EBA publishes product governance guidelines: EBA has published its final guidelines on product oversight and governance  arrangements for retail banking products. The guidelines will apply from 3 January 2017 and will apply to manufacturers and distributors when designing, marketing and selling mortgages, personal loans, deposits, payment accounts, payment services and electronic money. The guidelines cover:

  • for manufacturers:
    • Guideline 1: Establishment, proportionality, review and documentation
    • Guideline 2: Manufacturer’s internal control functions
    • Guideline 3: Target market
    • Guideline 4: Product testing
    • Guideline 5: Product monitoring
    • Guideline 6: Remedial action
    • Guideline 7: Distribution channels
    • Guideline 8: Information for distributors
  • for distributors
    • Guideline 9: Establishment, proportionality, review and documentation
    • Guideline 10: Distributor’s governance
    • Guideline 11: Knowledge of the target market
    • Guideline 12: Information and support for the manufacturer’s arrangements.

The guidelines also address outsourcing, reminding firms they should comply with the Committee of European Banking Supervisors' guidance, and that senior management of the outsourcing institution will retain responsibility for compliance. EBA stresses that manufacturers should periodically assess (i) that the internal product oversight and governance arrangements are being duly complied with, (ii) that the internal arrangements are still valid and up to date and (iii) whether the specifications of particular products continue to meet the interests, objectives and characteristics of the target market for which they were designed. Distributors should comply with the product oversight and governance arrangements of the manufacturer that related to bringing products to the market. Distributors should know and recognise the target market for which the product was designed and should normally sell and offer the product only to end-consumers in that target market. They would need to be able to justify selling the product to any other customer. (Source: EBA Publishes Product Oversight Guidelines)

EBA issues group support standards: EBA has published final draft regulatory technical standards (RTS) and guidelines on the provision of group financial support, as well as final draft Implementing Technical Standards (ITS) detailing the disclosure requirements of these activities. The RTS and guidelines establish a harmonised regulatory framework designed to facilitate the provision of intra-group financial support across the EU under the Bank Recovery and Resolution Directive. EU regulators will grant authorisation for support on the basis of a number of conditions, including the:

  • interest of the group as a whole and the risks in the absence of the support;
  • expected success of the support;
  • terms of the support;
  • possible impact on financial stability; and
  • resolvability of the providing entity.

Regulators will assess applications on the basis of the capital and liquidity situation of the relevant institution. (Source: EBA Streamlines Intra-group Financial Support for Banking Institutions)

EBA updates single rulebook Q&As: EBA has updated its single rulebook Q&As to include seven new items. (Source: EBA Single Rulebook Q&As)

EBA updates on transparency and stress tests: EBA has published a sample of banks taking part in the 2015 transparency exercise, together with the draft templates illustrating the type of data for disclosure. It also released the key features and a tentative calendar for the 2016 EU-wide stress test. The 2016 exercise will be based on a constrained bottom-up approach and will be closely aligned with the cycle of the annual supervisory review and evaluation process (SREP). EBA will discuss the draft methodology and templates with relevant stakeholders before the end of 2015 and expects to launch the 2016 exercise in the first quarter of 2016, and to publish the results in Q3 2016. (Source: EBA Updates on Upcoming Transparency Exercise and on Key Features of 2016 EU-wide Stress Test)

EBA publishes risk mitigation responses: EBA has published the responses to its consultation on RTS on risk mitigation techniques for OTC derivatives not cleared by a central counterparty (CCP). (Source:RTS on Risk Mitigation Techniques for OTC Derivatives Not Cleared by a CCP)