BPCE - 2020 Universal Registration Document

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NON-COMPLIANCE AND SECURITY RISKS RISK FACTORS & RISK MANAGEMENT

BPCE continued working on the remediation plan for the marketing of financial savings products in accordance with the European Markets in Financial Instruments Directive (MiFID 2), the Insurance Distribution Directive (IDD) and PRIIPs. BPCE has also implemented a remediation plan to bring Group entities into compliance with EMIR regulatory obligations concerning the reporting of SFTR (Securities Financing Transaction Regulation). This reporting has been implemented since July 13, 2020. CUSTOMER PROTECTION The Group’s reputation and the trust of its customers are strengthened when the products and services it sells comply with regulations and the information it supplies is reliable. To maintain this trust, the Compliance division makes customer protection a top priority. To that end, Group employees regularly receive training on customer protection issues to maintain the required level of customer service quality. These training sessions are aimed at promoting awareness of compliance and customer protection among new hires and/or sales team employees. Ethics and compliance training, entitled “Fundamentals of professional ethics,” has been set up for all Group employees. BPCE has also establisheda code of good conduct and ethics, rolled out to all Groupe BPCE institutions. The new Markets in Financial Instruments Directive (MiFID 2) and PRIIPs regulation (Packaged Retail Investment and Insurance-based Products) strengthen investor protection and

market transparency. They have an impact on the Group in its role as a distributor of financial instruments by enhancing the quality of the customer experience in terms of financial savings and insurance products: adjustments to customer and KYC data collection (customer • profile, characteristics of customer plans in terms of objectives, risks and investment horizons), an updated questionnaire on each customer’s financial investment knowledge and experience, and an updated questionnaire on customer risk appetite and loss tolerance, to ensure that suitable advisory services are provided; adaptation of offers associated with the financial services and • products sold; formalization of customer advice (suitability report) and the • customer’s acceptance of said advice (issuance of customer alerts where necessary); organization of relations between the Group’s manufacturers • and distributors; inclusion of provisions related to the transparency of fees and • charges at the required level of detail; production of periodic suitability reports and value-added • reports for customers and recording of conversations for customer relations and advisory purposes; disclosure of transaction reports to regulators and the market, • best-execution and best-selection requirements; Participation in the development of employee training and the • change management program related to these new provisions.

HIGHLIGHTS In terms of banking inclusion, Groupe BPCE has strengthened its support system for financially vulnerable customers, in accordance with the French decree of July 20, 2020. Lastly, due to an exceptional health crisis, the year 2020 was marked by the validation of exceptional marketing processes as well as specific products ( e.g. state-guaranteed loans (SGLs), student loans, extension of the maturity of professional and property loans).

FRENCH BANKING SEPARATION AND REGULATION ACT (SRAB)

In conjunction with the calculations and other work done in accordancewith this act, a complianceprogramwas adoptedand implemented as from July 2015 in response to the Volcker Rule (section 619 of the US Dodd-Frank Act) within the scope of BPCE SAand its subsidiaries.Takinga broaderapproachthan that of the French Banking Separation and Regulation Act, this program aims to map out all the financial and commercial activities of BPCE SA group, notably to ensure that they comply with the two major bans imposedby the VolckerRule: the ban on proprietary trading and on certain activities related to covered funds. The VolckerRule was amendedin 2020, giving rise to new Volcker 2.0 and 2.1 provisions that relax the existing system. As every year since July 2015, the Group has certified its compliance with the Volcker system. Note: in early 2017, Groupe BPCE appointed a SRAB-Volcker officer responsible for the security of the banking segregation mechanisms.

Groupe BPCE’s market risk map is regularly updated, calling for the creation of internal units subject to an exemption within the meaning of act No. 2013-672of July 26, 2013 on the separation and regulation of banking activities. Quarterly indicators are calculated by Natixis, Palatine and BRED in accordance with Article 6 of the Ministerial Order of September 9, 2015 (amended by the Ministerial Order of March 18, 2019); these quarterly indicators are supplemented by an annual indicator as well as quantitative metrics such as NBI or the VaR of the said internal units. Based on the work carried out by the Group, it has not been necessary to create a ring-fenced subsidiary, and mandates have been implemented at the different subsidiaries in order to supervise the various activities.

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE

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