Response to consultation on Guidelines on product oversight and governance arrangements for retail banking products
Question 1. Do you have any comments on the targeted amendments and consequential changes made to Chapter 2 of the POG Guidelines on ‘subject matter, scope and definitions’?
BEUC welcomes the draft Guidelines. Ensuring products with ESG features, which are marketed and sold to consumers, are subject to appropriate product oversight and governance arrangements is essential in tackling greenwashing in retail financial services.
(The consultation response has also been submitted as a .pdf, but the content is identical.)
Question 2. Do you have any comments on the targeted amendments made to Guidelines 2, 3, 7, 8 and 12?
Guideline 2: Manufacturers’ internal control functions
Given the relatively novel and niche, albeit growing, area of retail banking, which is occupied by products with ESG features, the explicit mention of competencies related to ESG products within the POG GLs is essential.
It is important to ensure that staff involved in the design process of a product possess sufficient knowledge and competency to avoid publishing misleading information. However, the internal control functions of the manufacturers should also monitor the impact of changes in the manufacturer’s sustainability profile that may impact the ESG features of the product. For example, changes in the climate transition commitments of an institution would impact the ESG profile of a green savings account offered by that institution.
Guideline 3: Target Market
From a greenwashing risk perspective, the most concerning retail banking products are savings and current accounts that are advertised to consumers as having ESG characteristics. This includes the use of terms such as sustainable, green or ethical. These products pose particularly difficult questions for conventional commercial banks. While “ethical” banks can offer these sustainable/green accounts by having an institution-wide policy against lending or servicing to unsustainable economic activities, the same cannot be said of regular banks.
While sophisticated tracing and earmarking techniques could be used by conventional banks to ensure that deposits in sustainable accounts are not contributing to lending to unsustainable activities, other issues remain. For instance, whether these accounts will have any impact on the bank’s lending is not guaranteed. However, research from BEUC UK member Which? has shown that consumer demand for green bank accounts is particularly low, with the impact on climate change viewed as minimal relative to other behaviours.[1]
However, supervisors should make sure that conventional banks that sell ‘green’ or ‘sustainable’ accounts have very good tracking or earmarking systems in place to ensure an effective connection between deposits and lending.
In many retail banking products, particularly credit products such as green loans or mortgages, the greenwashing risk faced by consumers is rather low, as the use of proceeds of the credit is the responsibility of the consumer. For example, a consumer who acquires a green loan does not face a significant greenwashing risk as they can ensure the loan is used in a sustainable way (e.g. installing solar panels or insulating their home).
However, it should be ensured that consumers have access to products with ESG features. For consumers who want to contribute to sustainability goals through the way they spend their money, the key concern is the costs and conditions associated with accessing these ESG financial products.
Although it is not a traditional example of greenwashing, there are instances where consumers are charged extra, a “greenium”, for a green loan when it would have been cheaper to take a regular loan. Evidence from our Spanish member ASUFIN showed that conventional mortgages have, on average, lower interest rates than those marketed as green.[2]
The changes to Guideline Three on target market must ensure that consumers, particularly lower-income households, are not excluded from accessing products with ESG features such as green loans or mortgages.
Guideline 7: Distribution Channels
The importance of ensuring that distributors have the appropriate competencies to distribute ESG products is rightly emphasised.
BEUC underlines the importance of staff in financial services providers having the necessary expertise and competency to ensure that consumers only purchase the products that meet their needs. Banks should be required to train their staff to provide advice about green loans and mortgages, and to ensure that there is a sufficient number of staff with this expertise.
Bank staff should be able to inform consumers about green loans and mortgages and be obliged to tell them about the closest one-stop shop for renovation and energy retrofit projects, which will be set up when implementing the Energy Efficiency Directive and the Energy Performance of Buildings Directive. Banks and one-stop shops should cooperate to assess the viability and eligibility of the renovation project, factoring in all relevant technical and financial elements, and exchange data (with the consumer’s consent when exchanging personal consumer data). An example of good practice in this area is found in the German KfW, which offers green loans together with technical advice by cooperating with a widespread network of qualified energy experts.
Guideline 8: Information to Distributors
The explicit reference to ensuring that sustainability communication is fair, clear and not misleading, as well as giving a fair representation of the institution or product profile, is welcomed.
The guidelines should ensure that consumers are provided with a fair representation of the institution’s overall sustainability profile and of the product. The overall sustainability of an institution may be important for consumers, especially for those who have sought out products with ESG features, such as sustainable or green accounts. A sustainable product sold by an unsustainable financial institution may not match the expectations of a consumer considering such a product.
Guideline 12: Information and support for the manufacturer’s arrangements
The distributor should be required to ensure that sustainability claims provide a fair representation of the institution’s overall profile and the profile of the product, to be consistent with the GLs on management of ESG risks.
[1] Which?, ‘Which? puts major high-street banks in “red” warning category based on green credentials’, 2023, https://www.which.co.uk/policy-and-insight/article/which-puts-major-high-street-banks-in-red-warning-category-based-on-green-credentials-apzxi2Y8oFqz (accessed 29 September 2025).
[2] Asufin, ‘IV Study on Green Finance in Spain, 2023, https://www.asufin.com/wp-content/uploads/2023/11/IV_ESTUDIO_FINANZAS_VERDES_SEPTIEMBRE_2023_INGLES.pdf (accessed 29 September 2025).
Question 3. Do you have any comments on the consequential changes made to chapter 6 of the POG Guidelines on ‘third-party arrangement’?
No specific comments.