Eurofinas fully agrees with the European Banking Authority that institutions should take into account the rights and interests of consumers when providing retail banking products and services to customers. In our view, it is very important that remuneration policies of our sales staff are also in line with this objective. Many our member firms have in place balanced scorecards, which are used by managers to keep track of the execution and monitoring of activities by the staff within their control. Amongst others,
these scorecards are used to ensure a high level of customer satisfaction, to monitor the performance of loans and default rates.
Any rules introduced by the EBA to further ensure consumer protection, must be proportionate and sufficiently flexible to adjust to the different business models of the credit and financial institutions covered. In this respect, we stress that that Guideline 1 may be particularly burdensome for smaller entities. Guideline 1.3 provides that the human resources function of institutions should participate in and inform on the design of the remuneration policies and practices. In practice, this would mean that those institutions that do not have a tailored human resources function – typically the smaller, less resourced ones – will be required to create such HR function. We believe that this is unnecessary, costly and excessively burdensome. With regard to Guideline 1.6, it is important to highlight that costs and margins should not be the only factors to be taken into account to determine whether the relevant product is in the best interest of the consumer. All product characteristics are relevant in this respect, and consumer interest can only be determined on case-by-case basis. This must be reflected in the EBA Guidelines.
Eurofinas agrees with Guideline 2 on documentation.
In our view, it is important that institutions have in place a system to ensure that their remuneration policies remain consistent with the rights and interests of consumers. However, we do notsupport the requirement to seek sound independent advice, especially for our smaller members that do not have a remuneration committee. Any EBA Guidelines must also be consistent with “level 1” regulation. The Capital Requirements Directive does not require institutions that are not significant to establish an advisory process on remuneration policies. Yet, the EBA Guidelines at hand requires all institutions to seek independent advice on remuneration practices. In addition, we emphasise that Guideline 3.3 is too granular and should be removed.
Some requirements (such as on variable remuneration) overlap with the Guidelines from the EBA on Sound Remuneration Policies in the European Financial Sector. This is rather confusing and we ask the EBA to clarify any ambiguity in this respect.