Final Report on the Amending Guidelines on Product Oversight and Governance Arrangements for Retail Banking Products to Take into Account Products with ESG Features and Greenwashing Risks
The EBA’s final report amends the 2016 Product Oversight and Governance (POG) Guidelines to incorporate ESG features and greenwashing risks for retail banking products. Key changes include requirements for manufacturers and distributors to prevent greenwashing, extended scope to non-bank consumer credit providers, and an application date of 11 January 2027.
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OVERVIEW
Background And Rationale
The EBA’s 2016 Product Oversight and Governance (POG) Guidelines for retail banking products — covering mortgages, personal loans, deposits, payment accounts, payment services and electronic money — had remained unchanged since issuance. Five regulatory developments made a revision necessary.
First, on 4 June 2024, the EBA published a final report on greenwashing monitoring and supervision recommending updates to the POG Guidelines. Second, amendments to the Capital Requirements Directive (CRD) and Capital Requirements Regulation (CRR) introduced ESG risk requirements, including a new obligation in Article 76 of the CRD for management bodies to develop concrete plans to address ESG risks. Third, the 2024 Directive on unfair business-to-consumer commercial practices was amended to address misleading sustainability claims. Fourth, the EU enacted a legislative framework for energy performance of buildings, assigning a critical role to the banking sector in providing green loans. Fifth, the EBA Founding Regulation was amended to bring consumer credit under the EBA’s remit.
A public consultation was held from 9 July to 9 October 2025, with a public hearing on 11 September 2025. The EBA received 13 responses (p.8), which it subsequently assessed in detail.
Rationale
Following the consultation, the EBA made changes in five areas.
On scope of application, the Guidelines were extended to non-bank creditors under the Consumer Credit Directive (CCD). Due to divergences in national transpositions, the qualifier “Directive as transposed in the respective Member States” was added to paragraph 6 (p.10).
On internal control functions, Guideline 2.1a was amended to require management bodies to put in place sound processes to “identify, and prevent greenwashing practices and to manage and monitor risks resulting from greenwashing or perceived greenwashing practices” (p.21). The term “perceived greenwashing” was retained for consistency with the EBA Guidelines on Management of ESG Risks (MESGR).
On information for distributors, Guideline 8.3c was refined to require that sustainability-related communications are fair, clear and not misleading, with sustainability claims accurate, substantiated and up to date — limited to greenwashing-risk related requirements in the EBA Guidelines on MESGR (p.22).
On third-party arrangements, Chapter 6 on outsourcing was deleted and replaced with a cross-reference to the EBA Guidelines on sound management of third-party risk regarding non-ICT services (SMTPR) in the scope of application (p.13–14).
On application date, the EBA extended the deadline from 1 December 2026 to 11 January 2027 to align with the MESGR application date for small non-complex institutions (SNCI), allowing smaller institutions adequate time to adapt (p.14).
Guidelines
The amended Guidelines apply from 11 January 2027. Key amendments include: ESG features incorporated into target market identification (Guidelines 3.1–3.3); distribution channels required to possess appropriate knowledge of ESG product features (Guideline 7.1); manufacturers required to ensure sustainability claims provided to distributors are accurate and substantiated (Guideline 8.3c); and distributors required to ensure sustainability communications are fair, clear and not misleading (Guideline 12.1a).
Accompanying Documents
The EBA conducted a high-level qualitative impact assessment. The preferred option was to adapt existing POG requirements to ESG regulatory changes in a “limited and targeted way” rather than adding detailed supplementary ESG requirements. Benefits are deemed to exceed the costs, which are considered not material (p.26).
The Banking Stakeholder Group (BSG) expressed divergent views. Some members supported the amendments and alignment with the current regulatory framework. Others cautioned against unnecessary complexity, questioned the EBA’s mandate and urged that revised Guidelines for SNCI should not apply earlier than the EBA Guidelines on MESGR (p.27).
The EBA reaffirmed that its competence derives from Article 16 of Regulation (EU) No 1093/2010 and that the legal basis was confirmed by the Court of Justice of the EU ruling C-911/19. The principle of proportionality is embedded in the POG Guidelines, allowing institutions to implement arrangements according to their nature, scale and complexity (p.16).
