ABBL

A year after the launch of the Private Banking Group, Luxembourg, the ABBL set up a second business line cluster: the Retail Banking Group (RBG). Bringing together ABBL members active in the field of retail banking, the RBG’s missions include defining initiatives and actions to be taken with regards to the retail banking business line, representing and defending the interests of the Luxembourg retail banking profession, promoting standards and best practices, and developing training programmes adapted to the needs of the profession.

Over the past few years, client protection and client information have rightly become an increasingly important issue. This trend has only grown in intensity as a consequence of the recent financial crisis.

Banks have an obligation to inform clients on the products and services they offer and whether these are suited to a given client -- an obligation that was reinforced by the introduction of the MiFID directive. However, a basic knowledge and understanding of financial concepts and products on the part of customers themselves also plays a significant role, since it allows them to take financial decisions that are adapted to their needs as well as to their financial situation.

The Retail Banking Group is thus currently evaluating how Luxembourg retail banks can contribute and promote financial education. Indeed, promoting basic knowledge in financial matters, via training courses or information material, for instance, can help lowering the risk of over-indebtedness.

The European Commission has recently launched a consultation on responsible lending and borrowing. As the Commission points out, responsible lending, where the credit products sold are appropriate for consumers’ needs and are tailored to their ability to repay, and responsible borrowing, where consumers provide relevant, complete and accurate information on their financial conditions, are vital components in ensuring a stable and effective credit market. The RBG will develop a strategy in this field for Luxembourg retail banks. In this context, the cluster will also discuss the effectiveness of a credit register.

Other issues that the RGB will work on in 2010 include the cross-border mortgage credit market and the further development of employee training in retail banking.

After preparing themselves for the introduction of the law on payment services and transposing the principles and standards of bank account switching in 2009, 2010 looks to be another busy year for Luxembourg’s retail banks.

Article published in LBQ issue 01/2010