The Grand Chamber of the Court of Justice of the European Union (“CJEU”) has today handed down an important decision concerning a challenge to the legality of guidelines issued by the European Banking Authority (“EBA”) in 2016.
In the FBF case, the highest French Administrative Court (the Conseil d’État) referred a number of questions to the CJEU concerning the legal effect of guidelines issued by the EBA on 22 March 2016 on product oversight and governance arrangements for retail banking products (“the EBA guidelines”).
The EBA guidelines were issued in order to learn lessons from the financial crisis and, for both manufacturers and distributors of retail banking products, were intended as an integral part of the general organisational requirements linked to internal control systems of firms. They did not deal with the suitability of products for individual consumers.
On 8 September 2017, the French banking authority (the ACPR) issued an opinion formally adopting the Guidelines and applying them to credit establishments regulated by it. The French Banking Federation challenged this as being outside the scope of the EBA’s – and by extension the ACPR’s - powers.
In its judgment, the Grand Chamber first clarified that the nature of the EBA Guidelines, as a non-binding act of an EU agency, was such that a direct action could not be brought against them in the EU Court system, pursuant to Article 263 TFEU (§§-).
Instead, binding acts such as the ACPR’s Opinion could be challenged before national courts in the EU notwithstanding the fact that the applicant would not satisfy the EU Court’s own standing rules, with relevant issues of EU law sent to the CJEU for clarification and guidance (§§-).
Finally, the CJEU examined the EBA guidelines in light of the applicable secondary EU legislation and rejected the challenge based on the EBA’s lack of legal basis for such guidelines (§§-). In particular, the Court endorsed the objective of the EBA guidelines to ensure that financial establishments bear in mind, and design risk processes tailored towards, their target audience (in particular retail customers) (at §). Such an initiative was held to establish principles designed to guarantee the efficacy of processes to detect, manage and respond to risks, as well as to adequate internal control mechanisms (at §). The Court accordingly found that the EBA Guidelines fell within the scope of the EBA’s functions (at §§ and ).here.