Decision of the European Ombudsman closing her inquiry into complaint 1966/2011/(EIS)LP against the European Banking Authority

Available languages: en
  • Case: 1966/2011/LP
    Opened on 31 Oct 2011 - Decision on 07 Nov 2013
  • Institution(s) concerned: European Banking Authority
  • Field(s) of law: General, financial and institutional matters
  • Types of maladministration alleged – (i) breach of, or (ii) breach of duties relating to: Lawfulness (incorrect application of substantive and/or procedural rules) [Article 4 ECGAB],Requests for information [Article 22 ECGAB]
  • Subject matter(s): Institutional and policy matters

The background to the complaint

1. The present case concerns the decision made in 2011 by the European Banking Authority (EBA) regarding the composition of its 30-member Banking Stakeholders Group (BSG). That decision was made pursuant to Regulation (EU) No 1093/2010 (the "Regulation") of the European Parliament and of the Council of 24 November 2010, establishing a European Supervisory Authority (EBA)[1]. On 23 October 2013, having carried out a new selection process (launched in May 2013), the EBA announced that the BSG would begin its second term of work with a revised composition. The inquiry into the present complaint included constructive discussions between EBA staff and the Ombudsman's services. Arising from these discussions, it was anticipated by the Ombudsman that the EBA would carry out the new selection process appropriately and in accordance with the Ombudsman's analysis of the original process. However, the present decision does not evaluate the second selection process or its outcome.

2. The complainant, UNI Europa, is a European trade union federation for services and communication. According to information available on its website, it represents 7 million workers in 330 European trade unions[2].

3. According to Recital 48 of the Regulation:

"The Authority should consult interested parties on regulatory or implementing technical standards, guidelines and recommendations and provide them with a reasonable opportunity to comment on proposed measures. Before adopting draft regulatory or implementing technical standards, guidelines and recommendations, the Authority should carry out an impact study. For reasons of efficiency, a Banking Stakeholder Group should be used for that purpose, and should represent, in balanced proportions, Union credit and investment institutions, representing the diverse models and sizes of financial institutions and businesses, including, as appropriate, institutional investors and other financial institutions which themselves use financial services; small and medium-sized enterprises (SMEs); trade unions; academics; consumers; and other retail users of banking services. The Banking Stakeholder Group should work as an interface with other user groups in the financial services area established by the Commission or by Union legislation".

4. Article 37(2) of the Regulation provides that:

"The Banking Stakeholder Group shall be composed of 30 members, representing in balanced proportions credit and investment institutions operating in the Union, their employees’ representatives as well as consumers, users of banking services and representatives of SMEs. At least five of its members shall be independent top-ranking academics. Ten of its members shall represent financial institutions, three of whom shall represent cooperative and savings banks".

5. According to Article 37(3) of the Regulation:

"The members of the Banking Stakeholder Group shall be appointed by the Board of Supervisors, following proposals from the relevant stakeholders. In making its decision, the Board of Supervisors shall, to the extent possible, ensure an appropriate geographical and gender balance and representation of stakeholders across the Union".

6. A call for expression of interest regarding the setting up of the EBA’s BSG was published on 26 November 2010,[3] with a deadline for submitting applications of 26 December 2010. On 18 March 2011, the EBA issued a press release on its decision on the composition of its BSG[4]. The press release contained information on the names of the newly appointed members of the BSG, the institutions each one of them was representing, their nationality, and the subcategory to which they had been selected[5].

7. On 30 March 2011, the complainant addressed a letter to the EBA expressing its disappointment about the composition of the BSG. It reminded the EBA that according to the Regulation, a balanced proportion had to be achieved between representatives from the industry, high-ranking experts, users, consumers, SMEs and employees' representatives in the sector. The complainant submitted that the composition of the BSG was in clear breach of the provisions of the Regulation. It noted that not all those appointed as representatives of consumers were considered by BEUC, the European Consumers Organisation, to be such. The complainant concluded that the selection process was biased and asked for it to be reorganised in line with the Regulation.

8. By a letter of 26 April 2011, the EBA replied to the complainant. It explained that the number and quality of applications were among the criteria considered for the appointments made for the different categories. It emphasised that every effort had been made to ensure the necessary diversity not only among the foreseen categories, but also within them, which explained why no more than one position was given to applicants representing the interests of the same institution or federation. According to the EBA, in the case of trade unions, preference had been given to applications coming from European Union Federations rather than national ones.

9. On 29 September 2011, not being satisfied with the above reply, the complainant lodged the present complaint.

The subject matter of the inquiry

10. The complainant submitted the following allegations and the following claims, which were included in the Ombudsman's inquiry:

Allegations:

(1) The EBA failed to ensure (i) geographical and (ii) gender balance within and among the stakeholder categories of the BSG, as required by Article 37(3) of Regulation (EU) No 1093/2010.

(2) The EBA failed to ensure an adequate balance between the stakeholder categories provided for in Regulation (EU) No 1093/2010.

(3) The EBA adopted an incorrect definition of the different stakeholder categories provided for in Regulation (EU) No 1093/2010.

Claims:

(1) The EBA should reconsider the composition of the BSG as soon as possible, and in any event, without waiting for the renewal of its membership, which will take place in 2013.

(2) The EBA should publish the CVs of the selected members as well as detailed information on the selection criteria and the selection process on its website.

The inquiry

11. On 31 October 2011, the Ombudsman invited the EBA to submit an opinion on the above allegations and claims.

12. On 31 January 2012, the EBA submitted its opinion to the Ombudsman, which was forwarded to the complainant for its observations. On 1 March 2012, the complainant submitted its observations.

13. After having examined the EBA's opinion and the complainant's observations, the Ombudsman concluded that it was necessary to proceed to an inspection of the EBA's file concerning this case. The inspection took place on 19 March 2013. The inspection report was sent to the complainant on 30 May 2013 for its eventual observations. The complainant did not submit any observations within the deadline fixed.

The Ombudsman's analysis and conclusions

A. Allegation that the EBA failed to ensure geographical and gender balance within and among the stakeholder categories of the BSG as required by Article 37(3) of Regulation (EU) No 1093/2010

Arguments presented to the Ombudsman

14. The complainant contests the way the EBA complied with the requirements of Article 37(3) of the Regulation. In particular, it criticised the fact that: (i) nine out of the ten representatives of the banking industry came from leading multinational banks from "old" Member States (i.e., EU Member States before the 2004 enlargement), whereas only one of them came from the "new" Member States (i.e., the Member States that joined the EU in or after 2004); (ii) the EBA selected no representatives from the "old" Member States in the consumer category of the BSG, (iii) no fewer than eight members of the BSG came from the United Kingdom, which was thus overrepresented in the BSG; and (iv) the EBA selected only 10 women among the thirty members of the BSG.

15. In its opinion, the EBA argued that the Regulation foresees "an appropriate geographical balance" and "representation of stakeholders across the Union". Thus, there is only an overall general geographical balance requirement and no specific requirement to ensure a geographical balance within the different categories of stakeholders. According to the EBA, as required by Article 37(2) of the Regulation, it had primarily focused on the qualities of the candidates, ensuring a balanced representation of expertise and experience from different categories of stakeholders.

16. As regards the composition of the "industry" category, the EBA explained that most of the applications for that category came from "old" Member States. That fact and its decision to appoint representatives from cross-border banking groups with significant presence around Europe led, in turn, to the appointment of consumer representatives mainly from the "new" Member States".

17. The EBA explained that the list of the approved stakeholders per category was as follows:

Category

Number

Industry

10

Employees’ representatives/trade unions

1

Consumers

5

Users of banking services

5

SMEs

3

Top-ranking academics

6

Total

30

  

18. As regards the alleged high number of representatives of British nationality, the EBA pointed out that, contrary to the complainant's submissions, there were 5, not 8 representatives coming from the UK representing the interests of (i) financial institutions, (ii) SMEs, (iii) consumers, (iv)users of banking services, and (v) top-ranking academics. It reiterated that the personal competences of the candidates and the number of applications received from each country were important factors taken into consideration. Since most applications received were from Germany, France, and the UK, the EBA’s Management Board decided to cap the number of appointed members per country. In some cases, however, the desire to ensure an appropriate representation for a given category of stakeholders meant that the nationality requirement would come second in consideration. Thus, the target number for the members representing SMEs was set at three which was the same number of applications received. As a result, the decision of appointing three representatives of SMEs prevailed over the nationality requirement, given that one of the three applicants was British.

19. Finally, as regards the gender selection, the EBA pointed out that female candidates represented 21% of all applications received. Despite this low percentage, the EBA set the target number of female stakeholders at 10, that is 33% of the BSG members.

20. In its observations, the complainant insisted that the EBA had failed to set up a BSG that was fairly balanced. In its view, it was neither necessary, nor in line with the Regulation, to appoint so many representatives from cross-border banking groups from "old Europe" within the "industry" category.

The Ombudsman's assessment

21. This is the first time a BSG has been appointed by the EBA pursuant to the Regulation. In that regard, the Ombudsman deems it useful to make two preliminary remarks. First, it is not the Ombudsman's task to substitute her choice of members of the BSG for that made by the EBA. In examining whether there was maladministration, the Ombudsman checks whether, in carrying out the selection process, the EBA acted lawfully and in accordance with the principles of good administration. Second, the Ombudsman is conscious of the difficulties inherent in combining geographical, gender and interest representation criteria with the need to ensure that the members chosen are competent, particularly in view of the fact that, as stated above, the EBA had no previous experience of carrying out this task. Finally, the Ombudsman takes the view that it was reasonable of the EBA to have confined its selection of BSG members from among those who had expressed an interest in appointment following a call for expression of interest from potential stakeholders. This approach complied with Article 37 (3) of the Regulation and the requirement laid down therein, according to which, "members of the Banking Stakeholder Group shall be appointed by the Board of Supervisors, following proposals from the relevant stakeholders" (see above, paragraph 5).

22. With the first allegation, the complainant criticised that the EBA (i) chose to appoint 9 out of the 10 members of the “industry” category from "old" Member States, (ii) appointed all members of the "consumer" category from "new" Member States only, (iii) appointed no fewer than eight members of the BSG from the United Kingdom, and (iv) selected only 10 women among the thirty members of the BSG.

23. The EBA defended this approach, stressing in particular that the requirement to ensure a geographical balance was meant to apply to the BSG as a whole, and not by reference to each of the six categories of stakeholders foreseen by the Regulation. The Ombudsman will thus examine first the methodological approach followed by the EBA in complying with the above mentioned requirement, before addressing in more detail the arguments raised by the complainant in relation to the composition of the specific categories of the BSG.

The requirement to ensure an appropriate geographical balance and representation across the Union

24. The Ombudsman notes that the Regulation is premised on the recognition of the fact that the recent financial and economic crisis created real and serious risks to the stability of the financial system and the functioning of the internal market as such. Thus, in order to safeguard financial stability, the legislator considered it necessary to identify, at an early stage, trends, potential risks and vulnerabilities stemming from the micro-prudential level, across borders and across sectors. It thus established the EBA to monitor and assess such developments in the area of its competence and, where necessary, inform the European Parliament, the Council, the European Commission and the other European Supervisory Authorities on a regular basis. To enable the EBA to consult interested parties on regulatory or implementing technical standards, guidelines and recommendations, the Regulation provided for the setting up of a BSG, composed of six main categories, to be used for such purposes. It is thus clear in the eyes of the Ombudsman that the Union legislator approached the need for setting up the EBA and the BSG with a view to improving the functioning of the internal market, and to ensuring the integrity, transparency, efficiency and orderly functioning of financial markets.

25. The Regulation requires the EBA to ensure, ‘to the extent possible, an appropriate geographical and gender balance and representation of stakeholders across the Union'. The Ombudsman agrees with the EBA that it must ensure an appropriate geographical balance in the overall composition of the BSG. However, the Ombudsman cannot accept that, provided there is an overall balance, the EBA is free to ignore geographical balance in the composition of the various categories making up the BSG. In the Ombudsman's view, the purpose of the requirement of appropriate geographical balance would be frustrated unless it also applied, to the extent possible, within each of the various categories of the financial services sector making up the BSG (“industry participants", "employees/trade union representatives", "consumers", "users", "SMEs" and "top-ranking academics"). As regards the meaning of the term “appropriate geographical balance”, the Ombudsman notes that the Regulation does not require that there should be a member from every MemberState, though this would have been mathematically possible. The Ombudsman, therefore, understands the term “appropriate geographical balance” to refer not only to the number of different Member States represented, but also to commonly used categorisations such as, for example, “EU-12”, “EU-15” and “2005-7 enlargement States”. It is in the light of this consideration that the arguments of the complainant raised in his first allegations are examined below.

As regards the composition of the "industry" category.

26. In so far as the composition of the "industry" category is concerned, the Ombudsman finds that the fact that nine out of the ten members came from “old” Member States raises serious questions. In its opinion, the EBA seemed to suggest that industry expertise and experience in financial services could mainly be found in the "old" Member States. In the Ombudsman's view, there is nothing to confirm such an assumption. Even though one could argue that the financial markets may be more important in certain Member States, in terms of turnover and persons involved, than in other Member States, that does not mean that the 'industry' category of the BSG should mainly be composed of members from those Member States. The EBA also made reference to its decision to appoint to that category representatives mainly from "cross-border banking groups with significance presence around Europe". Although this decision is not unreasonable as such, it does not explain why the representatives of these groups (which, by their very nature, cover more than one MemberState) were nearly exclusively chosen from the nationals of certain MemberStates rather than others. The Ombudsman considers it useful to add that the criterion adopted by the EBA is not mentioned in the Regulation and should therefore not be allowed to take precedence over what is stated in the relevant provisions.

27. In that regard, the Ombudsman considers it important to add that, given the existence of an internal market for financial services, it is essential that any consultative stakeholders' group set up to reflect the interest of various segments of the financial services sector should be, to the extent possible, a true representation of the actual geographical spread of the industry, covering, in principle, as many EU countries as possible.

28. The EBA also stated that although indeed 9 out of 10 of the appointed industry representatives came from “old” Member States that was also due to the fact that most applications for that category came from those Member States. The Ombudsman agrees that, in principle, the number of applications received from each country, and for each of the foreseen categories, necessarily influences the overall selection process. However, the Ombudsman also considers it evident that the selection of members for the BSG has to be carried out on the basis of the criteria laid down in the Regulation, which do not include a criterion concerning the number of applications received. In any event, the Ombudsman notes that the EBA did not argue that the applications received from candidates from “old” and “new” Member States corresponded to a ratio of 9 to 1, or that it was not possible to appoint more than one member of the industry group from a "new" MemberState.

29. Therefore, the Ombudsman finds that, in the absence of any convincing explanation, by deciding to appoint 9 out of the 10 members of the "industry" category by selecting representatives from "old" Member States, the EBA did not comply with the requirement to ensure "to the extent possible", "an appropriate geographical balance and representation of stakeholders across the Union". It thus committed an instance of maladministration. The Ombudsman will thus formulate below a critical remark.

As regards the composition of the consumer category

30. As regards the composition of the "consumers" category, the Ombudsman finds the decision of the EBA to choose all 5 members of that category among applicants from "new" Member States as a means to counterbalance its decision to appoint 9 out of the 10 members of the "industry" category from applicants coming from "old" Member States, equally flawed. As mentioned above, the Regulation is based on the need to improve the functioning of the internal market for financial services, including, in particular, a sound, effective and consistent level of regulation and supervision. As has already been pointed out above, this objective risks being undermined if the choice of the persons for a given category is dictated by the perceived need to remedy a geographic imbalance created in another category. Even more so than as regards the 'industry' category, the EBA's approach to selecting the members of the 'consumers' category was guided by what appears to be a clear geographical compartmentalisation, instead of trying to achieve a balanced geographical representation across the Union.

31. As the complainant rightly pointed out, the decision of the EBA regarding the composition of the "consumers" category meant that, in effect, the interests of consumers coming from "old" Member States (that is, 15 Member States) were not adequately represented, an outcome that, as explained above, does not appear to be in line with the Regulation's requirement that the EBA should "ensure to the extent possible, an appropriate geographical balance and representation of stakeholders across the Union".

32. Thus, in the Ombudsman's view, also as regards the composition of the "consumers" category, the EBA failed to comply with the requirement to ensure "to the extent possible", "an appropriate geographical balance and representation of stakeholders across the Union". In doing so, the EBA committed an instance of maladministration. The Ombudsman will thus formulate below a critical remark.

The number of British representatives

33. As regards the number of representatives of British nationality, the EBA clarified during the inquiry that five, not eight of the members of the BSG came from the United Kingdom. The complainant did not dispute this statement in its observations nor did it submit any further observations in that respect. The EBA also underlined that the main criterion used was "personal competence", and that the relevant appointments reflected the fact that most of the applications received came from Germany, France and the United Kingdom. As mentioned above, the Ombudsman recognises that the selection process is influenced by the quality and, to some extent, also by the number of applications received from candidates from a given Member State. That said, it is prima facie rather difficult to understand why out of the 30 members of the BSG that were to be selected among candidates coming from the 27 Member States (at the time the selection process took place), 5 members were chosen from one single Member State. In fact, this meant that the remaining 25 places had to be distributed among applicants from the 26 other Member States. In that regard, the Ombudsman notes that the EBA appears initially to have set a maximum limit of four for the number of members coming from each of the three Member States with the strongest presence and involvement in the financial services markets (i.e., Germany, France and the United Kingdom). The EBA explained that it appointed an additional member from the UK because, having set the number of the representatives for SMEs to three, it decided to appoint all three applicants for that category, thus including an additional applicant from the UK. The Ombudsman notes that the complainant has not criticised the above explanation by the EBA, nor does that explanation appear to be manifestly incompatible with the requirement of “appropriate geographical balance”. In these circumstances, the Ombudsman does not find maladministration in relation to this aspect of the present case. That being said, the Ombudsman considers it useful to remind the EBA that it would be advisable to act in the future, so as to avoid the risk that one or more Member States may appear to be overrepresented. The Ombudsman will make a further remark in this respect below.

As regards the representation of women

34. Finally, as regards the complainant's argument that only 10 out of the 30 appointed representatives were women, the Ombudsman takes note of the EBA's explanation that applications by women represented only 21% of all applications received. Based on the criterion of competence, and in trying to comply with the requirement of ensuring to the extent possible an appropriate gender balance, the EBA decided finally to appoint 10 women, that is 33% of the total number of the BSG representatives. The Ombudsman thus acknowledges the efforts of the EBA to counteract the very low proportion of applications from women by appointing a larger proportion of female members. In these circumstances, she does not find maladministration in relation to this aspect of the present case. That being said, given that the main obstacle for the EBA to achieve the required appropriate gender balance appears to have been the low proportion of applications received from women, the Ombudsman will invite the EBA, when it comes to future calls for expression of interest from potential stakeholders, to try to ensure the widest possible publicity so that all possible segments of the financial sector ("industry", "users", "consumers", " employee's representatives" and "academics") are aware of the setting up of a BSG. Such wider publicity should promote better gender balance in the applications, thus facilitating gender balance in appointments. In particular, the EBA may wish to explore the possibility to publish such a call for expression of interest, not only on its own website, but also in the specialised financial press, and use, in general, any other communication channel that could increase the awareness and interest of women candidates in applying to become members of the BSG. The Ombudsman will make a further remark in this respect below.

B. Allegation that the EBA failed to ensure an adequate balance between the stakeholder categories provided for in Regulation (EU) No 1093/2010.

Arguments presented to the Ombudsman

35. The complainant alleged that the EBA failed to ensure an adequate balance between the stakeholder categories provided for in the Regulation. In particular, the complainant put forward the following three main arguments in support of its second allegation: First, ten out of the total number of thirty members of the BSG were senior-level professionals employed and paid directly by the banking industry. Second, among the fourteen seats assigned to the "users", "consumers", "SMEs" and "employees" categories, only one seat was assigned to employees representatives, who were therefore under-represented. Third, one of the three selected representatives of SMEs was a senior legal adviser to and came from one of the largest European federations ("BUSINESSEUROPE") which, in addition to SME's, also represented the interests of all the large banking federations. Therefore, this representative could also be considered as an "industry" representative.

36. With regard to the first argument raised by the complainant, the EBA explained that by selecting 10 out of the 30 members of the BSG among senior-level professionals employed and paid directly by the banking industry, it fully complied with the Regulation which precisely foresees that 10 of the BSG members should represent financial institutions. As regards the issue of limiting the number of trade unions/employees' representatives to only one, the EBA acknowledged that during the selection process, its Management Board decided to increase the number of the representatives of the "consumer" category to four, "to the costs of the trade unions". However, in its opinion, the EBA recognised that even though the only member in the "trade unions/employees' representatives" category came from the complainant, a body representing the interests of trade unions and workers all around the world, limiting the number of employee/trade unions representatives indeed raised justified concerns, and that it intended seriously to reconsider this issue when the membership of the BSG would be renewed. Finally, regarding the representation of SMEs, the EBA explained that it had received only four applications, one of which was considered "inappropriate". Having set the target number for the SME's representatives in the BSG at three, it selected all three applications.

37. In its observation, the complainant questioned the basis on which the EBA decided to increase the number of representatives of the "consumer" category, to the detriment of the number of "employee representative/trade unions". Likewise, the complainant queried about the reasons for which the EBA also decided to increase the number of academics from five to six, given that other stakeholder categories were under-represented. It concluded that the EBA failed to provide a satisfactory explanation regarding its selection criteria.

The Ombudsman's assessment

38. The Ombudsman recalls that according to Article 37 (2) of the Regulation the BSG "shall be composed of 30 members, representing in balanced proportions credit and investment institutions operating in the Union, their employees’ representatives as well as consumers, users of banking services and representatives of SMEs. At least five of its members shall be independent top-ranking academics. Ten of its members shall represent financial institutions, three of whom shall represent cooperative and savings banks". It follows that 10 out of the 30 seats of the Group are expressly allocated to financial institutions, and that at least 5 seats should be reserved for top-ranking academics. That means that, in principle, the remaining 15 seats should be allocated in "balanced proportions" to the remaining four categories of stakeholders, thus potentially allowing for a minimum of three seats for each of the categories of "users", "consumers", "employees representatives/trade unions" and "SMEs". In carrying out the selection process, the EBA must also comply with Article 37(3) of the Regulation, which requires that the composition of the BSG, apart of ensuring a geographical and gender balance, should to the extent possible, also reflect an appropriate "representation of stakeholders across the Union".

39. It follows from the above that in selecting ten out of the total number of thirty members of the BSG among professionals employed and paid by the banking industry, the EBA, contrary to what the complainant argued, did not depart from the requirements of Article 37(2) of the Regulation, the latter setting the number of industry representatives precisely at ten members.

40. The same, however cannot be said with regard to the decision of the EBA to appoint only one employees' representative when, as stated above, there was scope to appoint, in principle, at least, three representatives for this category. Even though the Regulation does not fix the number of members to be appointed to this category and the EBA, therefore, has discretion as to how many members should be foreseen, the decision to limit this number to just one raises serious questions. In effect, even though the Regulation does not provide specific numbers for these categories, the fact that they are mentioned without any distinction would suggest that the legislator considered it appropriate that these categories should, in principle, comprise similar numbers of members. Moreover, there is nothing in the relevant provisions of the Regulation to imply that, apart of the 10 industry representatives and the 5 top-ranking academics, for any of the four remaining categories of stakeholders preference should be given to Europe-wide or large associations or federations, thus potentially limiting the level of representation for these categories to just one member. Given the size and importance of the financial service sector for the European economy, such an outcome could run counter to the requirement of the Regulation of ensuring a balanced representation of all the stakeholders concerned.

41. In that respect, the Ombudsman takes note of the fact that, following the opening of the present inquiry, the EBA itself recognised in its opinion that having only one employees' representative appointed to the BSG raises "justified concerns", Accordingly, the Ombudsman finds that the EBA's decision to appoint only one employee's representative to the BSG failed to do justice to the requirement of Article 37(2) of the Regulation to ensure, to the extent possible, a balanced representation of stakeholders across the Union, and thus gave rise to an instance of maladministration. The Ombudsman will thus formulate below a critical remark.

42. As regards the number of members foreseen for the category of "academics", the Ombudsman points out that Article 37 (2) provides that "at least five of its members shall be independent top-ranking academics". The Regulation thus clearly leaves scope for the EBA to appoint more than five representatives in that category, if deemed necessary. The complainant did not explain why the fact that the EBA decided in the present case to appoint one more academic than the minimum of five foreseen was in breach of the Regulation. Thus, no maladministration can be found in that regard.

43. As far as the representation of SMEs is concerned, the complainant argued that one of the representatives chosen for that category worked for a large organisation ("BUSINESSEUROPE") that represented not only the interests of SMEs, but also those of the banking federations. The EBA explained that it had taken that decision on the ground that the target number for representatives of SMEs was set at three and that only three valid applications for that category had been received. The EBA therefore considered that it was entitled to appoint all three applicants as SMEs' representatives.

44. The Ombudsman notes that "BUSINESSEUROPE", describes itself as an organisation whose members are "41 central industrial and employers’ federations from 35 countries, working together to achieve growth and competitiveness in Europe. BUSINESSEUROPE represents small, medium and large companies[6]. The complainant has not argued that the fact that one of the three SMEs representatives belongs to an organisation that also represents banking federations would impair that representative's ability properly to represent the interests of SMEs within the BSG. The situation could obviously have been different if the EBA had received more than three valid applications for the SMEs category. In that case, one would expect that, in principle, priority would be given to representatives of SMEs only, since employers and their federations are already adequately represented by the 10 members of the "industry" category. However, since there were only three valid applications for the three places reserved for the SMEs category, the Ombudsman considers that it is not possible to conclude that, by acting as it did, the EBA exceeded the margin of its discretion. Thus, the Ombudsman finds no instance of maladministration in this case.

C. Allegation that the EBA adopted an incorrect definition of the different stakeholder categories provided for in Regulation (EU) No 1093/2010

Arguments presented to the Ombudsman

45. The complainant alleged that the EBA adopted an incorrect definition of the different stakeholder categories provided for in the Regulation. In that respect, the complainant raised two main arguments. First, as regards the "consumers" category, it argued that one of the five selected members was actually an academic, while another one worked for a think-tank ('Re-Define'). Thus, none of these two representatives could be said to represent the interests of the consumers. Moreover, the remaining three representatives all came from very small consumer associations from the "new" Member States that lack the expertise and resources of the larger and more established consumer associations of the "old" Member States.

46. Second, with regard to the category of "users", the five representatives selected for that category were actually "providers", not "users" of banking services, representing influential organisations (i.e. major credit rating agencies and auditing companies) that supplied services to the banking sector. According to the complainant, the term "users" refers to the notion of consumers of financial services.

47. In its reply, the EBA argued that applicants were free to indicate in their application their interest for more than one of the six categories of stakeholders, and it was for the EBA to decide, on a case-by-case basis, into which category each application should be mapped. With regard to the representative of consumers who is an academic, the EBA explained that he was also a member of the Financial Services User Group (FSUG)[7] which also worked on issues related to consumer protection and price transparency. According to the EBA, the person in question had important experience in representation, drafting opinions and recommendations on initiatives affecting "users" of financial services and that he had also in the past been a member of the Forum of User Experts in the area of Financial Services ("FIN-USE"), identifying key issues that affected users of financial services. He was also appointed in the past to represent the interests of the financial users in the previous "CEBS Consultative Panel"[8]. Given his valuable contribution in the previous work carried out by CEBS, he was positively considered by the EBA, and was thus appointed as a member of the "consumers" category.

48. As regards the member who represented the think-tank "Re-define", the EBA explained that the latter is an independent, non-profit international organization, which had recently signed a four-year framework agreement with the European Parliament to advise the ECON Committee on matters pertaining to financial services regulation and economic policy, and that the said representative had extensively published articles and proposals on consumer-related issues.

49. As regards the definition of the notion of "users", the EBA argued that since no definition of "users" was given in the Regulation, it decided to adopt a broad interpretation of this term in order to have a coherent and balanced overall representation in the BSG. Thus, the term "users" was interpreted as including all possible entities, other than industry representatives, that enable final users to take their decision on financial/banking services. It further explained that only fifteen applications falling within this category were received, and that only seven among them clearly indicated the representation of the interests of users of banking services.

50. The complainant observed that the Regulation did provide a definition of the term "users" from which the EBA should not have departed. Recital 48 clearly stated that "other retail users of banking services should be presented in the group in addition to "consumers". Thus, any organisation providing remunerated services to banks should have been included in the industry category. The broad way in which the EBA interpreted the term "users" made it thus possible to appoint more members to the BSG that were part of the industry. As a result, the BSG was dominated by industry and its suppliers.

The Ombudsman's assessment

51. The fact that one of the selected members in the "consumers" category was actually an academic and another one worked for a think-tank does not necessarily imply, as the complainant appears to suggest, that these two members did not have any expertise or connection with the consumer movement. Being an academic or working for a think-tank does not, in itself, imply that someone is not able to represent consumers or stand for their rights. However, the Ombudsman considers it important to stress that the mere fact that a chosen member is also, like any other member of the BSG, a consumer of financial services, cannot serve as an adequate and valid justification for appointing that member in the "consumers" category. Otherwise, as the complainant argued, the EBA could misuse the selection process by appointing to the "consumers" category representatives of the industry (or to that effect of any of the other 5 categories), on the sole ground that, in their own capacity, the latter are also consumers of financial services. Therefore, the Ombudsman considers that what needs to be examined in each case is if a selected member is indeed able to act as an objective and dedicated consumer representative.

52. In that regard, the Ombudsman considers that, in principle, there should be a strong presumption that candidates representing consumer organisations and/or clear consumer interests are more suitable for being appointed to the "consumer" category than those whose main expertise and/or professional experience concerns other fields. In the present case, the EBA convincingly explained the reasons why, in this case, it considered that the two members in question (an academic, and a representative of a think tank), given their professional experience in this field, were deemed to have the required ability and experience to represent the interests of consumers. The complainant did not submit any concrete arguments to suggest that these two persons could not represent the interests of consumers of financial services or that they were or could be influenced by other conflicting interests. Thus, the Ombudsman finds no maladministration in this regard. That being said, the Ombudsman believes that it would facilitate and further improve the whole selection process if the EBA were to require in the future that applicants for the BSG indicate preferably only one of the six categories for which they would like to be considered. That way, applications could better suit the category targeted, thus reducing further the likely scope of challenges the EBA could face by appointing candidates whose main qualifications may not be those of the category concerned. The Ombudsman will make a further remark in that regard below.

53. As regards the definition of the term "users of banking services", the Ombudsman notes that three of the five members appointed to that category represented, respectively, three major accounting and audit firms, one member represented the Federation of European Accountants, and the fifth member, one of the top international credit-rating agencies. In that regard, the Ombudsman notes that even though Article 37 of the Regulation does not contain a definition of the term "users", Recital 48 of the Regulation indicates that the BSG is to be composed of 'Union credit and investment institutions, representing the diverse models and sizes of financial institutions and businesses, including, as appropriate, institutional investors and other financial institutions which themselves use financial services; small and medium-sized enterprises (SMEs); trade unions; academics; consumers; and other retail users of banking services'. Financial institutions that use financial services thus are to be included in the 'industry' category. It is further clear that the 'users' to which the Regulation refers as a separate category have to be retail users of financial/banking services. Since consumers who are "end" or "final" users of banking services are mentioned by the Regulation as a separate category, it could be argued that the term "users" encompasses those retail users who are situated in between the providers of financial and banking services and consumers.

54. However, regardless of what the precise definition of retail users of banking services should be for the purposes of applying the Regulation, the Ombudsman considers that in the light of Recital 48, the approach followed in the present case by the EBA, consisting in appointing to the "users" category representatives of entities which were clearly not retail users of the services provided by the financial/banking sector, but rather providers of services to the latter (accounting and audit firms, credit-rating agencies) cannot be considered to be in line with the Regulation. Nor is there anything in the wording of the Regulation that could lend support to the EBA's approach to include in this category entities that simply enable consumers to take their decisions on financial/banking services. Such an approach could theoretically encompass a wide array of professions that include not only accountants and credit-rating agencies, but also lawyers, financial consultants, media and press representatives, comparative web sites, and generally any profession or entity that directly or indirectly enables or influences the consumers' decisions on financial and banking matters. Although the term "users" could encompass entities which because of their specialised knowledge and experience of the workings and mechanics of the financial and banking sector could make a positive contribution to the BSG, it is not acceptable for profit-making suppliers of remunerated services to the financial and banking sector to be included in that category. Such entities would be likely to be perceived as representing commercial interests rather than those of the wider category of "users". In the Ombudsman's view, if the Union legislator had indeed intended to include representatives of such professions in the BSG, the Regulation would have used a term other than "users of banking services". Thus, by failing to exclude from the "users" category applications from entities which are clearly providers of remunerated services to the financial sector, not users of the latter's services, the EBA committed an instance of maladministration. The Ombudsman will thus formulate below a critical remark.

D. The complainant's claims

The complainant's claims

55. The complainant claimed that (i) the EBA should reconsider the composition of the BSG as soon as possible, and in any event, without waiting for the renewal of its membership due in 2013. It also claimed that (ii) the EBA should publish on its website the CVs of the selected members as well as detailed information on the selection criteria and the selection process by which each candidate was selected.

56. In its opinion, the EBA noted that the selection process had been conducted in good faith and to the best of its abilities. Any likely reconsideration of the composition of the BSG would be a very time consuming exercise and affect the expected stakeholders' contribution to the EBA's planned objectives for 2012. However, the EBA would be more than willing to accommodate the Ombudsman's suggestions and recommendations with regard to the next reappointment of the BSG members in 2013.

57. The EBA also confirmed that it has already published the CVs of the selected members of the BSG, and that they are available online on its website. With regard to the selection criteria, the EBA stated that it relied on the requirements laid own in Article 37 of the Regulation and its corresponding recitals. It also explained that general and category-specific criteria were adopted at a meeting of EBA's Management Board in February 2011, and subsequently used for the establishment of a proposed list of stakeholders that was submitted to the March 2011 EBA Board of Supervisors meeting.

The Ombudsman's assessment

58. The Ombudsman takes the view that reconsidering the composition of the Stakeholder Group that was set up in early 2011 would not at this stage be helpful, as the term of the members is shortly going to expire and a new selection process for the members of the BSG will, in any event, have to take place by the end of this year. Thus, the first claim cannot succeed. In this context, the Ombudsman welcomes the commitment of the EBA to accommodate any suggestions and recommendations that the Ombudsman may make in the present inquiry for the purposes of the appointment of the members of the next BSG.

59. As regards the complainant's claim that the CVs of the BSG members should be published on the website of the EBA, the Ombudsman notes that this claim has already been satisfied by the EBA, and that all the CVs of the members of the BSG have now been published on EBA's website. With regard to the further claim that the EBA also publish detailed information on the selection criteria used and the process by which each candidate was selected, the Ombudsman notes that, on 18 March 2011, the EBA issued a press release, providing information about the names of the newly appointed members of the BSG, the institutions each one of them was representing, their nationality, and the category to which they had been selected. Moreover, the EBA has adopted specific rules on access to documents giving effect to Article 72 of the Regulation[9], enabling thus third parties to seek access to documents, including those pertaining to the selection process, that could be made publicly available.[10] It appears that the complainant has not made use of this possibility. In these circumstances, the Ombudsman is not convinced that the EBA would be obliged to publish detailed information on the selection criteria used and the process by which each candidate was selected, as requested by the complainant. That being said, in the Ombudsman's view, it would further improve the overall transparency of the selection process and also strengthen the citizens' trust in the EBA's overall compliance with Article 37 of the Regulation, if the EBA were to publish, once the members of the BSG had been appointed, meaningful information that could show how, in the light of the various applications received, the EBA complied with the requirement to ensure a balanced representation of all the various categories of stakeholders concerned, and how, in doing so, it also ensured "to the extent possible (...) an appropriate geographical and gender balance and representation of stakeholders across the Union". The Ombudsman will thus make a further remark below.

E. Conclusions

60. As the Ombudsman’s above mentioned findings showed, the selection process carried out by the EBA for the composition of the various categories of the BSG was tainted by a number of deficiencies with regard to the composition of the "industry", "consumers", "employees' representatives" and "users" categories which in turn gave rise to a corresponding number of instances of maladministration.

61. Thus, on the basis of her inquiry into this complaint, the Ombudsman closes the case with the following critical remarks:

1. By applying the requirement laid down in Article 37(3) of the Regulation to ensure to the extent possible "an appropriate geographical and gender balance and representation of stakeholders across the Union" only as regards the composition of the BSG as a whole, and not also within each category of membership, the EBA committed an instance of maladministration.

2. By appointing only one employees' representative to the BSG the EBA did not comply with the requirement of Article 37(2) of the Regulation to ensure, to the extent possible, a balanced representation of stakeholders across the Union, and thus committed an instance of maladministration.

3. By including in the "users" category applications from representatives of entities which are clearly not retail users of the services provided by the financial/banking sector, but rather providers of remunerated services to the latter, the EBA committed another instance of maladministration.

No maladministration has been found as regards the other aspects of the complainant's allegations and claims.

The complainant and the EBA will be informed of this decision.

Further remarks

1. In future selections of members of the BSG, it would be advisable for the EBA to avoid the risk that one or more Member States may appear to be over-represented.

2. The EBA could publish future calls for expression of interest in becoming a member of the BSG, not only on its own website, but also in the specialised financial press, and use, in general, any other communication channel that could increase the awareness and interest of women candidates.

3. It would facilitate and further improve the selection process if the EBA were to require future applicants to indicate only one of the six categories for which they would like to be considered.

During the inquiry, and especially on the occasion of the inspection of documents (see paragraph 13 above), there were informal and constructive discussions between the EBA and the Ombudsman's services. During these discussions, the EBA expressed its willingness to revise its approach for the second selection round. As already noted, the EBA announced the new composition of the BSG on 23 October 2013. Although the present decision only concerns the first selection process that took place in March 2011, the Ombudsman invites the EBA, in its follow-up to the critical and further remarks above to explain how it revised its approach during the second selection process to take account of any lessons learned during the Ombudsman’s inquiry.

Emily O'Reilly

Done in Strasbourg on 7 November 2013


[1]OJ 2010 L 331, p. 12.

[2] http://www.uniglobalunion.org/Apps/uni.nsf/pages/about_euEn

[3] http://www.eba.europa.eu/cebs/media/Publications/Other%20Publications/Others/2010/BSG%20call%20for%20expression%20of%20interest/Complete-call-text.pdf">http://www.eba.europa.eu/cebs/media/Publications/Other%20Publications/Others/2010/BSG%20call%20for%20expression%20of%20interest/Complete-call-text.pdf

[4] http://www.eba.europa.eu/-/the-eba-establishes-its-banking-stakeholder-group

[5] http://www.eba.europa.eu/Aboutus/Organisation/Banking-Stakeholder-Group/Members.aspx

[6] http://www.businesseurope.eu/content/default.asp?PageID=600

[7] The European Commission set up in 2010 a Financial Services User Group (FSUG). The group took over the tasks of two earlier groups, the Forum of User Experts in the area of Financial Services (FIN-USE) and Financial Services Consumer Group (FSCG).

[8] Committee of European Banking Supervisors (CEBS). On 1 January 2011, the EBA was established, taking over CEBS' ongoing tasks and responsibilities.

[9] According to Article 72(2) of the Regulation, "[t]he Management Board shall, by 31 May 2011, adopt practical measures for applying Regulation (EC) No 1049/2001".

[10] http://www.eba.europa.eu/documents/10180/16082/EBA-DC-036-Decision-on-Access-to-Documents-FINAL_1.pdf/c7c7ff83-14b5-4a97-a6e8-c63aafe9027e