20 December 2018

EBF recommendations for an EU framework of experimentation

To support the ongoing attention of supervisors and regulators on testing frameworks in Europe, the EBF has developed a list of detailed recommendations for the development of an EU harmonised framework for experimentation.

Access to the testing

Access to the testing environment should not be restricted based on the nature or the size of the business and should by no means be considered as a way to circumvent existing rules. The entry system should consist of a flexible regime that does not restrict entry to specific periods / slots, to allow firms starting the testing as soon as ready. Participation in the framework by institutions should always be voluntary, and institutions should not be forced to participate.

Eligibility criteria

To facilitate the broadest access to innovators, the eligibility criteria should be simple and based on the following key principles: innovative nature of the project, regulatory uncertainties about the implementation and clear benefits to the consumer.

Length and scope of the testing period

The length of the testing period should be enough to fulfil this learning process. Considering that the testing may be initially envisaged for a limited time framework of 6 months with the possibility to extend it up to other 6 months on a case-by-case scenario, when deemed necessary. During the testing period, projects should also be limited in scope to reduce potential risks to both users and the financial system.

Exit of the testing period

Exit plans should be designed to allow firms to conclude the testing at any point without disrupting /harming participating consumers. The entry and exit process should be streamlined and avoid unnecessary bureaucratic constraints and should be agreed between the participating firms and the relevant authorities before the start of the testing period.

Information sharing and transparency

Transparency on the learnings from the testing should be enhanced by issuing reports on the outcomes of the tests. To ensure full consumer protection, customers must be aware that they are about to use a service/product that is under testing. Information sharing is necessary in order to leverage on the results of testing already undertaken in certain jurisdictions. This would allow shorter time-to-market and would support the uptake of technological developments.

Cross-border coordination

Cross-border coordination is the underlying principle underpinning the EU framework for experimentation and should therefore be enhanced across EU member states. The European Banking Authority, EBA, should take the role of central hub facilitating exchange of information as well as the gathering of legal interpretations of existing regulations by national authorities.

Full recommendations

© EBF