The CJEU has been asked to rule on the extent to which the European Banking Authority was competent to adopt a guideline on retail product governance.

Even if the matter only concerns directly the European Banking Authority and relates only to one given position, the CJEU's ruling will apply to all three ESAs, including therefore the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA). It is likely to be relevant to all acts adopted by ESAs of so-called "level III" authority, i.e. recommendations, guidelines, "mere" opinions, but also atypical acts in Q&A form.

The CJEU will have to consider in advance how a request for a review of the legality of the acts of ESAs may be referred to it. Can these acts give rise to actions for annulment before the General Court of the European Union and on whose initiative may this be undertaken (banking, financial and insurance operators or their professional associations)? If the answer is in the affirmative, can they nevertheless also be referred for a preliminary ruling on validity by the national courts to the CJEU?

This case may mark the beginning of the end of the tendency of ESAs to arguably exceed their powers – to which attention has already been drawn, see Annex 2 here). In this regard, it is worthwhile recalling ESMA's opinion on share classes in the field of investment funds.

The mere existence of this reference for a preliminary ruling on validity should, even before the CJEU's judgment is rendered, incite the ESAs to pay more attention to applicable rules stemming from European Union law. At the very least, it should encourage them to be more careful as regards objections under European Union law linked to the limits of their powers which banking, financial and insurance operators and their professional associations may raise.

We will keep you informed of developments in this case, which falls within the broader context of the increasing judicial review of the acts of European monetary, banking and financial authorities, as evidenced by recent case law vis-à-vis the European Central Bank and the Single Resolution Council.

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