Response to consultation on Guidelines on product oversight and governance arrangements for retail banking products
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However it must be made clear that, if a firm is acting both as a manufacturer and distributor, both sets of requirements should apply.
However, we would like to emphasize strongly that these POG requirements should not become a mere tick-box exercise for compliance officers. To that end we would like to see more transparency and a stronger involvement of national supervisors and EBA in this POG process.
Additional requirements should therefore include:
- The requirements for internal reviews should be detailed further (on content & frequency) and require an external check, e.g. by an auditor.
- For the sake of transparency, all POG requirements should be made publicly available.
- National supervisors should be tracking these POG requirements and hereby check if they effectively prevent inappropriate products from being sold and marketed to consumers. Their findings should be reported to EBA.
- If certain product classes are prone to systematic mis-selling practices, according to national supervisors’ reviewing of POG requirements, EBA should consider introducing a regulatory pre-approval process for these kind of products.
Furthermore manufacturers should inform their national supervisor about any remedial action taken, in order to accommodate for any potential further regulatory action.
Question 2: Do you agree with the delineation of the two sets of requirements for manufacturers and distributors?
BEUC agrees that manufacturers and distributors each play their distinct role and should accordingly comply with separate sets of requirements.However it must be made clear that, if a firm is acting both as a manufacturer and distributor, both sets of requirements should apply.
Question 3: Are there any additional requirements that you would suggest adding to either of the two sets of requirements? If so, why?
In general BEUC regards POG requirements as a careful first step towards a more ex-ante approach in avoiding consumer detriment. Obliging firms to take into account the consumer interest in every stage of the product design & sales process could give them a welcome impetus to create and sell products which truly addresses consumer needs.However, we would like to emphasize strongly that these POG requirements should not become a mere tick-box exercise for compliance officers. To that end we would like to see more transparency and a stronger involvement of national supervisors and EBA in this POG process.
Additional requirements should therefore include:
- The requirements for internal reviews should be detailed further (on content & frequency) and require an external check, e.g. by an auditor.
- For the sake of transparency, all POG requirements should be made publicly available.
- National supervisors should be tracking these POG requirements and hereby check if they effectively prevent inappropriate products from being sold and marketed to consumers. Their findings should be reported to EBA.
- If certain product classes are prone to systematic mis-selling practices, according to national supervisors’ reviewing of POG requirements, EBA should consider introducing a regulatory pre-approval process for these kind of products.
Question 4: Do you agree with Guideline 1 on establishment, proportionality, review and documentation?
NAQuestion 5: Do you agree with Guideline 2 on manufacturers’ internal control functions?
NAQuestion 6: Do you agree with Guideline 3 on the target market?
NAQuestion 7:Do you agree with Guideline 4 on product testing?
NAQuestion 8: Do you agree with Guideline 5 on product monitoring?
BEUC is in favour of further guidance by EBA on this point, regarding specific criteria or parameters which should be monitored, such as consumer complaints, repayment defaults and early contract terminations.Question 9: Do you agree with Guideline 6 on remedial action?
Remedial action is a key component of POG provisions. Therefore we urge EBA here to adopt tougher guidelines. When manufacturers become aware that products are not sold as envisaged or other problems arise, the manufacturer should suspend the selling of this product via the distributor(s).Furthermore manufacturers should inform their national supervisor about any remedial action taken, in order to accommodate for any potential further regulatory action.