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’?
FECIF supports the revision of the Guidelines covering the three ESG dimensions: environmental, social and governance. We support the use of a broad concept of ESG, which includes social and governance aspects alongside environmental considerations. We also welcome the selective approach and the emphasis on the importance of strengthening the knowledge and skills of the staff involved. It is essential to ensure that staff understand the characteristics and risks of ESG products. We also appreciate the EBA's efforts to continuously update its guidelines, which facilitates regulatory compliance.
Question 2. Do you have any comments on the targeted amendments made to Guidelines 2, 3, 7, 8 and 12?
The addition of paragraph 8.3 to guideline 8 and the inclusion of guideline 12.1a are, in our opinion, correct and in line with what is already provided for non-banking products. The aim is to ensure greater transparency in the banking ESG products’ sector.
FECIF suggests deleting, where applicable, the phrase “where applicable”, as this option could result in products with ESG characteristics being excluded from the required checks, leading to potential greenwashing. We believe that uniform checks should be required for all producers/distributors, rewarding those who stand out for their particular focus on sustainability.
Appropriate ways need to be identified to bring added value to the end customer – particularly the younger segments of the population – through these products. It would be useful to incentivise ESG products, especially “green” mortgages, through the EBA's provision of best practices that are taken up as positive examples to follow.
Question 3. Do you have any comments on the consequential changes made to chapter 6 of the POG Guidelines on ‘third-party arrangement’?
FECIF believes that the new wording of guideline 6 on arrangements with third parties may cause uncertainty about the responsibility of the senior management of the entity outsourcing services to service providers with regard to the risks associated with those services. We therefore propose the following rewording:
Where the activity of manufacturing and/or distributing is in whole or in parts outsourced to provided by third-party services providers parties or carried out by another entity in other ways, in case manufacturers and, where applicable, distributors, are any of the financial entities referred to in the EBA Guidelines on the sound management of third-party risks, they should ensure that in doing so, they comply with those Guidelines, including the requirements on the ultimate responsibility of financial entities relying on third-party services providers established in the CEBS Guidelines on outsourcing accordingly. This includes, in particular, guideline 2, which provides that “the ultimate responsibility for the proper management of the risks associated with outsourcing or the outsourced activities, that lies with an outsourcing institution’s senior management.