Regulatory Influencer: European Banking Authority Puts White Labelling on Notice for 2026

In October 2025, the European Banking Authority (EBA) issued a report on white labelling – a practice where an institution provides products or services developed by a financial institution, but that are distributed under its own brand.

White labelling is a common practice. The EBA reports that around 35 percent of banks under its remit make use of such arrangements, a figure that underscores the growing need for supervisory clarity. Primarily, this practice can be found in three main areas:

• Account and payment services.
• Credit provisioning.
• Open banking. 

Ranking in order of prominence, banks and e-money institutions represent the most common type of white labelling provider, followed by payment institutions. As for the distributors of the service, the EBA has noted the emergence of non-financial institutions increasingly acting as partners. 

As a practice, white labelling offers several notable benefits. The most immediate is cost efficiency: providers can expand their market presence without investing in extensive marketing campaigns by leveraging a partner’s brand visibility and customer reach. Meanwhile, partners also benefit from easier market entry, as they can offer regulated services without undergoing the costly and time-consuming authorisation processes themselves.

The EBA laid out further potential benefits: 

• Market expansion and customer reach: providers and partners can attract new clients and broaden their offerings.
• Enhanced targeting and personalisation: providers can use partners’ customer data to tailor products and services.
• Integration of new technologies: access to partners’ platforms can facilitate innovation.
• Financial inclusion: improving access for consumers who are underserved by traditional financial systems.
• Revenue generation: both providers and partners can earn fees from their respective offerings.
• Competition: fostering a more competitive landscape for financial services.

However, white labelling currently suffers from a significant lack of transparency, both for consumers and supervisors. The EBA’s report highlights a structural risk, as regulators have limited visibility into a rapidly expanding distribution model, making it impossible to quantify the true scale of potential exposure. This opacity amplifies supervisory sensitivity and indicates that white labelling will face heightened scrutiny in 2026. This regulatory influencer will examine both the potential consumer ramifications and the supervisory implications of white labelling in financial services.

The bigger picture 

White labelling is not a new phenomenon; it has long been used across industries such as energy, food and beverage, and other services. In financial services, however, its rapid adoption has outpaced supervisory visibility, creating a structural blind spot. Regulators cannot fully quantify exposures arising from these arrangements, making it difficult to assess potential risks to consumers or the financial system.

Outsourcing products or services inherently carries risks. Institutions have less direct control over the end product, which can lead to quality issues, operational disruptions or dependence on third-party suppliers. Still, the pace of white labelling’s growth has outstripped supervisory oversight, leaving exposures largely unquantified.

To better understand these risks, the EBA categorised them into four main areas:

• Risks to consumers.
• Risks for providers and partners.
• Regulatory and compliance risks.
• Supervisory and system risks. 

Risk to consumers 

From the EBA’s perspective, the potential risks to consumers should rank high in importance. In its report, the EBA highlighted several, such as:

• There is an increased risk of misleading or insufficient information, as well as mis-selling practices which could occur due to a lack of transparency.
• There exists significant challenges in complaints handling as consumers may face difficulties in identifying the relevant entity to whom a complaint should be addressed.
• There exists risks of fraudulent activities. This includes the risk of being manipulated into making a payment to a fraudster that is impersonating the partner or provider. 

A key risk in this context is the potential unavailability of a providers’ product or service. The report highlighted this risk from a commercial perspective, with the EBA noting that white-label arrangements can amplify business model risk. Partners who rely on third-party products or services may face severe disruption if a provider discontinues its offering, fails or has its licence withdrawn. In such scenarios, partners must act swiftly to prevent their own operational failure.

This risk also has significant implications for consumers. The EBA briefly acknowledged that “negative consequences may also affect customers, especially in the absence of adequate exit plans”. In practice, if exit plans are not formalised and rigorously tested, a providers’ failure could directly harm consumers, potentially leaving them unable to recover their funds.

The risk may also have contagion effects. If multiple partners rely on the same provider, a single provider failure could disproportionately impact a large number of end customers. With limited supervisory oversight over partners, which is expanded upon below, the potential scale of this risk cannot be accurately quantified.

Supervisory and systems risk 

Another notable risk highlighted by the EBA was supervisory and system-wide risk. Currently, both the EBA and national competent authorities (NCAs) face significant difficulties in monitoring compliance at all points in the value chain. The main challenges identified were: 

• The opacity of the structure, particularly relating to the relationship between providers and partners and their respective roles.
• Regulatory qualification of the arrangements and supervisory fragmentation, due to potentially different visibility over, and regulatory qualification of, different parts of the distribution arrangement and resulting supervisory expectations.
• The lack of direct supervision over partners, especially when they are unregistered or unauthorised entities, or when they are located in a different jurisdiction.

In respect to the opacity of the structure, the EBA has explained that this issue is further exacerbated by the fact that the agreements often go unreported as commercial partnerships, including white labelling, typically do not need to be notified. This lack of transparency even affected the creation of the EBA’s report, with the methodologies and limitations sections highlighting data limitations due to: 

• The fact that white labelling does not appear to be systematically captured in supervisory onsite and offsite activities.
• The limited amount of data available to NCAs in host member states via supervisory notifications.
• The variety of products and services offered via white labelling and the limited availability of data in view of the confidential nature of such agreements. 

Under current requirements, notification is only required under a few, limited circumstances. For instance, under Directive (EU) 2015/2366 (the revised Payment Services Directive – PSD2), if a payment institution intends to provide payment services through an agent, it must notify the competent authority in its home member state (Article 19, PSD2). An agent here is a natural or legal person who acts on behalf of a payment institution. 

Similar requirements are found in Directive 2014/65/EU (Markets in Financial Instruments Directive II – MiFID II) for tied agents, who are natural or legal persons that, under the full and unconditional responsibility of only one investment firm on whose behalf they act, promote investment and/or ancillary services to clients or prospective clients and provide other services on behalf of the firm (Article 4(29), MiFID II). MiFID II places strict obligations on such agents, including requiring the agent to be registered (Article 29, MiFID II).

Finally, the EBA’s guidelines (EBA/GL/2019/02) on outsourcing arrangements require notification if the white-labelling agreement involves the partner taking over a critical or important function. Outside these three regimes, there is no universally applicable notification requirement. 

In its stead, the EBA has developed a common template questionnaire to facilitate the identification and understanding of white-labelling agreements and the concrete allocation of tasks between providers and partners. In the long run, however, and in the interest of sector-wide transparency, this will in all likelihood prove inadequate. 

Why should you care? 

White labelling is a ubiquitous practice, promising great benefits for both sides. In addition, considering the upcoming Financial Data Access Regulation (FiDA), white labelling may become even more widespread. Specifically, FiDA establishes a framework for responsible access to individual and business customer data across a wide range of financial services, expanding the scope of open banking to open finance. 

As FiDA aims to enhance data accessibility and interoperability, the EBA believes the framework could streamline the integration of white-labelling services across borders and foster the distribution of white-labelled financial products and services.

Similarly, the EBA has pointed out that Directive (EU) 2019/882 (European Accessibility Act – EAA) could help address inclusion-related risks for digitally delivered white-labelled services.

However, the core issue remains: regulators cannot currently quantify the scale of exposures arising from these arrangements. This lack of visibility heightens supervisory sensitivity and signals that white labelling is likely to face increased scrutiny in 2026.

Not all white-label arrangements carry the same level of risk. The highest risks arise when:

• Products or services are critical to the partner’s business continuity, creating dependency on a third-party provider.
• Non-authorised or cross-border partners are involved, raising compliance, licensing and consumer protection challenges.
• Contingency or exit plans are absent, leaving partners and end customers vulnerable if a provider fails or withdraws.

Firms should therefore treat white labelling as a crucial risk area. Proactive management, robust oversight and early engagement with supervisors will be essential to navigate the evolving regulatory landscape.

Regulatory change? 

The financial services sector in the EU is overregulated. This issue is readily apparent to EU legislators, who have in recent periods launched several initiatives to alleviate some of the challenges. Yet, white labelling presents an area which, arguably, necessitates some action on the part of regulators. 

As highlighted in the report, the EBA has not identified areas of EU law that require amendment. Instead, the EBA has found a need for supervisory convergence in promoting a common understanding among national authorities about the potential opportunities and risks, the regulatory qualification of the arrangements between the parties involving agents and outsourcing, and ensuring the information conveyed to consumers is clear. The EBA has also committed to continue monitoring banks’ engagement in white labelling via the annual Risk Assessment Questionnaire. 

Considering the risks highlighted, and the existing opacity, these steps are insufficient. 

A possible solution would be to introduce a notification or registration regime, akin to PSD2’s agents notification requirements, mandating financial institutions to submit a notification to a national competent authority where their product or service is distributed by another institution. At the very least, such a regime would provide European regulators with the necessary information to supervise the market and proactively address emerging risks. 

Another possible option would be for the EBA to require competent authorities to use its common template questionnaire in their supervisory reviews of institutions.  

Nonetheless, with the EBA identifying a need for supervisory convergence actions in 2026, it is clear that regulators are unlikely to wait for legislative reform to take action. Firms should begin reviewing their white-labelling arrangements, particularly any arrangements requiring regulatory qualifications. Firms should also proactively map arrangements, enhance partner due diligence and strengthen exit plans. In any case, firms must be prepared for increased scrutiny on their white-labelling arrangements throughout 2026. 

As an additional point for consideration, partner firms should consider their own regulatory status. Although entering the market as a non-authorised partner may be the fastest route to market, the potential risks associated with that status may outweigh the possible benefits. Potential partners must too weigh up the risks, particularly considering the greater supervisory scrutiny to be expected over the coming year. Said another way, non-authorised partners may face a different, higher risk profile in the times ahead.