05 July 2019
The European Banking Authority (EBA) published today its first report on the way industry has implemented the EBA requirements aimed at protecting consumers across the European Union. The report focuses on the Guidelines on Product Oversight and Governance Arrangements (POG), which the EBA issued 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 the EBA will take to fulfil its supervisory convergence mandate.
The EBA promotes a transparent, simple and fair internal market for consumer financial products and services and seeks to foster consumer protection across the Union. One of the identified priorities stated in its work programme for 2019 is for the EBA to ensure a consistent implementation by financial institutions of the EBA's consumer protection requirements.
In order to address some of the causal drivers of consumer detriment, the EBA issued in 2015 the POG Guidelines for manufacturers and distributors. The Guidelines are aimed at ensuring 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.
This assessment, which uses a small sample of credit institutions from six Member States, shows that manufacturers have made welcome changes, in particular 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's assessment also suggests that the industry may have different understandings of the guidelines and that further clarification may be warranted to ensure further convergence across Europe.
The 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 here.
Article 1(5) of the EBA founding regulation requires the EBA to "contribute to improving the functioning of the internal market, including, in particular, a sound, effective and consistent level of regulation and supervision, […] preventing regulatory arbitrage and promoting equal conditions of competition, […] and enhancing customer protection" and to "foster supervisory convergence".
Franca Rosa Congiu