FEFSI response to FESCO’s Consultative paper on Conduct of Business Rules

23 May 2001

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Given the present heterogeneity of existing rules across Member States FEFSI appeals for a progressive harmonisation allowing all national practices to converge without disproportionate disruption or possibly even distortion of competition across the European playing field.

The rules are divided into those deemed applicable for investor protection (i.e. nonprofessional) and those for business with professionals.
FEFSI believes that it is possible to divide “customer facing” rules into those that should be applicable to professionals and non-professionals. They have in mind rules such as those relating to the information required from customers before the provision of an investment service and those rules relating to disclosure requirements.

The FESCO proposals for conduct of business rules are essentially, two-tier, i.e. professionals and non-professionals.
Large companies, partnerships and many institutional investors will only be treated as a professional investor if they actually request it. This is clearly over-burdensome and begs the question whether a two-tier approach to customer classification is correct. It would also be important to clarify what rights are to be attached to the status of professional investor.

See full paper

© FEFSI