The European Banking Authority (EBA) has published final guidelines on product oversight and governance arrangements for retail banking products.
The guidelines are forward looking and do not simply address past failings but rather provide a framework for robust and responsible product design and distribution to avoid future cases of detriment. The EBA states that as of the implementation date, the guidelines apply to all products brought to the market after the implementation date, as well as to all existing products on the market that are significantly changed after that. Competent authorities may wish to consider applying relevant guidelines, such as guideline 5 (product monitoring) and 6 (remedial action), to products that were brought to the market before the implementation date of the guidelines.
The EBA states that the banking sector must consider the needs of its customers when designing products. Developing products with the consumer’s interest, objectives and characteristics in mind from the outset is the cornerstone of ensuring good customer outcomes, and should help re-establish and maintain confidence in retail banks.
The guidelines supplement other EBA guidelines that may be relevant to product oversight and governance. In particular, the EBA’s guidelines on internal governance (GL 44) include guidance on the new product approval process that credit institutions should adopt, and, where relevant, these guidelines refer to relevant guidelines from GL 44.
The guidelines will apply from 3 January 2017.