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Ensuring appropriate conduct and culture in the financial services industry - New trends in the financial sector

The EBA’s work to improve conduct of financial institutions

By Enria Andrea - Chairperson, European Banking Authority (EBA)


Misconduct of financial institutions towards their customers causes significant consumer detriment, and undermines market confidence, financial stability and the integrity of the financial system. Addressing the root causes of poor conduct is first and foremost the responsibility of banks’ Boards and management. But regulators can also play an important role.
In order to help addressing some of the causal drivers of misconduct leading to consumer detriment, the EBA has issued several legal instruments either within the banking sector or jointly with the other two European Supervisory Authorities for cross-sectoral issues.

The EBA has focused its action on three different phases in the interaction between consumers and financial institutions: pre-contractual; contractual; and post-contractual.

For the pre-contractual phase, the EBA has established a framework for robust and responsible product design and distribution to consumers, by publishing Guidelines on product oversight and governance arrangements for manufacturers and distributors of retail banking products that will apply from January 2017. These Guidelines aim at ensuring that the banking sector considers the needs of its customers when designing products.

I am confident our instruments may contribute to the improvement on conduct of financial institutions.

As one of the contractual measures, the EBA is consulting on draft Guidelines aimed at providing a framework for financial institutions to implement remuneration policies and practices for sales staff that will, for instance, improve links between incentives and the fair treatment of consumers.

In the post-contractual phase, the EBA, jointly with ESMA, and in line with EIOPA, has published Guidelines for handling consumer complaints in the banking and securities sectors that apply from September 2014. As a result, EU consumers can rely on a single set of complaints handling arrangements should they believe they have a cause for complaint after the product was purchased.
I am confident our instruments may contribute to the improvement on conduct of financial institutions, also due to their high-level but concise and poignant nature, that make them easy to retain and apply by the staff of financial institutions whose conduct we want to change.