ruling supports the EBA’s ability to reduce the prudential impact of misconduct for financial institutions and to protect consumers from banking products that are not fit for purpose. The EBA will continue to establish high quality standards for the banking sector and EU citizens.  

The Court also confirms that, while EBA guidelines are not legally binding, supervisory authorities and financial institutions must make every effort to comply with them, that supervisory authorities have to give reasons if they intend not to comply, and that national courts are expected to take EBA guidelines into consideration when resolving cases. 

Notes to the editors  

In November 2017, the Fédération bancaire française (FBF) brought an action before the French Conseil d’État seeking the annulment of the announcement by the French banking supervisor, the Autorité de Contrôle Prudential et de Résolution (ACPR), that it complied with the EBA’s Guidelines on Product Oversight and Governance. As the case concerned EBA guidelines, the Conseil d’État referred a number of questions to the European Court of Justice (ECJ). The ECJ gave its decision today.  

The EBA’s Guidelines on Product Oversight and Governance establish that the EU banking sector should:  

• ensure financial products and services are designed to meet the needs and interests of their target consumers;  

• test products prior to their launch and monitor them;  

• take remedial action when something has gone wrong.  

EBA assessments have found that, following the issuance of the Guidelines, product manufacturers have made improvements to internal controls, in particular in terms of process and governance to take into account the interests of consumers. However, work remains to be done, with the assessments finding a greater need for focus on ensuring that consumers’ needs are met.