EBA guidelines for retail banking products
On 15 July 2015 the European Banking Authority (EBA) published its Guidelines on product oversight and governance (POG) arrangements for retail banking products.
Developments in the markets for financial services in recent years have shown that failures in the conduct of financial institutions towards their customers can cause significant consumer detriment and undermine market confidence, financial stability and the integrity of the financial system. The Guidelines are the EBA’s response to increasing risks arising from the misconduct of financial institutions in their interaction with consumers and are part of EBA’s work to enhance consumer protection across the EU.
The Guidelines will apply from 3 January 2017. Competent authorities and financial institutions must make every effort to comply with these guidelines.
The Guidelines deal with the establishment of product oversight and governance arrangements for both, manufacturers and distributors as an integral part of the general organisational requirements linked to internal control systems of firms. They refer to internal processes, functions and strategies aimed at designing products, bringing them to the market, and reviewing them over their life cycle. They establish procedures for ensuring the interests, objectives and characteristics of the target market. However, these Guidelines do not deal with the suitability of products for individual consumers.
The Guidelines apply to manufacturers and distributors (as defined in the Guidelines) of retail banking products offered and sold to consumers that fall within the EBA’s regulatory limit, i.e. mortgages, personal loans, deposits, payment accounts, electronic money and payment services such as credit and debit cards.
The Guidelines apply to all products brought to the market after the implementation date of the Guidelines as well as to all existing products on the market that are significantly changed after the implementation date of these Guidelines.
These Guidelines supplement other EBA guidelines that may be relevant to product oversight and governance, in particular, the EBA Guidelines on Internal Governance of 27 September 2011.
Impact on Luxembourg regulations
The CSSF Circular 12/552 on central administration, internal governance and risk management, that takes into account the following international guidelines into Luxembourg regulations:
- EBA guidelines on internal governance of 27 September 2011;
- BCBS guidelines on the internal audit function in banks of 28 June 2012
will need to be updated during 2016.
A summary of the guidelines can be download in the PDF file.