European Supervisory Authority Guidelines, Recommendations & Opinions

European Banking Authority

The European Banking Authority (EBA) publishes a list of its consumer protection and financial innovation related Technical Standards, Guidelines, Recommendations, Opinions, Reports, and other publications.

European Insurance and Occupational Pensions Authority

The European Insurance and Occupational Pensions Authority (EIOPA) publishes its consumer protection and financial innovation related Guidelines and other publications.

European Securities and Markets Authority

The European Securities and Markets Authority (ESMA) publishes its Guidelines and Technical Standards. Read the Central Bank's Markets Update.

Guidelines on MiFID II product governance requirements

On 3 August 2023, ESMA published the official translations Guidelines on MiFID II product governance requirements (2023). The ESMA Guidelines apply to firms and competent authorities. The purpose of these guidelines is to establish consistent, efficient and effective supervisory practices within the European system of financial supervision (ESFS) and to ensure the common, uniform and consistent application of the MiFID II product governance requirements. By helping to ensure that firms comply with regulatory standards, ESMA anticipates a corresponding strengthening of investor protection.

They apply in relation to the manufacturing or distribution of financial instruments and structured deposits. The product governance requirements apply in particular to the requirements in Articles 9(3), 16(3), Article 16(6), Article 24(1) and 24(2) of Directive 2014/65/EU (MiFID II) and in Articles 9 and 10 of the Commission Delegated Directive (EU) 2017/593 (MiFID II Delegated Directive).

The Central Bank of Ireland complies with these guidelines and incorporates them into its on-going supervisory practices and processes. Firms are expected to comply with these guidelines from 3 October 2023.

Guidelines on Certain Aspects of the MiFID II Suitability Requirements

On 3 April 2023, ESMA published Guidelines on certain aspects of the MiFID II Suitability Requirements. The purpose of these guidelines is to clarify the application of certain aspects of the MiFID II suitability requirements in order to ensure the common, uniform and consistent application of Article 25(2) of MiFID II and of Articles 54 and 55 of the MiFID II Delegated Regulation.

ESMA expects these guidelines to promote greater convergence in the interpretation of, and supervisory approaches to, the MiFID II suitability requirements, by emphasising a number of important issues, and thereby enhancing the value of existing standards. By helping to ensure that firms comply with regulatory standards, ESMA anticipates a corresponding strengthening of investor protection. The Central Bank of Ireland complies with these guidelines and incorporates them into its on-going supervisory practices and processes. Firms are expected to comply with these guidelines from 3 October 2023.

ESMA Guidelines on certain aspects of the MiFID II remuneration requirements

On 3 April 2023, ESMA published ESMA Guidelines on certain aspects of the MiFID II remuneration requirements.

The purpose of these guidelines is to ensure the common, uniform and consistent application of the MiFID II remuneration requirements set out in Article 27 of the MiFID II Delegated Regulation as well as, on the one hand, the conflicts of interest requirements set out in Articles 16(3) and 23 of MiFID II and Article 34 of the MiFID II Delegated Regulation in the area of remuneration; and on the other hand, the conduct of business rules set out in Article 24(1) and (10) of MiFID II.

In addition, these guidelines clarify the application of the governance requirements in the area of remuneration under Article 9(3) of MIFID II. 8. ESMA expects these guidelines to promote greater convergence in the interpretation of, and supervisory approaches to, the MiFID II remuneration requirements as well as the MiFID II conflicts of interest and conduct of business requirements in the area of remuneration by emphasising a number of important issues, and thereby enhancing the value of existing standards. By helping to ensure that firms comply with regulatory standards, ESMA anticipates a corresponding strengthening of investor protection.

ESMA Guidelines on certain aspects of the MiFID II appropriateness and execution-only requirements

On 12 April 2022, the European Securities and Markets Authority (ESMA) published ESMA guidelines on certain aspects of the MiFID II appropriateness and execution-only requirements. The purpose of these guidelines is to clarify the application of certain aspects of the MiFID II appropriateness and execution-only requirements in order to ensure the common, uniform and consistent application in relation to the provision of the investment services listed in Section A of Annex I of MiFID II and ancillary services listed in Section B thereof, as well as in relation to the sale of or advice on structured deposits.

ESMA expects these guidelines to promote greater convergence in the interpretation of, and supervisory approaches to, the MiFID II appropriateness and execution-only requirements, by emphasising a number of important issues, and thereby enhancing the value of existing standards. By helping to ensure that firms comply with regulatory standards, ESMA anticipates a corresponding strengthening of investor protection. The Central Bank of Ireland complies with these guidelines and incorporates them into its on-going supervisory practices and processes. Firms are expected to comply with these guidelines from six months of the date of publication of the guidelines on ESMA’s website in all EU official languages ie from 12 November 2022.

Guidelines on Certain Aspects of the MiFID II Suitability Requirements

On 6 November 2018, ESMA published Guidelines on certain aspects of the MiFID II suitability requirements. The purpose of these guidelines is to clarify the application of certain aspects of the MiFID II suitability requirements in order to ensure the common, uniform and consistent application of Article 25(2) of MiFID II and of Articles 54 and 55 of the MiFID II Delegated Regulation. ESMA expects these guidelines to promote greater convergence in the interpretation of, and supervisory approaches to, the MiFID II suitability requirements, by emphasising a number of important issues, and thereby enhancing the value of existing standards. By helping to ensure that firms comply with regulatory standards, ESMA anticipates a corresponding strengthening of investor protection. The Central Bank of Ireland complies with these guidelines and incorporates them into its on-going supervisory practices and processes. Firms are expected to comply with these guidelines from 8 March 2019.

Guidelines on Cross-Selling Practices

On 11 July 2016, ESMA published Guidelines on cross-selling practices. The guidelines apply in relation to cross-selling practices within the meaning of subparagraph 42 of Article 4(1) of MiFID II. In particular, the guidelines apply to the offering of an investment service together with another service or product as part of a package or as a condition for the same agreement or package. The Central Bank of Ireland complies with these guidelines and incorporates them into its on-going supervisory practices and processes. Firms are expected to comply with these guidelines from 3 January 2018.

ESMA Guidelines for the Assessment of Knowledge and Competence

On 3 January 2017, ESMA published the Guidelines for the assessment of knowledge and competence. The purpose of these guidelines is to specify the criteria for the assessment of knowledge and competence required under Article 25(1) of MiFID II, in accordance with Article 25(9) of the same Directive. The guidelines apply from 3 January 2018. MiFID firms and persons acting on behalf of such firms are currently subject to the Minimum Competency Code 2011 (MCC) when carrying out certain MiFID activities. The MCC has been amended to reflect the Guidelines. Regulated firms and persons acting on their behalf are expected to comply with the ESMA Guidelines from 3 January 2018.

ESMA Guidelines on Complex Debt Instruments and Structured Deposits

On 4 February 2016, ESMA published Guidelines on complex debt instruments and structured deposits. The purpose of these guidelines is to specify the criteria for the assessment of (I) debt instruments incorporating a structure which makes it difficult for the client to understand the risk involved and (ii) structured deposits incorporating a structure which makes it difficult for the client to understand the risk of return or the cost of exiting the product before term. ESMA expects these guidelines to strengthen investor protection and to promote greater convergence in the classification of “complex” or “non-complex” financial instruments or structured deposits for the purposes of the appropriateness test/execution-only business in accordance with Article 25(3) and 25(4) of MiFID II. The Central Bank of Ireland complies with these guidelines and incorporates them into its on-going supervisory practices and processes. Firms are expected to comply with these guidelines from 3 January 2018.

ESMA Guidelines on MiFID II Product Governance Requirements

On 5 February 2018, ESMA published Guidelines on MiFID II product governance requirements. The purpose of these guidelines is to provide more clarity on the product governance obligations for firms set out in MiFID II. In particular, they concern the manufacturing or distribution of investment products. The Central Bank of Ireland complies with these guidelines and incorporates them into its on-going supervisory practices and processes. Firms are expected to comply with these guidelines from 3 January 2018.

Guidelines on Certain Aspects of the MiFID II Compliance Function Requirements

On 5 June 2020, the European Securities and Markets Authority (ESMA), published the Final Report on the Guidelines on certain aspects of the MiFID II compliance function requirements. The ESMA Guidelines replace the existing MiFID Compliance Function Guidelines. The ESMA Guidelines are aimed at helping firms to increase the effectiveness of the compliance function. The ESMA Guidelines also take into account new requirements under MiFID II and the results of supervisory activities conducted by national competent authorities (NCAs) on the application of the compliance function requirements in accordance with MiFID II the MiFID II Delegated Regulation. The Central Bank of Ireland complies with these guidelines and incorporates them into its on-going supervisory practices and processes. Firms are expected to comply with these guidelines from 6 June 2021.

Joint Committee Publications

Guidelines on Complaints-Handling for the Securities (ESMA) and Banking (EBA) Sectors

In June 2014, the Joint Committee Guidelines on complaints handling for the securities and banking sectors were published. These Guidelines are addressed to competent authorities and seek to:

Clarify expectations relating to firms’ organisation relating to complaints handling;
Provide guidance on the provision of information to complainants;
Provide guidance on procedures for responding to complaints;
Harmonise the arrangements of firms for the handling of all complaints they receive; and
Ensure that firms’ arrangements for complaints handling are subject to a minimum level of supervisory convergence across the EU

On 31 July 2018, the revised Guidelines on complaints handling for the securities and banking sectors were published. The revised Guidelines extend the scope of the Guidelines to authorities competent for supervising the new institutions under the revised Payment Services Directive (PSD2) and the Mortgage Credit Directive (MCD). These institutions are as follows:

Payment Initiation Service Providers (PISPs)
Account Information Service Providers (AISPs)
Non-credit institution creditors under MCD
Mortgage Credit Intermediaries

The revised Guidelines will take effect from 1 May 2019.

European Banking Authority Publications

EBA Guidelines on Loan Origination and Monitoring

30 November 2020

On 29 May 2020, the EBA published its Guidelines on Loan Origination and Monitoring (the “Guidelines”). The EBA has described the Guidelines as follows: “The guidelines specify the internal governance arrangements for granting and monitoring of credit facilities throughout their lifecycle. They introduce requirements for borrowers’ creditworthiness assessment and bring together the EBA’s prudential and consumer protection objectives. The guidelines aim to ensure that institutions have robust and prudent standards for credit risk taking, management and monitoring, and that newly originated loans are of high credit quality. The guidelines also aim to ensure that the institutions’ practices are aligned with consumer protection rules and AML requirements.”

The Guidelines apply to institutions, as defined in point 3 of Article 4(1) of Regulation (EU) No 575/2013. When the loan falls under the scope of Directive 2014/17/EU (the Mortgage Credit Directive, MCD), Section 5 applies to creditors, as defined in Article 4(2) of this directive. When the loan falls under the scope of Directive 2008/48/EC (the Consumer Credit Directive, CCD), Section 5 applies to creditors, as defined in point (b) of Article 3 of that directive.

The existing 2015 EBA Guidelines on Creditworthiness Assessment (as related to the requirements in the Mortgage Credit Directive (Directive 2014/17/EU)) have been incorporated into the Guidelines and are thus repealed from the date of application of the Guidelines.

The Central Bank has confirmed to the EBA it intends to comply with the Guidelines. The Guidelines apply from 30 June 2021, with the following transitional arrangements also provided for:

1) The application of the guidelines to the already existing loans and advances that require renegotiation or contractual changes with borrowers will apply from 30 June 2022; and
2) Institutions will be allowed to address possible data gaps and adjust their monitoring frameworks and infrastructure until 30 June 2024.

In accordance with the discretion provided for in paragraph 10 of the Guidelines, the Central Bank will apply Sections 6 and 7 to retail credit firms, and Section 6 to moneylenders, as creditors that fall within the scope of Directive 2014/17/EU and Directive 2008/48/EU and, are not credit institutions, from the date of application of the Guidelines. It is also the Central Bank’s expectation that credit servicing firms authorised by the Central Bank will apply the requirements of Section 7 (Valuation of immoveable and movable property) of the Guidelines, when undertaking valuations of movable and immovable property in the course of carrying out credit servicing activities.

EBA Guidelines on ICT and Security Risk Management

2 September 2020

On 28 December 2019, the European Banking Authority (EBA) published Guidelines on ICT and security risk management under Directive (EU) 2015/2366. These Guidelines establish requirements for credit institutions, investment firms and payment service providers (PSPs) on the mitigation and management of their information and communication technology (ICT) and security risks and aim to ensure a consistent and robust approach across the Single market. These Guidelines have built on and replaced those on security measures for operational and security risks (EBA GL/2017/17), which have now been repealed.

In accordance with Article 16(3) of Regulation (EU) No 1094/2010, competent authorities and financial institutions must make every effort to comply with guidelines. The Central Bank complies with the Guidelines and has incorporated them into its ongoing supervisory practices and processes for PSPs. Firms are expected to comply with the Guidelines. The Guidelines are effective from 30 June 2020.

EBA Guidelines on the Conditions to Benefit From an Exemption From the Contingency Mechanism Under Article 33(6) of Regulation (EU) 2018/389 (RTS on SCA & CSC)

10 April 2019

On 4 December 2018, the European Banking Authority (EBA) published Guidelines on the conditions to benefit from an exemption from the contingency mechanism under Article 33(6) of Regulation (EU) 2018/389 (RTS on SCA & CSC). These Guidelines specify the conditions to exempt account servicing payment service providers (ASPSPs) that have opted for a dedicated interface from the obligation to set up the contingency mechanism described in Article 33(4) of the RTS on SCA & CSC. In accordance with Article 16(3) of Regulation (EU) No 1094/2010, competent authorities and financial institutions must make every effort to comply with guidelines. The Central Bank complies with the Guidelines and has incorporated them into its ongoing supervisory practices and processes for ASPSPs. The Central Bank expects ASPSPs seeking to avail of an exemption from the requirement to establish a contingency mechanism to comply with the Guidelines. The Guidelines apply from 1 January 2019.

EBA Guidelines on Authorisation Under PSD2

26 February 2018

On 11 July 2017, the European Banking Authority (EBA) published Guidelines on the information to be provided for the authorisation of payment institutions and e-money institutions and for the registration of account information service providers under Directive 2015/2366 (PSD2). The Guidelines set out the information to be provided by applicants intending to obtain authorisation as payment institutions and electronic money institutions as well as to register as account information service providers under PSD2. In accordance with Article 16(3) of Regulation (EU) No 1094/2010, competent authorities and financial institutions must make every effort to comply with guidelines. The Central Bank complies with the Guidelines and has incorporated them into its authorisation process for payment institutions and e-money institutions and its registration process for account information service providers. The Guidelines are effective for applicant firms from 13 January 2018.

EBA Guidelines on Procedures for Complaints of Alleged Infringements of PSD2

26 February 2018

On 13 October 2017 the European Banking Authority (EBA) published Guidelines on procedures for complaints of alleged infringements under Directive (EU) 2015/2366 (PSD2) to be followed by competent authorities (CAs) to monitor effective compliance by payment service providers (PSPs) under Directive (EU) 2015/2366 (PSD2). The Guidelines govern the process through which payment service users and other interested parties can submit complaints to CAs with regard to alleged infringements of PSD2 by PSPs. In particular, these Guidelines specify the requirements for the channels to be used by complainants to file their complaints, the information CAs should request from complainants when complaints are submitted to them, and the information CAs should include in their responses to complaints. In accordance with Article 16(3) of Regulation (EU) No 1094/2010, competent authorities must make every effort to comply with guidelines. The Central Bank complies with the Guidelines and has incorporated them into its Protected Disclosures procedure. The Guidelines are effective from 13 January 2018.

EBA Guidelines on Major Incident Reporting Under PSD2

26 February 2018

On 27 July 2017 the European Banking Authority (EBA) published Guidelines on major incident reporting under Directive (EU) 2015/2366 (PSD2).The Guidelines set out the criteria, thresholds and methodology to be used by payment service providers (PSPs) to determine whether or not an operational or security incident should be considered major and, therefore, be notified to the competent authority (CA) in the home Member State. In addition, these Guidelines establish the template that PSPs will have to use for this notification and the reports they have to send during the lifecycle of the incident, including the timeframes for submitting those reports. In accordance with Article 16(3) of Regulation (EU) No 1094/2010, competent authorities and financial institutions must make every effort to comply with guidelines. The Central Bank complies with the Guidelines and has incorporated them into its ongoing supervisory practices and processes for PSPs. Firms are expected to comply with the Guidelines from their effective date of 13 January 2018.

EBA Publishes Opinion on the Transition From PSD1 to PSD2

The EBA has published an Opinion in relation to the transition from the first Payment Services Directive (PSD1) to the revised Payment Services Directive (PSD2) which became effective 13 January 2018. The EBA opinion clarifies a number of issues identified by market participants and competent authorities, including with regard to the transitional period foreseen under PSD2, including the transitional arrangements that apply to account information service providers and payment initiation service providers.

EBA Guidelines on Remuneration Policies for Sales Staff

13 February 2017

On December 13th 2016, the European Banking Authority (EBA) published Guidelines on remuneration policies and practices related to the provision and sale of retail banking products and services. In accordance with Article 16(3) of Regulation (EU) No. 1093/2010, competent authorities and financial institutions must make every effort to comply with the guidelines. The guidelines apply from 13 January 2018.

The guidelines apply to remuneration paid to staff employed by credit institutions, mortgage credit intermediaries, retail credit firms, payment institutions, electronic money institutions and credit unions when providing deposits, payment accounts, payment services, electronic money, residential mortgages, and other forms of credit to consumers.

The guidelines include detailed requirements on (1) the design and monitoring of remuneration policies and practices, which should take into account the rights and interests of consumers; (2) documentation, notification and accessibility of the remuneration policies and practices; (3) approval of and responsibility for the remuneration policies and practices; and finally (4) monitoring of compliance with the guidelines.

In addition to existing requirements on remuneration, firms are expected to comply with these guidelines by their effective date, 13 January 2018. These guidelines will be incorporated into the Central Bank’s on-going supervisory practices and processes.

EBA Guidelines on Arrears and Foreclosure

29 March 2016

On 1 June 2015, the EBA published Guidelines on Arrears and Foreclosure. The guidelines provide additional detail to the requirements in Article 28 of the Mortgage Credit Directive (Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property). In accordance with Article 16(3) of the EBA Regulation (Regulation (EU) no 1093/2010), competent authorities and financial institutions must make every effort to comply with these guidelines. The guidelines are effective from 21 March 2016.

The guidelines apply to creditors in Ireland that provide credit that falls within the scope of the Mortgage Credit Directive, i.e. credit institutions, retail credit firms and credit unions.

The Central Bank of Ireland intends to comply with these guidelines, and will incorporate them into its on-going supervisory practices and processes for the firms that fall within the scope of the Mortgage Credit Directive in Ireland. Firms are expected to comply with these guidelines from 21 March 2016.

EBA Guidelines on Creditworthiness Assessment

30 November 2020

Update: These Guidelines have been incorporated into the EBA Guidelines on Loan Origination and Monitoring and are thus repealed from of the date of application of the Guidelines (30 June 2021).

On 1 June 2015, the EBA published Guidelines on Creditworthiness Assessment. The guidelines provide additional detail to the requirements in Articles 18 and 20(1) of the Mortgage Credit Directive (Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property). In accordance with Article 16(3) of the EBA Regulation (Regulation (EU) no 1093/2010), competent authorities and financial institutions must make every effort to comply with these guidelines. The guidelines are effective from 21 March 2016.

The guidelines apply to creditors in Ireland that provide credit that falls within the scope of the Mortgage Credit Directive, i.e. credit institutions, retail credit firms and credit unions.

Decision of the EBA Specifying the Benchmark Rate Under Annex II to Directive 2014/17/EU (Mortgage Credit Directive)

22 March 2016

On 21 March 2016, the EBA published its decision specifying the benchmark rate under the Mortgage Credit Directive

In certain circumstances, as set out in Schedule 2 of the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (S.I. No. 142 of 2016), creditors must use this benchmark rate to calculate the illustrative example of the Annual Percentage Rate of Charge and an illustration of a maximum instalment amount. These illustrations must be provided to the consumer in the European Standardised Information Sheet.

EBA Guidelines on Product Oversight and Governance

9 December 2015

On 15 July 2015, the EBA published guidelines on Product Oversight and Governance Arrangements for Retail Banking Products (Guidelines) which set out requirements for manufacturers and distributors when designing and bringing to the market retail banking products such as mortgages, personal loans, deposits, payment accounts, payment services and electronic money. In accordance with Article 16(3) of Regulation (EU) No 1093/2010, competent authorities and financial institutions must make every effort to comply with the guidelines.

The guidelines are divided into two parts:

The first part sets out requirements for manufacturers of retail banking products on their internal control functions; the identification of the target market; product testing; disclosure; product monitoring, remedial actions, and distribution channels.
The second part of the guidelines sets out requirements for the distributors of retail banking products on their governance arrangements, the identification and knowledge of the target market, and information requirements.

The Central Bank of Ireland will apply the guidelines to consumers as defined in the guidelines and will not extend that definition to include micro-enterprises and small and medium- sized enterprises.

The guidelines apply to all products brought to the market after the implementation date of the guidelines as well as to existing products on the market that are significantly changed after the implementation date of the guidelines. The Central Bank of Ireland will not, at this time, extend the application of the guidelines to products that are brought to the market before the implementation date of the guidelines. However, this will not preclude the Central Bank of Ireland from raising a potential product oversight and governance issue with a regulated entity regarding an existing product where there are concerns relating to actual or potential consumer detriment. The Central Bank of Ireland will keep the matter of application to some or all existing products under review.

The Central Bank of Ireland intends to comply with the guidelines and will incorporate them into its ongoing supervisory practices and processes. The Central Bank of Ireland does not, at this point, propose amendments to the legal framework.

The Guidelines will apply from 3 January 2017.

EBA Guidelines on the Security of Internet Payments

11 June 2015

On 19 December 2014, the EBA published Guidelines on the Security of Internet Payments (Guidelines) which set the minimum security requirements for Payment Service Providers (PSPs) in the European Union. These Guidelines seek to strengthen requirements for the security of internet payments across the EU and were developed in response to concerns about the increase in fraudulent activity related to internet payments. In accordance with Article 16(3) of Regulation (EU) No 1093/2010, competent authorities and financial institutions must make every effort to comply with the guidelines.

Among other things, PSPs will be required to carry out strong customer authentication in order to verify the customer identity before proceeding with an on-line payment. PSPs will also be required to provide assistance and guidance to their customers in relation to the secure use of internet payments. In particular, they will have to initiate customer awareness programmes so as to ensure their users understand potential risks and best practices in internet payments.

The Central Bank of Ireland intends to comply with the guidelines, and will incorporate them into its on-going supervisory practices and processes for PSPs. All firms within the scope of these guidelines are expected to comply from 1 August 2015.

European Insurance and Occupational Pensions Authority

EIOPA Guidelines on Information and Communication Technology Security and Governance

7 June 2021

On 12 October 2020, the European Insurance and Occupational Pensions Authority (“EIOPA”) published Guidelines on Information and Communication Technology (ICT) Security and Governance. These Guidelines provide guidance on how insurance and reinsurance undertakings (collectively “undertakings”) should apply the governance requirements in the context of ICT security and governance. The objective of these Guidelines is to provide clarification and transparency to market participants on the minimum expected information and cyber security capabilities, to avoid potential regulatory arbitrage, and to foster supervisory convergence regarding the expectations and processes applicable in relation to ICT security and governance as a key to proper ICT and security risk management.

These Guidelines have built on the Solvency II Directive (Directive 2009/138/EC), the Delegated Regulation (Commission Delegated Regulation (EU) No 2015/356), the EIOPA Guidelines on system of governance and the EIOPA Guidelines on outsourcing to cloud service providers. In accordance with Article 16(3) of Regulation (EU) No 1094/2010, competent authorities and financial institutions are required to make every effort to comply with guidelines and recommendations. The Central Bank complies with the Guidelines and has incorporated them into its ongoing supervisory practices and processes. Firms are expected to comply with the Guidelines. The Guidelines are effective from the 1 July 2021.

EIOPA Guidelines Under the Insurance Distribution Directive on Insurance-based Investment Products That Incorporate a Structure Which Makes it Difficult for the Customer to Understand the Risks Involved

On 4 October 2017, EIOPA published Guidelines under the Insurance Distribution Directive on insurance-based investment products (IBIPs) that incorporate a structure which makes it difficult for the customer to understand the risks involved. These Guidelines were developed in line with Articles 30(7) and (8) of the Insurance Distribution Directive (IDD). They principally address the issue of the identification of contractual structures or features which can make it difficult for the customer to understand the risks involved in an IBIP. However, they also concern a number of other issues relevant to the assessment of the complexity of IBIPs.

The IDD allows for a derogation from the requirement to assess suitability or appropriateness provided certain criteria are met, including that the products are non-complex. Where products are sold on an ‘execution-only’ basis, the Guidelines set out a process for the assessment of complexity, i.e., IBIPs that incorporate a structure that makes it difficult for the customer to understand the risks involved.

These Guidelines are divided in two sections:

The first section sets out requirements that apply to contracts which only provide investment exposure to financial instruments deemed non-complex under MiFID II (Article 30(3)(a)(i) of the IDD).
The second section sets out requirements that apply to 'other non-complex insurance-based investment products' (Article 30(3)(a)(ii) of the IDD).

The Central Bank of Ireland intends to comply with the Guidelines and will incorporate them into its ongoing supervisory practices and processes.The Central Bank of Ireland does not, at this point, propose amendments to the legal framework. Firms within scope are expected to comply with the Guidelines.

EIOPA Preparatory Guidelines on Product Oversight and Governance

29 July 2016

On 13 April 2016, the EIOPA published preparatory guidelines on Product Oversight and Governance Arrangements by Insurance Undertakings and Insurance Distributors (Guidelines) which set out requirements for manufacturers and distributors when designing and bringing to the market insurance products. In accordance with Article 16(3) of Regulation (EU) No 1094/2010, competent authorities and financial institutions must make every effort to comply with the guidelines.

The guidelines are divided into two parts:

The first part sets out requirements for manufacturers of insurance products on the establishment and review of product oversight and governance arrangements; the identification of the target market; skills, knowledge and expertise; product testing; product monitoring, remedial actions, and distribution channels.
The second part of the guidelines sets out requirements for the distributors of insurance products on the establishment and review of product distribution arrangements; obtaining information about the target market; distribution strategy; and the provision of sale information to the manufacturer.

The guidelines apply to all products brought to the market after the implementation date of the guidelines as well as to existing products on the market that are significantly changed after the implementation date of the guidelines. The Central Bank of Ireland will not, at this time, extend the application of these guidelines to products that are brought to the market before the implementation date of the guidelines. However, this will not preclude the Central Bank of Ireland from raising a potential product oversight and governance issue with a regulated entity regarding an existing product where there are concerns relating to actual or potential consumer detriment. The Central Bank of Ireland will keep the matter of application to some or all existing products under review.

The Guidelines will apply from 3 January 2017.