The European Banking Authority (EBA) launched today a consultation on its draft guidelines on remuneration policies and practices related to the sale and provision of retail banking products and services. The EBA has identified poor remuneration policies and practices as a key driver of miss-selling of financial products and services. The Guidelines are aimed at protecting consumers and reducing conduct costs of firms. The consultation runs until 22 March 2016.
The draft Guidelines apply to remuneration paid to staff employed by credit institutions, creditors, credit intermediaries, payment institutions and electronic money institutions, when providing deposits, payment accounts, payment services, electronic money, mortgages, and other forms of credit to consumers.
The Guidelines provide a framework for financial institutions to implement remuneration policies and practices that will improve links between incentives and the fair treatment of consumers, thus reducing the risk of mis-selling and related conduct costs for firms. They do so by(1) proposing that the management body is responsible for the design and monitoring of remuneration policies and practices, which should take into account the rights and interests of consumers; (2) preventing conflicts of interests; (3) using quantitative and qualitative criteria for determining the level of variable remuneration; and finally (4) retaining documents for auditing purposes.
Responses to this Consultation Paper can be sent to the EBA until 22 March 2016, by clicking on the "send your comments" button on the website. The EBA will assess the responses received before finalising the Guidelines, publication of which is expected in summer 2016.
These draft Guidelines have been developed according to Article 16 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (‘the EBA Regulation'), with a view to ensuring consistent efficient and effective supervisory practices within the European Union. In accordance with Article 16(3) of the EBA Regulation, competent authorities and financial institutions must make every effort to comply with the draft Guidelines by the date of entry into force provided for.