We strongly agree with the EBA that internal governance arrangements must be consistent with the individual risk profile and business model of the institution, so that the objectives of the regulatory requirements and of these guidelines are effectively achieved.
We welcome the detailed criteria set by the EBA draft Guidelines. Application of the principle of proportionality is extremely important. Smaller organisations should not be treated the same way as large systemically important financial institutions.
In addition, the draft Guidelines list “type of clients (e.g. retail, institutional, small businesses, public entity)” as a criterion to be taken into account for the purpose of the application of the principle of proportionality. We would also welcome more details as to which type of clients would call for more proportionality. We stress that retail clients and SMEs should be afforded the highest level of proportionality.
The EBA Guidelines require institutions to put in place a well-documented new product approval policy (NPAP) which addresses the development of new markets, products and services and significant changes to existing ones. Eurofinas and Leaseurope urge the EBA to clarify the implementation of this new policy and how this connects with, or can be distinguished from, Product Oversight and Governance Arrangements
In addition, we ask the EBA to confirm that the draft Guidelines allow for smaller institutions to have joint functions (such a joint committee for risk management and compliance), as clarified by the EBA at the public hearing on 5 January.