BPCE - Risk Report - Pillar III 2020

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NON-COMPLIANCE AND SECURITY RISKS

COMPLIANCE

In 2020, the Group Compliance division continued the program established to strengthen the completeness and compliance of regulatory Know Your Customer files. The aim of the program, in conjunction with the IS platforms, is to prevent accounts from being opened if a customer’s tax self-certification form has not been provided or regulatory records are not complete. Actions have also been taken to support Group institutions in correcting incomplete files (targeting customers, communication kits, reports). Lastly, efforts are under way to roll out a regulatory KYC update system.

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 established a 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).

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RISK REPORT PILLAR III 2020 | GROUPE BPCE

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