Opinion of the European Central Bank of 1 July 2015 on consumer protection in the financial markets  (CON/2015/21)
Date: 2015-07-01
Institutions: European Central Bank
Subjects: Slovakia, banking supervision, central bank, competence of the institution, consumer protection, financial stability, financial supervision, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 1 July 2015 

on consumer protection in the financial markets 

(CON/2015/21) 

Introduction and legal basis 

On 29 October 2014, the European Central Bank (ECB) received a request from the Slovak Ministry of 

Finance for an opinion on a draft law amending Law No 747/2004 on supervision of the financial markets 

and amending certain laws (hereinafter the ‘draft law’). In addition to Law No 747/2004, the draft law also 

amends  Law  No  566/1992  on  Národná  banka  Slovenska  and  certain  other 

laws,  such  as 

Law No 129/2010 on consumer credit and other credits and loans to consumers. It is noted that the draft 

law  was  adopted  by  the  Slovak  Parliament  on  26  November  2014  and  signed  by  the  President  on 

10 December 2014. In the course of the legislative process, further amendments were made to the draft 

law. 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  the  second,  third  and  sixth  indents  of  Article 2(1)  of 
Council Decision  98/415/EC1,  as  the  draft  law  relates  to  means  of  payment,  Národná  banka  Slovenska 

(NBS)  and  rules  applicable  to  financial  institutions  which  materially  influence  the  stability  of  financial 

institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of 

the European Central Bank, the Governing Council has adopted this opinion. 

1.  

Purpose of the draft law 

Previously to the draft law, no authority in Slovakia was competent to conduct supervision in the field of 
consumer protection in the financial markets2, with the exception of the provision of consumer credit, for 

which the Slovak Trade Inspection is the supervisory authority. In order to address this situation, the draft 

law extends the scope of NBS supervision of the financial markets to include responsibility for consumer 
protection3.  In  order  to  facilitate  the  exercise  of  this  additional  responsibility,  the  draft  law  introduces 

a number of sanctions and enforcement measures which NBS will be entitled to impose for breach of an 
obligation in the field of financial consumer protection4. Under the draft law, minor and obvious breaches 
will  be  dealt  with  via  simplified  proceedings5.  Members  of  staff  of  NBS  authorised  to  carry  out  on-site 

supervision will have the authority to order, on the spot, a supervised entity to take immediate action to 

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4  
5  

Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
See point 4.2 (impact assessment) of the explanatory memorandum to the draft law. 
Point 2 of Article I of the draft law. 
Point 26 of Article I of the draft law. 
ibid., in particular new sections 35b and 35c.  

 
 
 
 
                                                 
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eliminate any breach which has been identified. They may also order a supervised entity to suspend the 
provision or intermediation of the financial service affected by such breach until it has been eliminated6. 

The  draft  law  provides  that,  under  certain  circumstances,  NBS  will  have  the  power  to  withdraw  a 

supervised entity’s permit or other authorisation allowing it to engage in an activity related to the financial 

markets,  or  to  strike  it  off  the  relevant  register  of  entities  authorised  to  engage  in  activity  related  to  the 
financial markets7. A proportion of the costs incurred by NBS in the protection of financial consumers will 

be covered by a surcharge on annual contributions paid by entities supervised by NBS. This will be paid 

ex  post  and  only  by  those  supervised  entities  which  have  breached  their  obligations  in  relation  to  the 
protection of financial consumers or violated the rights of financial consumers8.     

The  draft  law  also  amends  certain  rules  on  how  supervision  is  carried  out.  It  provides  for  ‘mystery 
shoppingʼ  exercises9  and  the  conclusion,  for  supervisory  purposes,  of  a financial  services  contract  with 
a supervised entity10. In addition, a party which has initiated proceedings before NBS may be allowed to 
submit technical documentation, or other annexes to the application, in a foreign language11.  

As regards the amendments to Law No 566/1992, the draft law proposes to increase the number of board 
members of NBS from five to six and to extend their term of office from five to six years12. Current board 
members will not be affected by these new provisions13. 

The  draft  law  prohibits  the  use  of  the  terms  ‘coinʼ,  ‘banknoteʼ  and  ‘currencyʼ  in  the  specification  or 

description  of  a  token,  medal,  means  of  payment  or  analogous  technical  means,  or  other  tangible  or 

intangible items related to the production, offer, sale, or dissemination of such a token, medal, means of 

payment  or  analogous  technical  means.  This  prohibition  extends  to  words  that  contain  such  terms,  as 
well as to related translations14. 

Finally, the draft law amends Law No 747/2004 to include references to the role of NBS within the Single 
Supervisory Mechanism15.  

2. 

General observations 

2.1  As  indicated,  no  authority  in  Slovakia  was  competent  to  conduct  supervision  in  the  field  of 
consumer  protection  in  the  financial  market16.  The  new  task  allocated  to  NBS’s  in  respect  of  

consumer  protection  in  the  financial  markets  is  not  listed  among  the  functions  of  national  central 

banks set out in the Statute of the European System of Central Banks and of the European Central 

Bank (hereinafter the ‘Statute of the ESCB’).  

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8  

Point 26 of Article I of the draft law (new section 35d). 
Point 26 of Article I of the draft law (new section 35g). However, please see the observation of the ECB below. 

Points  29  and  35  of  Article  I  of  the  draft  law  and  the  corresponding  parts  of  the  special  part  of  the  explanatory 
memorandum. 
Points 11, 12, 13 and 15 of Article I.  

Point 12 of Article I. 
Point 17 of Article I. 

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10  
11  
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14  
15  
16   With exception of consumer credit, see paragraph 1 of this opinion. 

Points 4 and 6 of Article II. 
Point 17 of Article II. 
Point 9 of Article II. 

Points 5, 6 and 7 of Article I. 

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2.2  The ECB underlines that, in the context of a proposed conferral of tasks on an ESCB member, it is 

necessary to assess such conferral against the prohibition of monetary financing under Article 123 

of the Treaty. The ECB has developed the following guidance, in the form of general and specific 

considerations,  on  the  basis  of  which  the  ECB  may  decide  whether  a  new  task  conferred  on  an 

ESCB national central bank (NCB) is to be considered a central banking task or a government task 

for the purposes of the monetary financing prohibition. 

2.2.1  General considerations 

First,  the  systematic  categorisation  of  tasks  assigned  to  NCBs  as  central  banking  or  government 

tasks applies to genuinely new tasks that did not exist in the past or did not form an integral part of 

the central banking tasks already assigned to the NCB. In recognition of the different EU Member 

States’  legal  frameworks,  central  banking  traditions  and  national  set-ups,  the  tasks  currently 

discharged by an NCB as central banking tasks are not reviewed and re-categorised, but may be 

reassessed if they are subject to legislative amendments of substance. 

Second, the principle of financial independence requires that the Member States may not put their 

NCBs  in  a  position  where  they  have  insufficient  financial  resources  to  carry  out  their  ESCB  or 

Eurosystem-related tasks, as applicable.  

Third, central banking tasks comprise in particular those tasks that are related to the tasks listed in 

Article 127(2), (5) and (6) of the Treaty. 

Fourth,  new  tasks  conferred  on  an  NCB  which  are  atypical  of  NCBs’  tasks,  or  which  are  clearly 

discharged on behalf of and in the exclusive interest of the government or of other public entities, 

should be considered as government tasks. In that context, a distinction should be drawn between 

liquidity  and  solvency-related  tasks  of  NCBs.  While,  for  purposes  of  the  monetary  financing 

prohibition, solvency support is a government task, liquidity-related tasks, the ultimate objective of 

which are to finance the economy, are central banking tasks. 

2.2.2  Specific considerations 

An important criterion for classifying a new task as a government task is, therefore, the impact of 

the  task  on  the  institutional,  financial  and  personal  independence  of  the  NCB.  In  particular,  the 

following should be taken into account. 

First,  it  should  be  assessed  whether  the  performance  of  the  new  task  creates  inadequately 

addressed  conflicts  of  interests  with  existing  central  banking  tasks,  and  does  not  necessarily 

complement  those  existing  central  banking  tasks.  If  a  conflict  of  interest  arises  between  existing 

and  new  tasks,  there  should  be  sufficient  mitigation  in  place  to  adequately  address  that  conflict. 

Complementarity between the new task and existing central banking tasks should not, however, be 

interpreted  extensively,  so  as  to  lead  to  the  creation  of  an  indefinite  chain  of  ancillary  tasks. 

Complementarity should also be examined from the point of view of the financing of those tasks. 

Second,  it  should  be  assessed  whether  without  new  financial  resources  the  performance  of  the 

new task is disproportionate to the financial or organisational capacity of the NCB concerned, and 

may negatively impact its capacity to properly perform existing central banking tasks. 

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Third,  it  should  be  assessed  whether  the  performance  of  the  new  task  does  not  fit  into  the 

institutional  set-up  of  the  NCB  in  the  light  of  central  bank  independence  and  accountability 

considerations. 

Fourth,  it  should  be  assessed  whether  the  performance  of  the  new  task  harbours  substantial 

financial risks. 

Fifth, it should be assessed whether the performance of the new task exposes the members of the 

NCB’s decision-making bodies to political risks which are disproportionate and may also impact on 

their  personal  independence  and,  in  particular,  the  guarantee  of  the  term  of  office  under 

Article 14.2 of the ESCB Statute. 

2.2.3  Any  final  assessment  on  the  qualification  of  a  task  given  to  an  NCB  as  either  falling  within  the 

scope of a central banking task or a government task will be guided by the objective of ensuring the 

consistent application of the prohibition of monetary financing within the Eurosystem and the ESCB 

to the extent that it applies to its members. 

3. 

Specific observations 

3.1  Consumer protection not atypical central banking task 

The  ECB  has  consistently  expressed  the  view  that  consumer  protection  tasks  discharged  by  an 

NCB will be central banking tasks, and therefore that no monetary financing issue arises, provided 

that those tasks “complement existing supervisory powers and thus contribute to the soundness of 
the financial market and the preservation of confidence in the marketplace”17. Sufficient mitigation 

measures  must  be  put  in  place  to  ensure  that  in  case  of  a  conflict  of  interests  supervisory 

considerations prevail. 

3.2 

Links to basic tasks listed in Article 127(2), (5) and (6) of the Treaty 

Financial  consumer  protection  as  a  task  complementary  to  existing  supervisory  powers  may  be 

considered a task related to the tasks referred to in Article 127(5) of the Treaty, particularly where 

an NCB already has a mandate for supervision in financial markets, which is the case with NBS.  

3.3  Consumer protection as a task complementary to existing supervisory powers 

In accordance with the above, the new task entrusted to NBS can be considered a central banking 

task, as it complements its existing supervisory powers over entities active in the financial markets 

already  supervised  by  NBS,  is  financed  as  part  of  a  system  of  (partial)  financing  of  NBS’s 

supervisory  tasks  via  contributions  and  fees  related  to  supervision,  and  contributes  to  the 

soundness  of  the  financial  markets  and  the  preservation  of  confidence  in  the  markets.  In  this 

regard, the ECB welcomes the consulting authority’s aim of ensuring that NBS has effective means 

to enforce compliance with the rules on financial consumer protection. 

17  

See,  for example, ECB Opinions  CON/2007/29,  CON/2007/8,  CON/2006/47, and CON/2006/38.  All ECB  Opinions 
are on the ECB's website at www.ecb.europa.eu. 

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3.4  Conflict  of  interests  between  consumer  protection  and  supervisory  tasks;  fitting  of  the  new  task 

within NBS’s institutional set-up 

3.4.1  Under  the  draft  law,  in  the  protection  of  financial  consumers,  NBS  will  carry  out  activities  and 
exercise  authorisation  pursuant  to  Law  No  747/200418.  The  draft  law  empowers  NBS  to  impose 

specific administrative measures for breaches of obligations in the field of consumer protection in 

the financial markets. Such specific administrative measures include monetary penalties, banning 

unfair  commercial  practices  or  unacceptable  conditions  disadvantaging  financial  consumers, 

banning  the  provision  of  a  financial  service  not  complying  with  consumer  protection  rules,  and 

withdrawal of an authorisation or permit. 

3.4.2  The ECB notes that, pursuant to Article 1(1)  of Law No  747/2004, when exercising such powers, 

NBS  should  take  into  account  the  general  objective  of  financial  market  supervision  in  order  to 

contribute  to  the  stability  of  the  financial  market  as  a  whole,  as  well  as  to  the  safe  and  smooth 

operation  of  the  financial  markets  in  the  interests  of  maintaining  the  credibility  of  the  financial 

markets,  the  protection  of  customers,  and  compliance  with  competition  law.  In  this  respect,  the 

ECB  understands  that  NBS,  as  the  sole  authority  responsible  for  supervision  under  Law 

No 747/2004,  will  be  required  to  mitigate  any  potential  conflict  of  interests  between  its  consumer 

protection tasks and its financial stability mandate by always taking financial stability considerations 

into account when imposing a sanction or enforcement measure for a breach of an obligation in the 

field  of  financial  consumer  protection.  In  this  regard,  given  the  complementarity  of  the  consumer 

protection task, that new task fits into NBS’s institutional set-up. 

3.4.3  In view of the primacy of Union legislation, the ECB also notes that when NBS considers that it is 

necessary to withdraw a credit institution’s authorisation under section 35g of the draft law, it must 
give  full  regard  to  Article  4(1)(a)  and  Article  14(5)  of  Council Regulation (EU)  No  1024/201319, 

which assign to the ECB the exclusive competence to withdraw a credit institution’s authorisation, 

and  submit  a  proposal  to  the  ECB  to  that  end.  In  that  case,  the  ECB  will  take  a  decision  on  the 

proposed withdrawal of authorisation, taking into account the justification for withdrawal put forward 

by NBS.  

3.5  Financial independence; proportionality to the organisational capacity of NBS to perform its tasks 

The  principle  of  financial  independence  requires  NCBs  to  have  sufficient  means  to  carry  out  not 

only their ESCB-related tasks from an operational and financial point of view, but also their national 

tasks.  In  this  regard,  the  ECB  notes  that  additional  expenses  for  NBS  resulting  from  the 

assumption of its new tasks and powers in the field of consumer protection in the financial markets 

are to be financed by a surcharge on annual contributions of entities supervised by NBS being a 

part of a system of (partial) financing of NBS’s supervisory tasks via contributions and fees related 
to supervision20. The ECB further notes that the surcharge will not be payable regularly and by all 

supervised entities, but only by those which, pursuant to a final decision of NBS, are found to have 

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20  

See point 26 of Article I of the draft law (new Section 35a of Law No 747/2004). 
Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank 
concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 
See Section 39 et seq. of the Law No 747/2004. 

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breached  their  obligations  in  the  field  of  financial  consumer  protection  or  violated  the  rights  of 

financial consumers. However, entities which have been subject to sanctions or other enforcement 

measures  imposed  in  simplified  proceedings,  and  addressees  of  interim  measures,  will  not  be 

subject to this fee. It will not be possible to estimate the amount of proceeds from the surcharge. 

However,  considering  that  the  task  is  complementary  to  existing  supervisory  tasks  and  that  a 

proportion  of  the  costs  incurred  by  NBS  in  financial  consumer  protection  will  be  covered  by 

the surcharge,  the  performance  of  the  new  task  cannot  be  considered  disproportionate  to  NBS’s 

financial  or  organisational  capacity  and  should  not  negatively  impact  on  its  capacity  to  properly 

perform its existing central banking tasks. 

3.6  Extent to which the performance of tasks harbours substantial or disproportionate risks 

Given  that  the  new  consumer  protection  task  may  be  considered  complementary  to  existing 

supervisory  tasks  which  are  partially  financed  via  contributions  and  fees  related  to  supervision, 

these tasks bear similar financial and political risks as supervision. In this regard, such risks should 

not  be  considered  substantial  or  disproportionate  to  the  supervisory  tasks  already  assumed  by 

NBS. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 1 July 2015. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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