EBA欧洲银行-BSG-response-to-Consultation-paper-28EBA-CP-2015-29292022-March-2016_7页_232kb

EBA Banking Stakeholder Group Summary on EBA/CP/2015/29

Core Content

The EBA Banking Stakeholder Group (BSG) has provided general comments and detailed replies to the consultation paper EBA/CP/2015/29, which outlines draft guidelines on remuneration policies and practices related to the sale and provision of retail banking products and services. The BSG supports the initiative to harmonize supervisory rules across Europe, aiming to ensure fair competition and reduce conduct costs for firms. However, they emphasize the importance of addressing potential risks that could arise from these remuneration practices.

Main Views and Key Information

General Comments

• Objective: The draft guidelines aim to protect consumers and reduce the risk of mis-selling by aligning remuneration with fair treatment of customers.
• Scope: The guidelines apply to all types of remuneration, including both financial and non-financial schemes, for staff involved in retail banking services.
• Concerns: The BSG highlights that remuneration and incentive schemes significantly influence staff behavior and can create unfair pressure on retail staff, leading to potential harm to consumers and financial instability.
• Examples: Mis-selling of Payment Protection Insurance in the UK, hybrid securities in Spain, and the failure of several banks in different EU countries were linked to inappropriate remuneration schemes.

Definitions

• The BSG suggests expanding the definition of remuneration to include performance management systems, such as disciplinary actions, monitoring, and dismissal.
• These systems can have a detrimental effect on both customers and staff, especially when the threat of job loss increases pressure on staff to prioritize sales over customer interests.

Replies to Questions

Question 1: Do you agree with Guideline 1 on design?

• The BSG broadly supports the guidelines but recommends enhancements:
  • Including risk management and controls in the design of remuneration policies.
  • Conducting sales quality monitoring and root cause analysis of consumer complaints.
  • Ensuring that any changes to remuneration policies are made to mitigate identified risks.
  • When moving to discretionary remuneration, clear documentation of reasons for bonuses is essential to avoid indirect sales incentives.

Question 2: Do you agree with Guideline 2 on documentation?

• Institutions should disclose risks and mitigation actions in their annual reports.
• Documentation should include concerns raised by staff about bias or excessive sales pressure, along with investigations and any resulting policy changes.

Question 3: Do you agree with Guideline 3 on approval and monitoring?

• The BSG recommends the following enhancements:
  • Institutions must gather and summarize Management Information for risk assessment.
  • Those responsible for sales quality monitoring should be independent to avoid bias.
  • Effective feedback and whistleblowing procedures should be established for frontline staff.
  • Monitoring should be continuous, not just annual, to ensure ongoing compliance and mitigate consumer harm.

Question 4: Do you see a need for any additional requirements?

• The BSG refers to their responses to questions 1-3, indicating that additional requirements are implied in those replies.

Question 5: Do you have any other comments?

• The BSG suggests the EBA should include the following practices in the guidelines:
  • Cliff edges: Practices where high rewards are given for meeting specific sales thresholds, which can create excessive pressure on staff.
  • Performance management: Using disciplinary action, extra monitoring, or threats of dismissal to push staff to meet sales targets, potentially at the expense of customer interests.

Conclusion

The BSG underscores the importance of aligning remuneration policies with consumer protection and financial stability. They advocate for a comprehensive and transparent approach to remuneration design, documentation, and monitoring, ensuring that these policies do not inadvertently encourage mis-selling or unfair treatment of customers.