ESMA publishes final guidelines on MiFID II suitability requirements
23 September 2022
The assessment of suitability is one of the most important requirements for investor protection in the MiFID framework. It applies to the provision of any type of investment advice, whether independent or not, and to portfolio management.
The European Securities and Markets Authority (ESMA), the EU’s Securities Markets Regulator, has published its Final Report on Guidelines on certain aspects of the MiFID II suitability requirements].
The main amendments introduced to the MIFID II Delegated Regulation
and reflected in the guidelines on the topic of sustainability are:
- Information to clients on the sustainability preferences – Firms
will need to help clients understand the concept of sustainability
preferences and explain the difference between products with and without
sustainability features in a clear manner and avoiding technical
language;
- Collection of information from clients on sustainability preferences – Firms
will need to collect information from clients on their preferences in
relation to the different types of sustainable investment products and
to what extent they want to invest in these products;
- Assessment of sustainability preferences – Once the firm
has identified a range of suitable products for client, in accordance
with the criteria of knowledge and experience, financial situation and
other investment objectives, the firm shall identify the product(s) that
fulfil the client’s sustainability preferences; and
- Organisational requirements – Firms will need to give staff
appropriate training on sustainability topics and keep appropriate
records of the sustainability preferences of the client (if any) and of
any updates of these preferences.
This Final Report builds on the text of the 2018 ESMA guidelines, which have been reviewed to consider:
- the adoption by the European Commission of the changes to the MiFID II Delegated Regulation
to integrate sustainability factors, risk and preferences into
organisational requirements and operating conditions for investment
firms;
- the good and poor practices identified in ESMA’s 2020 Common Supervisory Action
(CSA) on suitability. These good and poor practices will give practical
guidance to firms in some areas where lack of convergence was
identified; and
- the amendments introduced through the Capital Markets Recovery Package to Article 25(2) of MiFID II.
By pursuing the objective of ensuring a consistent and harmonised
application of the requirements in the area of suitability, including on
the topic of sustainability, the guidelines will contribute to the
achievement of the objectives of MiFID II...
more at ESMA
© ESMA
