Reed Smith Client Alerts

German financial regulatory authorities have implemented new disclosure and monitoring obligations to align the country’s retail banking system with European Banking Authority (EBA) guidelines.

Authors: Felicitas Scriba

The German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin recently issued a circular proposal aimed at protecting the interests, objectives and characteristics of consumers in line with European product oversight and governance guidelines. The circular may have an impact and impose new compliance duties on manufacturers and distributors.

BaFin is accepting comments on the circular until February 28, 2023. The circular takes effect May 1, 2023. It will apply to products introduced to the market after May 1, as well as to all products already on the market that have undergone significant changes since the circular’s effective date.


The European Banking Authority (EBA) issued guidelines on the supervision and governance of retail banking products aimed at product manufacturers and distributors in 2015.

Initially there were doubts regarding a sufficient basis in European law, which is why BaFin did not initially adopt the guidelines in its German supervisory practice.

This has now changed with the European Court of Justice (ECJ) ruling of July 15, 2021, which clarified the validity of the guidelines. Following the ECJ ruling, BaFin is now implementing these guidelines in a circular closely aligned with the initial guidelines.

The circular is based on Section 15a (1) of the German Banking Act (KWG) and Section 27 (1) of the German Payment Services Supervision Act (ZAG). It regulates banking products (in particular real estate) consumer loan agreements, deposit products and payment services) and organizational requirements for internal control systems of institutions as defined by the KWG and ZAG. The regulations relate to internal processes, functions and strategies of a product, based on its entire life cycle. They aim to ensure the interests, objectives and characteristics of the target market, that is, the consumers for whom each financial product was designed. The guidelines impose specific rules on both product manufacturers and product distributors, and regulate disclosure and monitoring obligations of both.