EBA Publishes Report On Mystery Shopping Exercise Showing Inadequacies In Offerings

The European Banking Authority (EBA) published a report after conducting a mystery shopping exercise involving personal loan and payment accounts. The recent report added to an earlier study on charges that the agency published towards the end of 2022.

EBA conducts mystery shopping exercise

The mystery shopping exercise conducted by the EBA shed light on several things. It detected that out of the samples of financial institutions involved in the activity, some had inadequacies and needed to improve their offerings.

For instance, some financial institutions failed to provide the necessary pre-contractual information to customers. The institutions also automatically raised the total amount of credit, including bank fees without getting the customer’s explicit consent.

In the case of personal loans, most financial institutions failed to use the first visit of the mystery shoppers to offer pre-contractual data, including the Standardized European Consumer Credit Information that the EU Consumer Credit Directive manages.

The mystery shopping exercise also reported that 63% of financial institutions that participated in the research did not share the fee information document with these mystery shoppers during the online visits.

EBA outline recommendations to regulatory authorities

In the full report, the EBA also published several recommendations for the Member State competent authorities and the actions they ought to consider to ensure that the activities continue running smoothly.

One of these actions includes communicating with financial institutions regarding the lack of information shared with customers relying on digital channels in some countries. The details should also revolve around the benefits of adopting a consistent approach to offer pre-contractual information onsite and online and across branches and distribution channels within the same institution.

The other recommendation set out by the EBA is to investigate the conduct of some financial institutions regarding automatically increasing the total amount of credit and including bank fees without consent from the customers. The regulatory authority is also calling for a probe into providing information linked to some requirements, such as opening bank accounts and getting mandatory insurance to receive loans.

Regulatory authorities have also been urged to probe the conduct of financial institutions concerning providing access to pre-contractual information documents for personal loans in good time. There is also a need to share the fee information document to settle payment accounts.

According to the EBA, the mystery shopping exercise has shown that it is a useful complementary platform that supervisory entities can use to meet their goals on supervision and enforcement.

The authority also noted that the exercise had allowed it to gather information related to financial products and services. It also looked into the behavior that financial institutions have toward consumers.

It is not the first time that the EBA is conducting this exercise. The authority released a report on mystery shopping activities of national competent authorities in May 2021. It later released a methodological guide on mystery shopping in July 2021.