EBA欧洲银行-EBA-BS-2012-003-Financial-Innovation-and-Consumer-ProtectionOverview-of-EBA-work-in-2011-2012_31页_747kb

Summary of EBA's Standing Committee on Financial Innovation (SCFI) 2011-2012

Core Content

The European Banking Authority (EBA) established the Standing Committee on Financial Innovation (SCFI) in May 2011 to support its mandate in the areas of financial innovation and consumer protection. The SCFI consists of two sub-groups: the Sub-Group on Consumer Protection (SGCP) and the Sub-Group on Innovative Products (SGIP). Its main objectives include promoting transparency, simplicity, and fairness in financial markets, monitoring financial activities for risks, safeguarding the EBA's regulatory goals, and developing methodologies for assessing the impact of products and distribution processes on financial institutions and consumers.

Main Objectives of SCFI

• Promote transparency, simplicity, and fairness in consumer financial products/services by collecting, analyzing, and reporting on consumer trends, reviewing financial literacy initiatives, developing training standards, and contributing to common disclosure rules.
• Monitor new and existing financial activities to promote market safety and regulatory convergence.
• Safeguard the objectives of EBA regulation against harmful innovations and ensure a coordinated regulatory and supervisory approach.
• Develop common methodologies to assess the impact of product characteristics and distribution on institutions and consumers.

Key Areas of Focus

II. Consumer Protection

Consumer protection is central to the SCFI's mission, as it directly supports market stability and consumer trust. The SGCP focuses on identifying consumer detriment from banking activities and products, especially innovative ones. The following areas were identified as key concerns:

• Indebtedness and responsible credit: Concerns about over-indebtedness, arrears, and foreclosures, especially in the context of mortgages and personal loans.
• Financial Literacy and Education: Challenges in delivering consistent financial education across member states, with concerns that excessive information may lead to consumer confusion.
• Complex Savings Products: Difficulty for consumers in understanding the costs, risks, and benefits of complex financial products.
• Bank Account Fees and Charges: Potential for unfair or excessive fees.
• Unnecessary Sales: Risk of pushing unsuitable products on consumers.
• Impact of Technology: Risks associated with digital financial services and online platforms.
• Comparison Websites: Concerns about the accuracy and fairness of information provided by these platforms.

III. Innovative Products

The EBA aims to identify and analyze potentially harmful financial innovations before they cause significant risks. In 2012, the SCFI focused on products such as collateralised commercial paper, contracts for difference, and convertible bonds, as well as Exchange Traded Funds (ETFs), which are a rapidly growing and complex market.

The SCFI plans to:

• Identify harmful innovations.
• Analyze their risks.
• Recommend or take action if necessary.

The EBA also aims to strengthen its market intelligence function to proactively address risks rather than reacting after crises. This involves working closely with Member States' supervisory authorities, other ESAs, the ECB, and the European Commission.

Key Recommendations and Work Plans

• The EBA will publish annual reports from 2012 onwards, highlighting areas of concern in consumer protection and financial innovation, and making recommendations to the Board of Supervisors, national authorities, and the European Commission.
• The SGCP plans to develop Binding Technical Standards (BTS) for the Mortgage Credit Directive (MCD) within six months of its adoption.
• The MCD is expected to address issues such as pre-contractual information, creditworthiness assessment, and conflict of interest in credit intermediation.
• The ESRB has issued recommendations on foreign currency lending, which member states are expected to implement by 2013.
• The EBA will continue to refine its approach to financial literacy and education, focusing on collaboration with the OECD and the Joint Committee, rather than increasing regulation on disclosure alone.

Conclusion

The SCFI's work in 2011-2012 highlights the importance of balancing financial innovation with consumer protection. It emphasizes the need for transparency, fairness, and market intelligence to prevent consumer harm and ensure the stability of the financial system. The EBA aims to coordinate with other regulatory bodies and promote a unified approach to supervisory and regulatory practices across the EU.