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.ThisCourt rulingsupportsthe EBA’sabilitytoreduce the prudential impact of misconduct for financial institutionsand toprotect consumers from banking products that are not fit for purpose. The EBA will continue toestablishhigh qualitystandardsforthe banking sectorand EU citizens.
The Courtalsoconfirms that, while EBA guidelines are not legally binding,supervisory authoritiesand financial institutions must make every effort to comply withthem,that supervisory authoritieshave togive reasons if they intend not to comply,and that national courtsare expected totakeEBA guidelinesinto consideration when resolving cases.
Notesto the editors
In November 2017, theFédérationbancairefrançaise(FBF)brought an action beforethe French Conseild’Étatseeking the annulment of theannouncementby the Frenchbanking supervisor, theAutoritédeContrôlePrudential et deRésolution(ACPR),that it complied with the EBA’s Guidelines on Product Oversight and Governance.As the case concernedEBA guidelines, the Conseild’Étatreferreda number ofquestions totheEuropeanCourt of Justice(ECJ). The ECJ gave its decision today.
The EBA’s Guidelines on Product Oversight and Governance establish thattheEUbanking sector should:
ensure financial products and services are designed to meet the needs and interests of their targetconsumers;
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.
Documents
EBA Report on the application of the guidelines on POG arrangements
(787.13 KB - PDF) Last update 9 December 2021