Inclusion of finance sector in EU due diligence law on the brink

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Call for clarification on the Artificial Intelligence Liability Directive

On 28 September, the European Commission published its proposal for the Artificial Intelligence Liability Directive which  complements and modernises the EU civil liability framework by introducing for the first time rules specific to damages caused by AI systems. 

The purpose is to lay down uniform rules in case of damages caused by AI systems and to establish broader protection for victims. The Directive is applicable to both individuals and businesses. The new rules will, for instance, make it easier to obtain compensation if someone has been discriminated against in a recruitment process involving AI technology.

It is proposed that five years after the entry into force of the AI Liability Directive, the Commission will assess the need for no-fault liability rules for AI-related claims if necessary.

Consequently, on 3 October, the Commission enabled relevant stakeholders to provide feedback on the proposed AI Liability Directive. All feedback to be received will be summarised by the Commission and presented to the Parliament and Council with the aim of feeding into the legislative debate.

As part of its mandate, ESBG replied to the Commission’s call for feedback on 2 December. In its response, ESBG supports the protection of consumers as well as adapting liability rules to the digital age, thereby setting out a framework for excellence and trust in AI.

However, ESBG understands from the proposed Directive that the presumption of a causal link in the case of fault is mainly a matter of “non-compliance of due diligence duties”. In this context, ESBG calls for clarification on what could be considered as non-compliance of due diligence duties. In particular, ESBG questions whether the presence of bias or discrimination could be considered a noncompliance of due diligence duties. Furthermore, clarification is necessary on what tools are available to providers and users of AI systems to refute the causal link.

Finally, as the AILD is a directive, members stress the importance to take the cultural and legal differences between member states into account when implementing. Different application across member states can lead to regulatory arbitrage where firms choose where to be domiciled according to the member states legislative application. Therefore, the directive should be aligned with the Rome I Regulation and the Rome II Regulation regarding the conflict of laws on the law applicable to non-contractual obligations.


ESBG stresses the need for timely assessment of loans with ESG-linked features in its letter to the IASB Chair

Call for clear scope of applicability of the Cyber Resilience Act

On 14 November, ESBG submitted its input to the European Commission’s call for feedback on the proposed Cyber Resilience Act, which was published in September. All feedback received will be summarised by the Commission and presented to the European Parliament and Council with the aim of feeding into the legislative debate.

On 15 September, the Commission published a proposal for a Cyber Resilience Act, which aims to protect consumers and businesses from products with inadequate security features. The Cyber Resilience Act introduces mandatory cybersecurity requirements for products with digital elements. It will ensure that digital products, such as wireless and wired products and software, are more secure for consumers across the EU. In addition to increasing the responsibility of manufacturers by obliging them to provide security support and software updates to address identified vulnerabilities, it will enable consumers to have sufficient information about the cybersecurity of the products they buy and use.

In the position paper, ESBG members welcome the Commission proposal and support the goal of only having secure software on the internal market. However, members believe that the Cyber Resilience Act leaves too much room for interpretation regarding its scope of applicability and therefore proposes that the Commission should make a clear scope-statement that would dissolve any uncertainty whether the software developed, operated, or marketed by financial institutions is in scope of this Act.

In addition, there are vertical initiatives that already regulate the cyber-resilience of hardware and software products used by certain sectors. This is the case of the Digital Operational Resilience Act (DORA) for the financial sector, a regulatory framework specifically designed and developed to ensure the digital operational resilience of the financial sector. Extending the scope of the Cyber Resilience Act to products manufactured by credit institutions may place additional burdens onto banks, on top of the already existing tight regulatory corset.


Payment Fintech:Quo Vadis?

ESBG Spotlight 6 December 2022 – Jan Vermeulen (NBB), Payment Fintech: Quo Vadis?


It seems that most Fintech companies target payments as the holy grail for their business. Since PSD2 has brought the opportunity for those Fintech companies to become licensed to operate in payments, the number of FinTech companies as well as the granted licenses showed impressive growth. But is it all gold that glitters?

Now that the review of PSD2 is taking place, Jan Vermeulen, directly overseeing the Belgium-based licensed FinTech companies at the National Bank of Belgium, will take stock on whether that is the case or not.

During this ESBG Spotlight, he will provide insight in the developments in the Belgium Fintech space since PSD2 became into force.

About Jan Vermelulen
Jan Vermeulen is the Coordinator Retail payments, prudential supervision and oversight at the National Bank of Belgium.

This session will be moderated by Diederik Bruggink, Head of Payments and Innovation at the European Savings and retail Banking Group (ESBG).



Coordinator of the team responsible for prudential supervision on payment institutions/electronic money institutions and oversight on payment systems at the National Bank of Belgium



Head of Department Innovation and Payments at The European Savings and Retail Banking Group

Get in contact with us for more details about Spotlight, replays of previous editions or possible collaboration:

May you rest in peace, Wouter!

It is with great sadness that we have to announce that our colleague and friend, Wouter De Win, passed away on 30 October, 2022 at the age of 58, surrounded by his loved ones.

Wouter started his career at the WSBI-ESBG Joint Office at 17 December 2001 as an accomplished accountant in our Organization Department. Wouter loved to work with figures but also with people. His pleasant personality and positivity was contagious to everyone he met.
He was a real appreciated colleague and delivered excellent work. Always with a smile and ready to help. Even during Covid Times, Wouter would not have missed a day of work at the office.
The last year we noticed that Wouter’s health condition was getting worse and a long hospitalisation followed.
Never we would have thought that we would be saying a definitive goodbye.

May you rest in peace, Wouter!

ESBG submitted its response to the EBA consultation on DGS contribution calculation


November 7, 2022

The European Savings and Retail Banking Group (ESBG) welcomes the initiative of the European Banking Authority (EBA) to launch a consultation aiming at reviewing its guidelines, which specify the methods for calculating the contributions to the Deposit Guarantee Schemes (DGS), as requested in Art 13(3) directive 2014/49/EU. The EBA analysed whether the original guidelines’ approach to determine the riskiness of institutions is appropriate. In particular, the EBA analysed whether institutions that required DGS interventions were among the riskiest according to the guidelines’ methodology.

Enhancing the proportionality between the riskiness and the DGS contribution.
The EBA has identified elements that should be improved:
• setting minimum thresholds for the majority of core risk indicators and adjusting their minimum weights to better reflect the indicators’ performance in measuring the risk to
the DGSs,
• introducing an improved formula for determining the risk adjustment factor of each member institution that ensures a constant relationship between the riskiness of institutions and their DGS contributions,
• specifying how to account for deposits where the DGS coverage is subject to uncertainty, including in relation to client funds, thus ensuring closer alignment between the amount of covered deposits of a credit institution and its contributions.

Further clarity is needed.

While ESBG members welcomed the EBA consultation, ESBG’s response introduced two main recommendations. First, the DGS should be requested to disclose a description of
the institution’s contribution to the DGS fund with the goal of enhancing the member institution’s understanding of their risk profile. Such communication could also encourage the institutions to lower their risk profile where necessary, which could contribute to financial stability.
A more balanced risk weight between indicators.

As a second point, ESBG advocates for a more balanced risk weight for the two following indicators: Return on Assets (RoA) and the Total Risk Exposure Amount/Total of Assets
(TREA/TA). According to the EBA analysis, the former provides a better indication of a potential DGS intervention than the latter. Consequently, the EBA proposes raising the weight of the RoA and lowering the weight of the TREA/TA. ESBG points out that this initiative is counterintuitive, as it benefits high-risk banks. Low risk remains the principal reason to avoid DGS intervention.

High-level position paper – Executive summary


ESBG responds to the EBA consultation on the supervisory handbook for IRB systems validation

On 28 October, ESBG responded to the European Banking Authority (EBA) consultation on the supervisory handbook for Internal Rating Based (IRB) systems validation. The handbook aims to clarify the role of the validation function as part of corporate governance, in particular in terms of scope of work and interaction with the credit risk control unit.

As a general comment, we stressed that organizational suspension of the validation function should be independent of the size of the bank. In addition, it should be ensured that the validation manual is free of inconsistencies with existing supervisory regulations such as the ECB Guide on Internal Models.
ESBG stressed that it would be helpful to consider the aspect of proportionality more closely. The validation approach proposed by the EBA hardly differentiates between the materiality of models/portfolios and model changes. On the contrary, the intensity and scope of validation activities must always be based on the expected data situation, the importance of the rating procedure, and the scope and complexity of the changes made.


TOPIC: Prudential regulation


ESBG short paper on the bank crisis management and deposit insurance framework (CMDI)

Position Paper | Prudential, Supervision and Resolution


October 27, 2022

The Banking Union is one the most relevant EU policy over the last decade. The financial crisis in 2008 and its subsequent sovereign debt crisis in the euro zone have revealed weaknesses inherent in the functioning of the banking industry and demonstrated the need to coordinate the supervision and to shape a common framework in Europe.

Created in 2014, the Banking Union was a powerful response aiming to ensure that the European banks are able to withstand the upcoming crisis in the future without recourse to taxpayers’ money. The Banking Union is based on three pillars:
i) the Single Supervisory Mechanism (SSM) set up rules on capital requirements mainly from the implementation of Basel agreement and gave to the European Central Bank the responsibility to coordinate this supervision;
ii) the Single Resolution Mechanism (SRM) established a Single Resolution Board (SRB) and a Single Resolution Fund (SRF) in order to ensure the orderly resolution of failing banks, while minimising their impact on the real economy and on public finances;
iii) , the Deposit Guarantee Schemes (DGS) aim to protect depositors in the case where their banks fail, and their deposits are not available anymore.
These new uncertain times worsened due to the high inflation and the war in Ukraine legitimates the ongoing implementation of Basel IV rules in the EU regulation. Indeed, a well-capitalised banking sector contributes to reinforce the resilience of the European economy. As regards the two other pillars of the Banking Union, the European Commission has been mandated by the Eurogroup to bring forward a legislative proposal for a strengthened Crisis Management and Deposit Insurance (CMDI) framework in June.

Without a political agreement between the Member States, the Eurogroup decided to postpone the introduction of a European Deposit Insurance Scheme (EDIS) which was included in the initial workplan drafted by the Eurogroup President Pascal Donohoe. Against this background and before the publication of the legislative package postponed at the beginning 2023, the European Savings and Retail Banks Group wishes to reiterate its supports to the current CMDI review and calls in the meantime for an evolution of the framework, not a revolution. Read our paper below:




ESBG welcomes EU Commission's legislative proposal on instant payments

BRUSSELS, 26 OCTOBER 2022. The European Savings and Retail Banking Group (ESBG) welcomes the European Commission’s legislative proposal on instant payments announced today. The ESBG hopes that the initiative will strengthen the efforts of savings and retail banks to make instant payments the new normal across the European Union.

Since its introduction, the ESBG has been supporting the development and roll out of instant payments, inter alia by encouraging its member banks to adhere on a voluntary basis to the European instant payments scheme (SCT Inst), one of the major building blocks of a future pan-European solution. Instant payments allow frictionless transfers within 10 seconds in all European countries and therefore support the ambition to strengthen the European sovereignty in the payments sector. However, the ESBG still considers that adherence should be measured in terms of number of accounts reached, rather than in terms of adhering banks and therefore stresses the importance of a more balanced approach in this respect. Nevertheless, we welcome that a differentiation has been made between banks within the euro area and banks within other EU member states when it comes to adhering to the scheme.

Fabrice Denèle, CEO BPCE Payment Services and Chair of the ESBG Payments Committee.

The ESBG especially welcomes the proposal’s attempt to streamline the approach to sanctions screening, for which it has been advocating as a key element to make instant payments effective while remaining safe.

“Relying on a daily client database screening, instead of forcing both the sending and the receiving bank to screen each and every cross-border transaction, will allow banks to offer pan-European innovative solutions while ensuring full compliance with AML/CTF rules and targeted financial sanctions regulations” said Fabrice Denèle, CEO BPCE Payment Services and Chair of the ESBG Payments Committee.

“I am very pleased to see that the suggestions put forward by the industry have been taken on board” he continued. “The ESBG was among the first associations to raise awareness on the topic to the political agenda and our regular talks with the European Central Bank have triggered the set-up of a Task Force on sanctions screening that in January 2022 delivered its report to policymakers. I am convinced that with this new approach the number of false positives will decrease drastically – hence increasing consumer trust”.

Diederik Bruggink, ESBG Head of Innovation and Payments.

“ESBG member banks were already between the early adaptors of instant payments in euro”, said the association’s Head of Innovation and Payments, Diederik Bruggink.

“The first cross-border instant payment in euro took place between two ESBG member banks, notably between CaixaBank and Erste Bank, and also the first transaction in the European Central Bank’s instant settlement system TIPS was between to ESBG member banks, BPCE and CaixaBank”, he added.

The ESBG also welcomes the focus of the proposal on consumer protection, a long standing priority for all its member banks. It especially supports the decision to leave the concrete implementation of services known as Confirmation of Payee to the market, which demonstrates full trust in the ability of the industry to find the best solutions based on the specific needs of each Member State.

Finally, in taking note about the Commission’s position on the charging principles, the ESBG highlights that a long term sustainable business model benefiting all stakeholders is key not only to ensure the success of instant payments, but also to foster their innovative potential in the ecosystem.

Press contact:

Leticia Lozano, Senior Communications Adviser
Tel. +32 2211 1196

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