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 ABBL is pleased to contribute to the EBA’s consultation on the proposal to amend the subject matter, scope, and definitions. The EBA consultations intends to simplify and harmonize rules regarding the Product Oversight and Governance (POG), in the context of Article 74 (1), 76 and 87 of Directive 2013/36 (Capital Requirements Directive, CRD VI), to have a better alignment between financial market participants and National Competent Authorities (NCA).
Scope of clients covered
The current definition provide by POG Guidelines (EBA/GL/2015/18) define a consumer as “a natural person, who is acting for purposes which are outside his trade, business or profession” in order to protect consumer. The ABBL stresses that the primary purpose of the POG Guidelines is customer protection; this fundamental objective must remain paramount. Accordingly, any revisions should focus exclusively on reinforcing consumer safeguards without linking the scope or intensity of protection to the size or classification of the institution. Client entitlement to protection should be uniform and unconditional.
Definition of Greenwashing
- We have the following clarification to bring to your attention, the mention of the term ‘greenwashing’ in the introduction of the consultation paper should be removed or clarified. We noted that the definition of ‘greenwashing’ is differently defined in three major regulations (MiFID, CSRD and EU Taxonomy). The ‘greenwashing’ is defined by the EU Taxonomy (EU 2020/852 – Recital 11) as ‘the practice of gaining an unfair competitive advantage by marketing a financial product as environmentally friendly, when in fact basic environmental standards have not been met’, whereas the CSRD (EU 2022/2464 – Recital 2) refers to the EU Taxonomy by adding the notion of ‘unduly claim’. MiFID (2021/1253) defines greenwashing as ‘the practice of gaining an unfair competitive advantage by recommending a financial instrument as environmentally friendly or sustainable, when in fact that financial instrument does not meet basic environmental or other sustainability-related standards’.
These discrepancies can cause regulatory confusion and uneven enforcement; therefore, a harmonized or clarified approach is essential.
Inclusion of the ESG Risks Management Guidelines
The Amendments to Chapter 2 ‘Subject matter, scope and definitions’ correctly mention that the ESG Risk Management guidelines may be relevant, in supplement to the POG guidelines (and therefore do not automatically apply).
The guidance subsequently introduced however makes direct reference to those ESG risk guidelines as applicable, which is incorrect: they are still in the process of implementation in several Member States, and will in any case not apply to small and non-complex institutions before 11 January 2027.
We therefore suggest to remove the expectation that the management of greenwashing risk or of sustainability communication should be “consistent with the requirements in the EBA Guidelines on the management of ESG risks” as this would extend their scope of application beyond what is originally foreseen.
We also suggest removing the reference to the EBA Guidelines on ESG risk management (EBA/GL/2025/01 – ‘ESG Guidelines’). Their integration could generate a distortion between Significant Institutions (SI), which fall automatically under the scope of the upcoming EBA Guidelines on ESG risk management, and Less Significant Institutions (LSI). The distortion between SI and LSI will be, notably, in the implementation of the time horizons as described in the ESG Guidelines. The current instruction is not clear enough and increases legal uncertainty for LSI. The ESG Guidelines define the time horizons as considering ‘several time horizons, including a long-term time horizon articulated with short- and medium-term strategies’. The new requirements to consider different time horizons without clear and proportionate guidance would reinforce distortions between SI and LSI. The EBA launched in January 2025 a consultation on Guidelines on ESG Scenario Analysis (EBA/GL/2025/02) to specify the different scenarios and time horizons we are of the opinion that they are better suited to clarify these requirements. To conclude, we recommend removal references to the EBA Guidelines on ESG risk management (EBA/GL/2025/01) to maintain proportionally and clarity.
Finally, it is imperative that customer protection under the POG framework aligns at a minimum with the requirements of MiFID. This alignment cannot vary according to the size of the bank or intersects inappropriately with ESG risk management frameworks.
We recommend removing all references to the EBA Guidelines on ESG risk management and greenwashing to preserve the POG original consumer protection intent and avoid distinct regulatory objectives. The term greenwashing must, at a minimum, be clarified with a detailed and understandable definition if the EBA decides to keep it.
Question 2. Do you have any comments on the targeted amendments made to Guidelines 2, 3, 7, 8 and 12?
Among the proposals of this consultation paper, we suggest avoiding any reference to the term « greenwashing » before having a harmonized definition between different EU regulatory frameworks, as previously mentioned. The harmonization of rules and requirements are a prerequisite to ensure a level playing field and fostering competitiveness of the European banking and financial sector.
In order to strengthen and improve a clear and stable regulatory framework, we recommend not referring to the EBA Guidelines on ESG risk management until the possible Implementing Technical Standard (ITS) are defined. Manufacturers’ internal control functions , as referred in Guideline 2, require regulatory stability and clear rules to implement new controls and adequately train their people. Premature inclusion of ESG risk management provisions risks undermining internal governance processes due to evolving standards and will increase compliance challenges.
Reference to the Target Market
Regarding amendments to Guideline 3 on the definition of the target market, we recommend cancelling these changes due to the unclear and unprecise nature of “ESG features” criteria. The ESMA (European Securities and Markets Authority) Guidelines on Product Governance refer to “products which consider sustainability factors”. We suggest, at minimum, to align the wording between ESMA Guidelines and the potential revision of POG (EBA/GL/2015/18) to avoid potential inconsistencies.
Besides the European Securities and Markets Authority’s (ESMA), Final report on Guidelines on MiFID II product governance requirement (ESMA 34-43-3448), reported that “if the target market are defined in too much detail this may lead to “ closed shops”, where only distributors from the same group as the manufacturer are able to fully comprenhend the scope and meaning of overly granularly formulated target market”. In the same document, ESMA mentionned that “too much granularity may put the continued existence of an open architecture at risk, which would be detrimental for investors”. Furthermore, the dual requirement for banks to respect both distribution location and client residence rules creates significant operational challenges. Before introduction new obligations regarding the notion of the target market, the EBA must offer clear and harmonized guidance before adopting any new requirements.
We recommend that the amendment of the guidelines on distribution channels (Guideline 7) clarify the minimum frequency of distributor controls as well as the essential elements of distributor controls to ensure consistent supervisory expectations and practical implementation.
We draw the EBA’s attention to the proposed text concerning information to distributors, referred in Guideline 8, which may be a source of confusion for financial market participants and in its application by NCAs. The current wording raises questions, particularly on how to assess what constitutes ‘an understandable manner’ to present. We support the implementation of harmonized practices to reduce the risk of divergent supervisory interpretations.
Finally, we consider that the provisions on information and support for manufacturers’ arrangements, for adding Article 12.1.a, should be removed. The additional requirements are already covered by existing regulation, i.e. MiFID, and ESMA explicitly cautions against unnecessary granularity that could lead to burdensome or redundant rules by ESMA (34-43-3448).
In conclusion, the ABBL and its members recommend the removal of all references to the EBA Guidelines on ESG risk management and ESG features from the current POG guidelines amendments. This approach preserves proportionality, regulatory coherence, and operational clarity for financial institutions, while maintaining the EBA’s overarching goal of robust consumer protection.
Question 3. Do you have any comments on the consequential changes made to chapter 6 of the POG Guidelines on ‘third-party arrangement’?
Regarding the third-party arrangement, the ABBL consulted its members and will provide its comments in the response to consultation EBA/CP/2025/12.