On November 28, 2013, the European Supervisory Authorities (“ESAs”) issued a joint paper (the “Joint Position”) setting out eight high level principles, intended to form a harmonised, cross-sector approach to the regulation of the development and governance processes to be observed by the originators of financial products and services in Europe. These are not intended to be directly applicable to financial institutions, but instead are to be guiding principles, within which each of the 3 ESAs will in time, develop more detailed provisions which will be applicable to institutions operating in their respective financial sectors (banking, pensions/insurance and securities/derivatives). The principles are the outcome of a survey of national competent authorities in the EU (“NCAs”), aimed at highlighting failures in product development and governance processes. However, they are not seeking to introduce any additional product approval, licensing or prohibition powers for NCAs.
The ESA Principles -
1. Product manufacturers (being natural or legal persons that are responsible for developing, issuing or making changes to financial products (“products” also includes services for the purposes of the principles) and are subject to EU regulation) should establish, implement and maintain an ongoing review of all their product oversight and governance processes.
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