The Court of Justice of the European Union (CJEU) is expected to declare invalid the European Banking Authority (EBA)’s 2017 Guidelines on product oversight and governance arrangements for retail banking products. This was recommended on Thursday 15 April by the Court’s Advocate General Michal Bobek in his Opinion in case C-911/19.
It was the French Banking Federation (FBF) that initiated the questioning of the EBA’s competence to issue such guidelines. It had appealed to the French Conseil d’État (Council of State) to annul an opinion of the French ‘Autorité de contrôle prudentiel et de résolution’ (Prudential Supervision and Resolution Authority - ACPR) applying the EBA guidelines - which decided to refer several questions to the CJEU for a preliminary ruling.
In his Opinion, the Advocate General first proposes that the Court should rule that EU law allows for a request for a preliminary ruling to be submitted on the assessment of validity of non-binding EU acts (soft law acts) such as the EBA guidelines.
The contested guidelines concern the establishment of product governance for retail banking products. In particular, they recommend that producers identify relevant target markets and ensure that products are appropriate for these markets.
On the nature of the guidelines, Mr Bobek concludes that, as a whole, they do not fall within the scope of the legislative acts referred to in the EBA’s founding regulation or those which confer specific tasks on the EBA. The EBA could not therefore legally adopt these guidelines, he said.
In order to find out whether the EBA had exceeded its powers, the Advocate General compared the scope of the EBA’s founding regulation with the actual content of the guidelines. In particular, he noted a clear mismatch between the subject matter of those acts and that of the guidelines, as while the latter have set out specific ‘rules’ that concern product governance, the former all relate to corporate governance.
The fact that the guidelines aim to protect consumers does not alter this conclusion, he says.
Mr Bobek also believes that the non-binding nature of the guidelines does not entitle them to a more lenient validity check.
The Advocate General concludes that it is essential to make non-binding acts (soft law acts) adopted by EU agencies subject to normal judicial review, at least with regard to their competences, so that those agencies do not unlawfully interfere with the competences of other EU bodies or institutions.
See the conclusions: https://bit.ly/3e7WMXl (Original version in French by Marion Fontana)