EBA provides its advice to the EU Commission on non-bank lending
04 May 2022
The EBA’s proposals aim at addressing risks arising from the provision of lending by non-bank entities in the areas of supervision, consumer protection, anti-money laundering and countering the financing of terrorism (AML/CFT), macro and microprudential risks.
The European Banking Authority (EBA) today published a Report
on non-bank lending in response to the European Commission’s February
2021 Call for Advice on this topic.
While the magnitude of non-bank lending in the EU remains limited
compared to credit provided by banks, FinTech activity has been
increasing over the last years. The trends observed outside the EU also
show that BigTechs and other non-traditional operators have already
developed, and successfully rolled out, business models for lending.
The provision of innovative financial services may bring benefits for
consumers and increase competition in the market. However, the analysis
of the regulatory regimes currently in place indicates that non-bank
lending remains largely unharmonised across the EU, and this may create
challenges for all the stakeholders, including regulators.
In this Report, the EBA has identified the risks related to
provisions of credit by non-bank lenders and put forward some proposals
to address them. In particular, the Report highlights the importance of:
- Ensuring that the consumer protection framework remains fit-for
purpose in view of new players entering the market. For that, the EBA is
proposing i) to enhance the disclosure requirements and ensure that
they are fair, effective and well-suited for new forms of lending; ii)
to strengthen the requirements for creditworthiness assessment, to
ensure it is conducted in the interest of consumers.
- Strengthening the provisions in terms of authorisation and
admission to activities and clarifying the identification of the
prudential perimeter and the supervisory responsibilities in
cross-border provision of services, to allow for a more effective
oversight.
- Covering all non-bank lenders in a more comprehensive way in the
EU-wide AML/CTF framework, to achieve greater harmonisation and capture
such entities as ‘obliged entities’.
- Enhancing the monitoring and reporting frameworks to avoid that any
sudden increase of macroprudential risks remain unaddressed and
considering the introduction of activity-based macro-prudential measures
to cover all credit providers
EBA
© EBA
