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ASSOCIATION FRANCAISE DES SOCIETES FINANCIERES

Question 1: Are the issues identified by the EBA and the way forward proposed in section 4.1 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
FinTech does not depend on the size or the legacy of the company, but is defined as innovative technology based solutions and services. It includes start-ups but also incumbent banks and Bigtech companies (of which potentially GAFAs).
Innovative digital services and solutions are not only developed by small entities / start-up FinTech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

ASF does not support the concept of sandbox regimes as it goes against the principle of level playing field.
We do not believe there should be exception to the rules otherwise loopholes would be created in the regulation of financial activities that would make the framework less clear and coherent, against the objectives of the Single Market.
Fintech solutions should be implemented in the existing playing field according to the principle of proportionality already existing within the EU.
New business models coming from new technologies may challenge the existing boundaries between supervisors. Some new products and services may be transversal to their fields of expertise (market activities / credit activities, etc…). Then, when appropriate and in order to ensure a fair regulation vis a vis the existing players it may be important to promote a form of cooperation between supervisors.
Currently, outside the scope of FinTech, the regulation of specialized credit activities is divergent between EU jurisdictions concerning agreements and supervision. For instance, leasing, consumer credit and factoring activities are not submitted to the same rules in all EU member states. This existing issue should be dealt with in priority.
We believe it would be relevant, in the context of current EBA work on FinTech regulation to extend it to the issue of a specific status for European financial institutions. We believe that a new regulatory status of financial institution could be created beside the current status of full credit institution. This new status would be associated with a coherent and adapted prudential framework (solvability, liquidity and leverage requirements). It would cover among possible others specialised financing activities that have to be duly regulated, but in an adequate and proportionate manner. Currently, under EU legislation, these activities (such as consumer credit, leasing and factoring, that collect few or no deposits from the public) have to be conducted either through the heavy European regime of credit institution, or under local prudential regimes and even sometimes under commercial company’s regimes. Many Fintech would benefit from such a new intermediary and adapted prudential status. We strongly support proportionality in prudential regulation of the financial sector, based on the risk profile and business model, and applied equally to all actors – Fintech and current players.
Innovative business developments need to respect fair competition rules. We consider that there is a risk that “regulatory sandboxes” lead to a preferential prudential treatment of – subjectively - selected Fintechs companies, creating eventually a situation of competition distortion between those selected companies and other Fintechs and current players.
At least, we would expect from the EBA the assessment of eligibility and minimum framework criteria for sandboxes regimes that NCAs in all EU jurisdictions would have to comply with.
We would rather support a proportionate and progressive application of the existing rules to all the players.
The European Commission recently proposed that the treatment of FinTech guarantees “technological neutrality” and “market integrity”. We completely agree with these principles.
Question 2: Are the issues identified by the EBA and the way forward proposed in subsection 4.2.1 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.
Question 3: What opportunities and threats arising from FinTech do you foresee for credit institutions?
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

New risks identified for credit institutions
BigTech or other FinTech (such as GAFAs, cloud service providers…) that provide critical services to a large number of financial institutions create a new concentration systemic risk. We would support an EBA assessment on this new type of risk to check that the current regulatory framework is efficient enough. We would support the principle that these activities are i) subject to prudential, data protection, consumer protection and cybersecurity requirements as financial activities themselves and ii) subject to supervision.

New risks linked to the new DSP2 framework
DSP2 will have a strong impact on the payment activity throughout the EU.
We consider that the new landscape could create large competitive advantage to BigTech detaining large databases on their customers and that regulators should also take into account EU competitivity and sovereignty issues in their risk assessment.

New risks linked to cybersecurity
Cybersecurity is essential for digital transition.
Cyber security and anti-money laundering (AML-FT) current legal and prudential frameworks are already very strict for financial sector, and permanently checked out and adapted when required.
In this field, requirements should apply to Fintechs equally as to other players, respecting a principle of proportionality according to their risk profiles.
The nature and the fast growth of some new products and services create new risks. For example, the IoT (Internet of Things): IoT means that more personal information and business data will exist in the cloud and be passed back and forth through thousands of devices that may have exploitable vulnerabilities. One weak link in the security chain could provide hackers with nearly limitless doorways that could potentially be unlocked and lead them to data. Currently, according to an infographic from Cisco, more things are connected to the Internet than people, 50 billion devices are slated to connect by 2020.
IoT carries many cyber security issues: Insecure Web interface, insufficient authentication or authorization, insecure network services, lack of transport encryption, privacy concerns, insecure cloud interface, insecure mobile interface…

New risks linked to developing cloud services
Cloud solutions are a main challenge for cybersecurity and data protection issues at UE level. We estimate that cloud solutions providers proposing services in the field of financial activity within the EU should be compulsory located within the EU, and submitted to EU data protection rules. It is a matter of sovereignty.

New risks linked to data protection
Data sharing is essential for FinTech development. We consider that any FinTech activity should be very respectful of the new General Data Protection Regulation (GDPR), and of the existing legal framework for consumer and investor protection.
Question 4: Are the issues identified by the EBA and the way forward proposed in subsection 4.2.2 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.
Question 5: What opportunities and threats arising from FinTech do you foresee for payment institutions and electronic money institutions?
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

New risks linked to the new DSP2 framework
DSP2 will have a strong impact on the payment activity throughout the EU.
We consider that the new landscape could create large competitive advantage to BigTech detaining large databases on their customers and that regulators should also take into account EU competitivity and sovereignty issues in their risk assessment.

New risks linked to cybersecurity
Cybersecurity is essential for digital transition.
Cyber security and anti-money laundering (AML-FT) current legal and prudential frameworks are already very strict for financial sector, and permanently checked out and adapted when required.
In this field, requirements should apply to Fintechs equally as to other players, respecting a principle of proportionality according to their risk profiles.
The nature and the fast growth of some new products and services create new risks. For example, the IoT (Internet of Things): IoT means that more personal information and business data will exist in the cloud and be passed back and forth through thousands of devices that may have exploitable vulnerabilities. One weak link in the security chain could provide hackers with nearly limitless doorways that could potentially be unlocked and lead them to data. Currently, according to an infographic from Cisco, more things are connected to the Internet than people, 50 billion devices are slated to connect by 2020.
IoT carries many cyber security issues: Insecure Web interface, insufficient authentication or authorization, insecure network services, lack of transport encryption, privacy concerns, insecure cloud interface, insecure mobile interface…

New risks linked to developing cloud services
Cloud solutions are a main challenge for cybersecurity and data protection issues at UE level. We estimate that cloud solutions providers proposing services in the field of financial activity within the EU should be compulsory located within the EU, and submitted to EU data protection rules. It is a matter of sovereignty.

New risks linked to data protection
Data sharing is essential for FinTech development. We consider that any FinTech activity should be very respectful of the new General Data Protection Regulation (GDPR), and of the existing legal framework for consumer and investor protection.
Question 6: Are the issues identified by the EBA and the way forward proposed in subsection 4.3.1 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.
Question 7: What are your views on the impact that the use of technology-enabled financial innovation and/or the growth in the number of FinTech providers and the volume of their business may have on the business model of incumbent credit institutions?
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

As underlined by the EBA, business models are evolving along with the digital transition. Digital “ecosystems” are appearing and incumbent banks and FinTech are increasingly operating jointly through services chains or through partnerships or other structures. We consider that regulators should make sure that the regulatory framework is fairly applied to all the actors of these chains so complementarities among them within a fair level playing field is encouraged. Interoperability for instance is very positive if developed in a way that maintains high requirements on cybersecurity and personal data protection.
From our point of view, two scenariis may be considered:
Complementarity scenario: Fintech and incumbent credit institution” combine their competitive advantages in order to accelerate innovation meanwhile preserving profitability, customer’s protection and financial stability. For example, FinTech can deploy their technology and simplified customer experience for incumbent’s credit institution that will provide their customer knowledge, financial stability and long-term strategy. This is a win-win scenario.
Adverse scenario: aggressive competition between “FinTechs and incumbents credit institution” would destroy value for the second without assuring sustainability for the first. Some FinTech would survive but the global impact would be negative for the economy, financial stability and customers protection.
We estimate that the adverse scenario is not sustainable. Even if the number of FinTech is growing fast, they haven’t taken any significant position and many of them are in difficulties. According to KPMG International (1), global investments in FinTech have decreased recently: 1076 deals for 25 Bn USD in 2016 compared to 1 255 deals for 47 Bn USD in 2015. There seems to be less enthusiasm in the financing of disruptive FinTech, which could be seen as a first step towards a complementary and cooperative scenario that should be promoted in the benefits of all the parties.
Source: KPMG International, The Pulse of Fintech: Global Analysis of Investment in Fintech, Fourth Quarter 2016 (data provided by PitchBook), updated February 2017

We also consider that the new concentration risks due to the dominant position of some BigTech have to be dealt with in order to avoid disbalance in the financial landscape that could end up being detrimental to consumers.
Question 8: Are the issues identified by the EBA and the way forward proposed in subsection 4.3.2 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.
Question 9: What are your views on the impact that the use of technology-enabled financial innovation and/or the growth in the number of FinTech providers and the volume of their business may have on the business models of incumbent payment or electronic money institutions?
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

As underlined by the EBA, business models are evolving along with the digital transition. Digital “ecosystems” are appearing and incumbent banks and FinTech are increasingly operating jointly through services chains or through partnerships or other structures. We consider that regulators should make sure that the regulatory framework is fairly applied to all the actors of these chains so complementarities among them within a fair level playing field is encouraged. Interoperability for instance is very positive if developed in a way that maintains high requirements on cybersecurity and personal data protection.
From our point of view, two scenariis may be considered:
Complementarity scenario: Fintech and incumbent credit institution” combine their competitive advantages in order to accelerate innovation meanwhile preserving profitability, customer’s protection and financial stability. For example, FinTech can deploy their technology and simplified customer experience for incumbent’s credit institution that will provide their customer knowledge, financial stability and long-term strategy. This is a win-win scenario.
Adverse scenario: aggressive competition between “FinTechs and incumbents credit institution” would destroy value for the second without assuring sustainability for the first. Some FinTech would survive but the global impact would be negative for the economy, financial stability and customers protection.
We estimate that the adverse scenario is not sustainable. Even if the number of FinTech is growing fast, they haven’t taken any significant position and many of them are in difficulties. According to KPMG International (1), global investments in FinTech have decreased recently: 1076 deals for 25 Bn USD in 2016 compared to 1 255 deals for 47 Bn USD in 2015. There seems to be less enthusiasm in the financing of disruptive FinTech, which could be seen as a first step towards a complementary and cooperative scenario that should be promoted in the benefits of all the parties.
Source: KPMG International, The Pulse of Fintech: Global Analysis of Investment in Fintech, Fourth Quarter 2016 (data provided by PitchBook), updated February 2017

We also consider that the new concentration risks due to the dominant position of some BigTech have to be dealt with in order to avoid disbalance in the financial landscape that could end up being detrimental to consumers.
Question 10: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.1 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

We consider that the level playing field should apply to all players including FinTech. This would be the best guarantee to achieve an efficient consumer protection across EU members. It is to be underlined that, according to a Macroaxis analysis (FinTech Acquisition Probability Of Bankruptcy FNTC Nasdaq - Macroaxis.htm), there is a 51% risk of failure/bankrupt for FinTech within the first two years of their life.
Enough consumer protection rules (IDD, PRIIPS, MCD, CCD, UCIT, MIFID…) have been recently designed, no new rule is required. But it is necessary that current rules do apply to all players, whether FinTech or not.
Question 11: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.2 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.
Question 12: As a FinTech firm, have you experienced any regulatory obstacles from a consumer protection perspective that might prevent you from providing or enabling the provision of financial services cross-border?
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

Passporting agreement is currently required when providing a regulated activity in another Member State. The activity’s location shall then be assessed but this assessment may be difficult to make in a cross-border digital environment. We consider that it would be helpful that the EBA sets out Guidelines or Opinion on the assessment of the location of digital financial services provision.
Most ASF members cross border consumer credit activities are currently operated within the country where the activity is developed. Therefore, required information to consumers are disclosed locally in the country language, and local consumer protection rules are always fully respected despite the fact that they vary from one country to another depending on whether directives have been over-transposed or not.
Digital cross border credit activities are very limited since credit institutions need to organise the credit distribution process (knowledge of the customer, risk analysis, recovery …) from inside the country itself to guarantee its adequacy and efficiency.
Market studies tend to prove that there is no demand in digital cross border credit and we do not estimate that any new regulation is required in the field of cross border credit activity.
But we consider that level playing field in current regulation and supervision within the EU should be put in scrutiny, whether credit activity is operated by FinTech or not.
Question 13: Do you consider that further action is required on the part of the EBA to ensure that EU financial services legislation within the EBA’s scope of action is implemented consistently across the EU?
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

Passporting agreement is currently required when providing a regulated activity in another Member State. The activity’s location shall then be assessed but this assessment may be difficult to make in a cross-border digital environment. We consider that it would be helpful that the EBA sets out Guidelines or Opinion on the assessment of the location of digital financial services provision.
Most ASF members cross border consumer credit activities are currently operated within the country where the activity is developed. Therefore, required information to consumers are disclosed locally in the country language, and local consumer protection rules are always fully respected despite the fact that they vary from one country to another depending on whether directives have been over-transposed or not.
Digital cross border credit activities are very limited since credit institutions need to organise the credit distribution process (knowledge of the customer, risk analysis, recovery …) from inside the country itself to guarantee its adequacy and efficiency.
Market studies tend to prove that there is no demand in digital cross border credit and we do not estimate that any new regulation is required in the field of cross border credit activity.
But we consider that level playing field in current regulation and supervision within the EU should be put in scrutiny, whether credit activity is operated by FinTech or not.
Question 14: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.3 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

We agree that any FinTech firm should comply with the EU legislation regarding consumer complaints, according to the principle “same business, same risks, same rules”.
A single point of entry for consumer complaints is of particular importance in the field of digital financial services since i) digital services are increasingly provided through companies’ partnerships where it’s difficult for the consumer to identify which firm is responsible for one specific part of the chain and ii) on line services are usually delivered without (or with limited) human intervention.
Question 15: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.4 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.
Question 16: Are there any specific disclosure or transparency of information requirements in your national legislation that you consider to be an obstacle to digitalisation and/or that you believe may prevent FinTech firms from entering the market?
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

We consider that level playing field should apply to all players including FinTech. This would be the best guarantee for an efficient consumer protection.
Enough consumer protection rules (IDD, PRIIPS, MCD, CCD, UCIT, MIFID…) have been designed in recent years. We estimate that no new rules are required, but we agree that a work should be conducted to adapt these existing rules to the digital credit distribution.
We underline the specific lack of harmonization of digital identity frameworks within the EU, and this should be a priority work.
Question 17: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.5 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.
Question 18: Would you see the merit in having specific financial literacy programmes targeting consumers to enhance trust in digital services?
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

Respecting a level playing field principle, the same precontractual and disclosure requirements should apply to all players, whether or not they are FinTech.
We would be in favour of the development of budgetary educational programs underlying the specificities of digital financial services, focusing on the new risks carried such as cybersecurity and AML/CFT issues.
Question 19: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.6 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

We would not consider that Artificial Intelligence carries a risk of exclusion to credit as a whole since the granularity permitted by the use of big data may give access to credit to customers that would not have access to credit in less granular solvability assessment processes. However, we would welcome Guidelines on the use of Big data in marketing activities in financial sector in line with banking secrecy for cybersecurity, consumers protection and trust reasons.
We agree that big data could also create new discrimination risks and would recommend that the use of some typologies of criteria (gender, religion,…) would be strictly forbidden.
Algorithms’ control remains possible and financial firms must always be able to intervene on the source of their algorithms.
Question 20: Are the issues identified by the EBA and the way forward proposed in section 4.5 relevant and complete? If not, please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

EBA findings demonstrate that resolution/recovery plans are not equally required for FinTech firms from one country to another.
We estimate that, as a matter of financial stability, EU current rules on resolution, insolvency and recovery should apply to all players - including FinTech - which activities are in the scope of EU legislation.
Question 21: Do you agree with the issues identified by the EBA and the way forward proposed in section 4.6? Are there any other issues you think the EBA should consider?
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.
Question 22: What do you think are the biggest money laundering and terrorist financing risks associated with FinTech firms? Please explain why.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

EBA findings demonstrate that AML-FT requirements are not equally enforced by FinTech firms from one country to another within the EU.
We estimate that, as a matter of security and of financial stability, compliance with EU current AML-FT rules should be strictly imposed to all players - including FinTech - which activities are in the scope of EU legislation.
We consider that it could be necessary to strengthen knowledge and expertise of the national local authorities regarding Fintech initiatives, in order to i) enable them to understand and to identify more concretely the AML /CFT issues raised by Fintech; ii) harmonize their approaches, in terms of controls and sanctions; iii) provide guidelines on the roles’ and responsibilities of each actor, whether Fintech firms and existing financial institutions (banks, management companies, insurance companies, asset managers, …).
Among new money laundering risks, one could mention payment services transaction between individuals through their banking cards since it is not possible to formally identify a cardholder only through his card number. Cards transactions carried out through these Fintech for banks could generate a break in the traceability of financial flows between individuals.
We consider that the lack of harmonized legal framework for digital identity is as an obstacle to the deployment of new identification solution such as digital identification, facial recognition, finger prints identification, ... These new solutions present a higher level of reliability than more classical solutions of identification especially in case of digital remote relationships but also in face-to-face.
Question 23: Are there any obstacles present in your national AML/CFT legislation which would prevent (a) FinTech firms from entering the market, and (b) FinTech solutions to be used by obliged entities in their customer due diligence process? Please explain.
As a unique representative body of all the French specialised credit institutions and financial institutions which represents 285 entities, ASF contributes to an appropriate recognition of the specialised financial activities like equipment and real estate leasing, factoring, consumer credit and auto loans and leases, mutual guarantee societies which – with an outstanding of more than €230 billion in 2016 – accounts for about 20% of total amount of credits to the real economy in France.
ASF agrees with the propositions of the EBA oriented toward harmonization of the agreement, regulation and supervision of the FinTech within the EU.
ASF notice that EBA identified that more than 50% of FinTech in the EU are not regulated under the EU regulatory regime whereas they are providing services that are in the scope of the EU legislation, which is not acceptable from a financial stability and from a consumer protection perspective.
Innovative digital services and solutions are not only developed by small entities / start-up Fin Tech companies. Incumbent players are very much involved in developing new digital products and services, for instance in consumer credit, leasing and factoring. Those incumbent credit institutions must respect a heavy set of legal and prudential rules, that any other new players should also have to respect in order to avoid competition distortion.
It is then essential and necessary to guarantee a level playing field in regulation, supervision, consumer and investors protection, data protection and cybersecurity matters.
ASF agrees with all the EBA propositions in line with the rule “same business, same risks, same rules, same supervision”.

EBA findings demonstrate that AML-FT requirements are not equally enforced by FinTech firms from one country to another within the EU.
We estimate that, as a matter of security and of financial stability, compliance with EU current AML-FT rules should be strictly imposed to all players - including FinTech - which activities are in the scope of EU legislation.

We consider that the lack of harmonized legal framework for digital identity is as an obstacle to the deployment of new identification solution such as digital identification, facial recognition, finger prints identification, ... These new solutions present a higher level of reliability than more classical solutions of identification especially in case of digital remote relationships but also in face-to-face.
Contact name
M. Yves-Marie LEGRAND