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’?
The EBA Guidelines (GL) on ESG risk management take a prudential perspective and are only indirectly related to greenwashing and consumer protection topics. References to them within the POG guidelines are not suitable and should therefore be omitted (paragraph 9 in section 2 and Guidelines 2.1a, 8.3 point c, 12.1a).
Additionally, in the interest of clarity and consistency of the scope of the GLs, ESBG would like to make the following comments:
- Lack of clarity regarding ESG “characteristics”
With regard to the scope of the amended Guidelines, greater clarity as to ESG “characteristics” or “features” of products would be helpful, particularly for payments, mortgages, consumer loans, among others.
- Removal of credit intermediaries
ESBG members furthermore oppose the removal of credit intermediaries covered by the Mortgage Credit Directive (MCD) from the scope of these EBA GLs.
In terms of the wording, the following comments can be made:
On the matter of external service providers, the GL replaces the "outsourcing" section with "third-party arrangements", which could pose a challenge for banks. The term "third party" is much broader.
The following terms found in the GLs would warrant a careful review:
- The phrase “Fair, clear, and not misleading”seems vague and could be subject to interpretation. However, the same terminology is found in Article 7 on advertising in consumer credit.
- The term “up to date” (for instance, “sustainability-related communication should be up to date”) can be challenging, as it implies constant adjustments, which is difficult to undertake. A potential adjustment to consider could be: “sustainability-related communication should be updated when necessary.
- Finally, “products are presented in an understandable manner”: this specific wording may lead to different interpretations, since the notion of "understandable manner" depends on the reader (consumer or regulator), and credit institutions do not have the means to assess the degree of understanding of all its clients.
As a final remark, recent EU legislation relating to retail banking products with ESG characteristics, such as the Sustainable Finance Disclosure Regulation (SFDR), will be thoroughly revised and simplified by European lawmakers. Therefore, we believe that the implementation of these GLs could be postponed until the amendments to the texts included in the Omnibus Directive have been finalised and the implementation deadline is due.
Should postponement not be practicable for regulators, ESBG suggests the harmonisation of the application dates of these GLs between small and non-complex institutions (SNCIs), and other larger financial institutions, allowing smaller banks more time to adapt to the new EBA standards.
Question 2. Do you have any comments on the targeted amendments made to Guidelines 2, 3, 7, 8 and 12?
It is understandable that ESG and greenwashing risks should also be anchored in the awareness of product manufacturers and distributors and taken into account in product governance arrangements. However, this issue is addressed in detail by the EmpCo Directive and is generally covered by the existing POG and other governance requirements. Against the backdrop of the targeted reduction of bureaucracy, it seems questionable whether additional anchoring within the POG guidelines is necessary.
Question 3. Do you have any comments on the consequential changes made to chapter 6 of the POG Guidelines on ‘third-party arrangement’?
With regard to the referenced EBA Guidelines on TPRM, it should be noted that there will be a two-year transition period for the institutions (from the date of their final publication, expected in spring 2026). This would also have to be reflected in the application of the revised POG Guidelines.