The CNMV (National Securities Market Commission), the Directorate General for Insurance and we at the Banco de España have competencies within our sphere of influence, although on assigning them regard is had to the type of product marketed, and not to the usual criterion of type of institution. On an ongoing basis, the Banco de España exercises surveillance over and inspects transparency and bank customer protection. As indicated in the latest Annual Claims Report, further to this oversight 6 disciplinary proceedings were initiated in 2019 against different banks, and 58 requirements and 31 written observations and recommendations were made. 3/6  BIS central bankers' speeches  Indeed, both the requirements and the written notifications are, per se, supervisory actions, a fact often forgotten as the focus is solely on fines. Our Institutions’ Conduct Department has been tasked with defining the supervisory policy for and the exercise of oversight in respect of conduct. However, from the prudential supervision standpoint, conduct risk is also evaluated, with everincreasing attention. Conceptually, this risk comes under non-financial or operational risk which, since Basel II was approved, is part of the minimum capital Pillar 1, and is directly reflected in the solvency ratio. Elsewhere, reputational aspects, which are very important for the banking sector, are also evaluated as part of Pillar 2. Both pillars of the capital framework repeatedly mention the concept of “risk”. A quick search of the text of the European Solvency Regulation will bear this out: the word risk appears no fewer than 1,500 times.

A good example of this was Law 2/2011 on Sustainable Economy, which marked a milestone on the road towards advanced regulation of conduct. For example, this legislation includes for the first time so-called “responsible lending” and modernises claims services. Several European Directives addressing this field have also been approved. Banco de España Circular 5/2012, which replaced Circular 8/1990, includes all these features. I honestly believe that the current rules accurately regulate transparency obligations regarding bank products and services both in the pre-contractual stage and over the life of the operation. Evidently, in parallel with these regulatory developments, there have been most significant changes in society, public opinion and jurisprudence, especially in the past decade. Our supervisory framework has also evolved. Now, in addition to focusing on formal compliance with conduct obligations, it also envisages the management and mitigation of these risks by banks and their incorporation into the business model. I shall briefly refer to these aspects today. But I will also broach the need to enhance customers’ financial knowledge. In my view, this is a key element of which little mention is usually made. The cost of litigiousness Clearly, the changes in customer safeguard regulations and in jurisprudence mean that what was appropriate in the past has ceased to be so today. Undoubtedly, banks have acted questionably; but to be completely fair, we should acknowledge that the legal playing field on which banks operate has changed significantly.