Shearman & Sterling LLP | FinReg | European Banking Authority Publishes Report on EU National Regulators' Mystery Shopping Activities
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  • European Banking Authority Publishes Report on EU National Regulators' Mystery Shopping Activities

    The European Banking Authority has published its first report on the "mystery shopping" activities of EU national regulators. In this context, mystery shopping involves national regulators conducting undercover research to measure the quality of customer service and gather information about financial products and services at EU financial institutions. The EBA was mandated to coordinate the mystery shopping activities of national regulators from January 1, 2020. The report is the first stage in fulfilling that mandate. It focuses on activities conducted in relation to retail banking products and services (e.g. consumer credit, mortgage credit, basic payment accounts, payment services and car loans), as these are the products that fall within the EBA’s consumer protection mandate. The EBA will use the information to inform its coordination of mystery shopping activities going forward.
    The report considers key aspects of mystery shopping activities, including the objective, subject matter and scope of national regulators' activities, the methodologies used and the follow-up actions undertaken after activities have been completed.
    The report also sets out lessons learned by national regulators in terms of good and bad practices.  Most regulators agree that mystery shopping is a useful tool that in some cases enables them to obtain information from financial institutions they would not otherwise have received. The practice also allows regulators to get first-hand experience of the financial institution's staff and obtain faster results, which was particularly useful during the COVID-19 pandemic. Key challenges of the process include the need for the individual representing the national regulator to reveal their real identity if they are entering into contractual or post-contractual relationships, the difficulties of subjective bias on the part of the individual investigating and the risk that the mystery shopper will capture a one-off occurrence that is not representative of the firm's usual behavior. The report does not cover any mystery shopping activities of other organizations, e.g. the European Commission or competition authorities.
    View the EBA's report on mystery shopping activities.
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