For several years, the French Banking Federation (FBF) has been challenging recommendations issued by the European Banking Authority (EBA) concerning the sale of banking products. The Court of Justice of the European Union (CJEU) has now ruled in favor of the European regulator.
A dispute over the sale of banking products
The dispute between the French Banking Federation and the European Banking Authority dates back to 2016, when the EBA issued recommendations on the sale of retail banking products, and more specifically on the oversight and governance arrangements for these products.
In concrete terms, the EBA's regulations require that banking products sold must be in the customer's interest, and provide for corrective measures if this is not the case.
Accepted the following year, in September 2017, by the Autorité de contrôle prudentiel et de résolution (ACPR), these recommendations become applicable to all French banking establishments.
But in November 2017, the French Banking Federation, opposed to these recommendations, lodged an appeal with the Conseil d'État in an attempt to overturn the opinion of the Autorité de contrôle prudentiel et de résolution, arguing that the ACPR was not competent to issue such an opinion.
The Conseil d'Etat then referred the case to the European Court of Justice, which ruled in favor of the European Banking Authority, obliging French banks to apply these recommendations.
European Banking Authority satisfied with Court of Justice ruling
The European Banking Authority has welcomed the European Court of Justice's decision, saying it enables it to pursue its objective of preventing banks from paying billions of euros in fines and litigation costs, as they did before its recommendations were implemented.
If the CJEU had ruled in favor of the French Banking Federation, all the EBA's recommendations would have been annulled, impacting other European supervisory authorities too, such as the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA).
On the strength of this decision, the EBA announced that it would be carrying out checks on European financial institutions to ensure that customers' needs, in line with its recommendations, were being met.