Financial Services Regulation and Compliance - Banking December 2022
Domestic
European Union (Access to Anti-Money Laundering Information by Tax Authorities) (Amendment) Regulations 2022 [S.I. No. 704 of 2022]
The European Union (Access to Anti-Money Laundering Information by Tax Authorities) (Amendment) Regulations 2022 (S.I. No. 704/2022) were signed into law by the Minister for Finance on 20 December 2022. These regulations are related to the new register of ownership of bank and payment accounts and safe-deposit boxes (ISBAR), which was set up by the CBI last year.
European
EBA Final report - draft implementing technical standards specifying the templates to be used by credit institutions for the provision of information referred to in Article 15(1) of Directive (EU) 2021/2167
On 18 December 2022, the EBA published its final report on the draft implementing technical standards (ITS) templates to be used by credit institutions for the provision of information to credit purchasers when selling or transferring non-performing loans. The draft ITS are based around the principle of proportionality, focusing on the sales of portfolios of NPL and setting different information requirements depending on the nature of the borrowers and of the loans included in the portfolios to be sold, by specifying mandatory data fields. Proportionality is further reinforced by allowing all data fields to be treated as not mandatory for certain types of transactions. The draft ITS have been submitted to the European Commission for adoption before being published in the Official Journal. The technical standards will apply 20 days after their publication in the Official Journal.
Final report - guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) and supervisory stress testing under Directive 2013/36/EU (EBA/GL/2022/03) (applicable from 1 January 2023)
On 14 December 2022, the EBA guidelines compliance table was updated to capture Ireland's intention to comply by 1 January 2023. The requirements of the guidelines will be incorporated into the Central Bank of Ireland supervisory processes and practices.
EBA publishes its first thematic review on the transparency and level of fees and charges for retail banking products in the EU, observing that significant detriment still arises for consumers
On 14 December 2022, the EBA published its first thematic review on the transparency and level of fees and charges levied for financial institutions on retail banking products in the EU. The review found that national legal frameworks are mostly subject to the general principle of freedom of contract. Despite the improvements in consumer protection brought about by several EU sectoral directives introduced in the past decade to regulate the banking retail products, market practices for fees and charges are causing significant detriment to consumers. The review covered mortgage credit, consumer credit, deposits, payment accounts, payment services and electronic money services and was based on input received from national competent authorities, a sample of EU and national consumer associations and a sample of 140 financial institutions.
The EBA publishes its roadmap on sustainable finance
On 13 December 2022, the EBA published a roadmap setting out the objectives and timeline for delivering mandates and tasks for sustainable finance and ESG risks over the next three years. Numerous legislative acts and initiatives allocate to the EBA new mandates and tasks in the area of sustainable finance and ESG risks. These mandates and tasks cover the three pillars of the banking framework, i.e. market discipline, supervision and prudential requirements, as well as other areas related to sustainable finance and the assessment and monitoring of ESG risks.
Deal on new rules to protect consumers from taking on too much debt (PR58027)
On 2 December 2022, negotiators from Parliament and Council reached a provisional political agreement to update the EU's rules on consumer credit. The new directive on consumer credits (CCD) aims to make the credit markets function smoothly while ensuring a high level of consumer protections. The legislation will cover credit agreements of up to €100,000.
It was agreed that before concluding a credit agreement, proper assessment of consumer’s creditworthiness to meet their obligations must be carried out. EP negotiators secured a measure that protects cancer survivors applying for credit for which an insurance is required, whereby they have the “right to be forgotten" after a relevant period of time so their former illness does affect the insurance rates.
There will also be stricter rules on advertising to reduce miss-selling to over-indebted consumers. Member states will have to ensure effective measures are in place against overcharging consumers and will also have to ensure that consumers have the right to withdraw from a credit agreement with no reason within 14 days. The provisional political agreement reached will now have to be approved first by the Internal Market and Consumer Protection Committee (IMCO), and then by a plenary vote. The Council also has to approve the deal, before it can come into force.
Commission Delegated Regulation (EU) 2022/2580 of 17 June 2022 supplementing Directive 2013/36/EU regulatory technical standards specifying the information to be provided in the application for the authorisation as a credit institution
On 29 December 2022, the Commission Implementing Regulation (EU) 2022/2580 of 17 June 2022 supplementing Directive 2013/36/EU of the European Parliament and of the Council was published with an effective date of 18 January 2023. It covers regulatory technical standards specifying the information to be provided in the application for the authorisation as a credit institution. It also specifies the obstacles which may prevent the effective exercise of supervisory functions of competent authorities.
Commission Implementing Regulation (EU) 2022/2581 of 20 June 2022 laying down implementing technical standards for the application of Directive 2013/36/EU of the European Parliament
On 29 December 2022, the Commission Implementing Regulation (EU) 2022/2581 of 20 June 2022 was published with an effective date of 18 January 2023. The regulation lays down implementing technical standards for the application of Directive 2013/36/EU of the European Parliament and of the Council (CRDIV) with regard to provision of information in applications for authorisation of a credit institution.
Basel Committee clarifies how climate-related financial risks may be captured in the existing Basel Framework
On 8 December 2022, the Basel Committee on Banking Supervision published responses to frequently asked questions (FAQs) to clarify how climate-related financial risks may be captured in existing Pillar 1 standards. The responses are consistent with the Basel Committee's principles for the effective management and supervision of climate-related financial risks.
Banks should consider how to incorporate climate-related financial risks in their interpretation and application of the existing Basel framework, and continuously develop their capabilities and expertise in relation to climate-related financial risks. Where appropriate, the responses explicitly acknowledge data limitations and recognise that practices will evolve iteratively over time, and therefore allow for flexibility while promoting a globally consistent implementation of the Basel framework.
ECB Banking Supervision: SSM supervisory priorities for 2023-2025
On 12 December 2022, the ECB released their update of the supervisory priorities for 2023-2025. These are stated to be based on a thorough assessment of the main risks and vulnerabilities faced by the significant institutions under its direct supervision, as well as considering the progress made on the 2022 priorities and 2022 SREP. Priorities include strengthening resilience to immediate macro-financial and geopolitical shocks such as credit risk and funding risk, addressing digitalisation challenges by focusing on business models and plans, operational risk and governance. The third priority is to step up efforts to address climate change by ensuring banks continue to incorporate C&E risks within their business strategy.
Joint Committee Advice on the review of the securitisation prudential framework (banking) - Response to the Commission’s October 2021 - Call for Advice to the JC of the ESAs (JC 2022 66)
On 12 December 2022, the three European Supervisory Authorities (EBA, EIOPA and ESMA) published a joint advice in response to the European Commission's October 2021 call for advice on the review of the securitisation prudential framework. The ESAs made recommendations aimed at improving the consistency and risk sensitivity of the capital framework for banks and recommended that the current liquidity framework for banks and the prudential framework for insurers be maintained in their current forms.
For more information on these topics please contact any member of A&L Goodbody's Financial Regulation team.
Date published: 12 January 2023