Response to consultation on Guidelines on product oversight and governance arrangements for retail banking products
Question 2. Do you have any comments on the targeted amendments made to Guidelines 2, 3, 7, 8 and 12?
We welcome the proposed amendment to guideline 3 related to target market. For intermediaries it is of utmost importance that the POG is well done at the manufacturers level. By doing so, it makes the advice process easier and clearer for consumers, especially those interested in ESG related features.
We also support the fact that distribution channels should be well informed of the specific ESG product features and ask for continuous support from product manufacturers in this matter. That’s the reason why we are supportive of the new paragraph c) under Guideline 8.3, where conditions for sustainability-related communication and sustainability claims are listed. Distributors do rely on product manufacturers to have clear, accurate and up-to-date information on product’s key characteristics, risks and total cost to consumers. Only under these conditions could distributors properly market the product, identify the target market and recognize consumers for whom the product may be suitable.
Regarding the proposed new paragraph 12.1 a), “specifying that the distributor should, for products with ESG features offered and sold, ensure that sustainability related communication is fair, clear, and not misleading, and that sustainability claims are accurate, substantiated, up to date, provide a fair representation of the institution’s overall profile or the profile of the product, and are presented in an understandable consistent with the requirements in the EBA Guidelines on the management of ESG risks”, we fear that pushing the responsibility on the distributor’s shoulders could be disproportionate, as the product manufacturers are supposed to provide all the relevant information to their distribution channels.
Distributors cannot be held responsible for the sustainability claims provided by the product manufacturers.
Distributors are solely responsible for what is already mentioned under Guideline 12 : “Guideline 12 requires distributors to use the information provided by the manufacturer to clearly communicate the product’s key characteristics, risks, and total cost (including fees) to consumers. They should only sell products to consumers outside the target market when justified and be able to explain such decisions to the manufacturer. Distributors should also gather information to help the manufacturer assess whether the product continues to meet the target market's needs. If any issues arise with the product or does not fit for the target market, distributors should inform the manufacturer”.