09 January 2015

AMF Position on Agreements on the distribution of financial instruments

Analysis of practices and agreements revealed that relations between the entities responsible for publishing information documents relating to certain financial instruments and ISPs, and financial investment advisers, were generally governed by written agreements, even prior to January 2010.

In order “to harmonise certain rules applying to the marketing of financial instruments with those applying to the marketing of comparable retail investment products and insurance products” and, more specifically, to “provide for the establishment of agreements governing relations between manufacturers and distributors”, Order n° 2008-1271 of 5 December 2008, the implementing legislation of which came into force in January 2010, made it mandatory for agreements to be drawn up between manufacturers and distributors of financial instruments, life insurance policies and capitalisation contracts.

This legislation states that these agreements must include information pertaining to the verification by the manufacturer that the promotional documents issued by the distributor comply with the regulatory disclosures; and the provision by the manufacturer to the distributor of all information required for the proper marketing of the financial instruments.

It has been observed that the required indications were often imprecise and unsuited to the wide variety of players in the distribution circuit. In such cases the legislator’s will of regulating and ensuring the quality of information issued to the client is therefore not fulfilled. By contrast, some of the “platforms” using a network of distributors had taken the initiative of drawing up agreements with their partners containing similar obligations to those set forth in their agreements with manufacturers. In fact, the existence of distribution chains has resulted in an increasing number of interlocutors positioned between the manufacturer and the client. Hence the manufacturer’s contact (“distributor in direct relation with the manufacturer”) may be different from the client’s direct contact (“distributor in direct relation with the client”).

AMF’s recommendation is as follows: Where the manufacturer on the one hand and the ISP or the FIA in direct contact with the end client on the other hand are not directly in relation with each other, the AMF recommends that this ISP or this FIA draw up an agreement with the entity interposed between them. In this agreement, this entity undertakes to transmit:

• To the ISP or the FIA in contact with the client, the regulatory disclosures (and its update) that it receives from the manufacturer in accordance with the agreement signed with this manufacturer as set forth in Article L. 533-13-1 of the Monetary and Financial Code
• To the manufacturer for validation by the manufacturer, the communications of a promotional nature drawn up by the ISP or the FIA in contact with the end client

If the manufacturer so agrees, the transmission of up-to-date regulatory disclosure to the ISP or the FIA in direct contact with the end client, and the validation of promotional communications may be governed by an agreement drawn up between the manufacturer and the ISP or the FIA instead of the agreement recommended in the previous paragraph.

Full AMF position

© AMF - Autorité des Marchés Financiers