Welcome to the August 2025 edition of RegRally Insights: Consumer Protection Regulation. This is the month’s briefing, spotlighting key regulatory moves shaping consumer protection across the EU. We break down the latest developments, highlight persistent compliance gaps, and outline practical steps to help you stay ahead of evolving regulatory standards.
EBA moves to tackle greenwashing through revised product governance guidelines.
As ESG products proliferate in retail banking, the European Banking Authority is consulting on updated governance rules to combat greenwashing and strengthen business conduct. The revisions aim to enhance product oversight without burdening financial institutions.
The European Banking Authority (EBA) has launched a consultation to revise its Guidelines on Product Oversight and Governance (POG) arrangements to address the increasing risks of greenwashing in the retail banking sector. The proposed updates clarify existing requirements for ESG-featured products to protect consumers from misleading practices and ensure compliance with evolving conduct standards. The revisions focus on select areas, including internal controls, target market assessment, and product distribution, emphasising maintaining a proportionate regulatory approach. These changes are driven by findings from the EBA’s 2024 report on greenwashing and align with recent updates to the Capital Requirements Directive and Regulation. The final guidelines are expected by Q1 2026 and will apply from 1 December 2026.
Financial institutions should proactively review their internal product governance frameworks, particularly for retail products with ESG features. Preparatory alignment with the draft revisions, especially in internal controls, disclosure practices, and target market definitions, will ensure smoother compliance once the updated guidelines come into effect.
Lithuanian central bank finds persistent legal gaps in payment service contracts
While most electronic money and payment institutions have improved consumer contracts in response to regulatory scrutiny, key deficiencies remain, particularly in liability, contract changes, and clarity of terms.
Following a reassessment of electronic money institutions (EMIs) and payment institutions (PIs), the Bank of Lithuania found that although all nine institutions under review changed their consumer payment service agreements, not all fully addressed previously identified issues. The review, based on compliance with the Law on Payments of the Republic of Lithuania, showed varying levels of conformity. Three institutions met 87% of the legal requirements, while others showed partial or significant non-compliance. Common weaknesses included clauses on liability for payment execution, contract modification or termination, and the overall clarity of contract language. In one institution, over half of the clauses were found non-compliant. The Bank of Lithuania will continue engaging with non-compliant institutions to ensure complete alignment with legal standards and improved consumer transparency.
Our recommendation:
EMIs and PIs should undertake a comprehensive legal audit of standard consumer payment contracts (Terms and Conditions), prioritising provisions on liability, contract amendments, and termination rights.
Institutions must ensure complete alignment with the Payments Law and present terms in clear, consumer-friendly language. Legal monitoring and periodic contract reviews should be embedded into internal controls to prevent regulatory breaches and reputational risks.
Financial institutions improve payment service experience, but gaps in fraud response and transparency remain
Lithuania’s financial institutions report better compliance with consumer protection expectations, but persistent issues in fraud procedures, payment clarity, and service accessibility highlight the need for structural improvements.
According to a 2025 follow-up survey by the Bank of Lithuania, financial institutions now fully meet 91% of regulatory expectations related to the quality of payment services – a slight improvement from the previous year. However, challenges remain in critical areas such as fraud-related processes, communication on reserved funds, clarity on payment limits, and transparency when third-party service providers are involved. Notably, 24% of institutions report only partial compliance with fraud-related payment trace and recall procedures. The lack of 24/7 support lines, opaque dispute processes, and unclear legal relationships with third-party intermediaries contribute to customer dissatisfaction. While institutions show high compliance in AML/CTF measures and KYC practices, delayed customer support in risk scenarios (e.g., account blocks) continues to cause frustration.
Our recommendation:
Institutions should enhance fraud management protocols by offering 24/7 customer support and implementing user-friendly payment cancellation tools. Communication on reserved funds, card transaction statuses, and spending limits must be simplified and accessible across all platforms. When using third-party agents, institutions must disclose the service structure and legal responsibilities in all consumer-facing channels, not just contracts.
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