EBA and ESMA on compliant handling

On 16 June 2014 the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) issued joint guidelines concerning the procedures for complaint handling by financial companies. These guidelines follow on from similar guidelines issued by the European insurance supervisor (EIOPA) at the end of 2012. The guidelines issued by EBA and ESMA have to be respected by banks, investment firms and fund managers. This news item takes a closer look at these guidelines.



At the time of setting up the three European authorities supervising the financial sector, EBA, EIOPA and ESMA, in 2010, the European legislature explicitly determined which powers these regulators were to be given and how they should carry out their work. One of the main components was that the three supervisors had to cooperate actively with each other and co-ordinate their work with each other whenever possible. Given this it is particularly notable that EIOPA issued guidelines in 2012 regarding procedures for complaint handling that applied only to insurers, without similar guidelines for other types of financial companies being issued at the same time. Complaint handling is, after all, a process that occurs in all types of financial firms.

In any event, the EBA and ESMA recently picked up the gauntlet and have drawn up guidelines on the procedures for complaint handling for the sectors they also supervise. More specifically, these guidelines apply to all banks operating within the European Union, investment firms, managers of collective investment schemes (and UCITS), payment institutions and electronic money institutions.


Guideline Contents

Like the requirements which relate to the handling of complaints in the Wft, the guidelines cover complaints from both retail as well as financial customers of a more professional nature. It is therefore more interesting how the concept of “complaint” is defined. While no specific definition of this concept is included in the Wft, according to the guidelines, “every expression of dissatisfaction” by a customer of a financial service of the financial company is a complaint. Since an expression of dissatisfaction is easily made, this will soon be a formal complaint in the sense of the guidelines. Financial companies which fall under the guidelines must therefore realise that they will need to use a stricter definition of complaints.

There are a total of seven specific guidelines. These guidelines address the following topics:

  1. Policy for handling complaints
  2. Official who deals with complaints
  3. Registration of complaints
  4. Reporting complaints
  5. Internal analysis and follow up of complaints
  6. Information on complaints
  7. Procedures for handling complaints



Although the guidelines are not complex by nature, they will have an impact on all companies they apply to, due to the fact that they set additional rules beyond the current rules incorporated in the Wft.

The following provisions have the greatest impact:

  • All complaints (read: “expressions of dissatisfaction”) should be recorded internally;
  • Information on the number of complaints must be shared with supervisors periodically;
  • The company must analyse data concerning received complaints on an on-going basis and take immediate action when there seems to be systematic problems or potential legal or operational risks.

The guidelines will enter into force two months after they have been translated into all EU languages. This is expected to mean that the specific guidelines will take effect around October 2014. With an eye to this, it is recommended that banks, investment firms and other financial companies which fall under the guidelines make an analysis as soon as possible of the impact the guidelines are going to have on their company. Given the strict interpretation of the concept of complaints this impact will be considerable in many cases.

The Guidelines issued by EIOPA at the end of 2012 continue to apply to insurers. Their contents are similar to the ones now issued by the EBA and ESMA. When insurers have not yet fully implemented the guidelines issued by EIOPA, it is advisable to start doing so at very short notice. As yet the guidelines issued by the EIOPA and EBA and ESMA do not apply to financial service providers, although the possibility that Dutch supervisors or legislators will declare them as such via separate regulations, is not unthinkable.


To conclude

This news item gives a brief sketch of the guidelines issued by ESMA and EBA concerning the procedures for complaint handling by financial companies. Given the strict definition of the concept of “complaint” in these guidelines it is our prediction that the impact of these guidelines will be far reaching.

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