ESMA consults on suitability requirements under MiFID II

Published: 17 July 2017

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The European Securities and Markets Authority (ESMA) has published a Consultation Paper on draft guidelines on certain aspects of the suitability requirements under the Markets in Financial Instruments Directive (MiFID II). The suitability requirements were introduced under MiFID to enhance investor protection by ensuring that firms which provide investment advice and portfolio management act in clients’ best interests. Suitability has to be assessed against clients’ knowledge and experience, financial situation and investment objectives. In order to achieve this, investment firms have to obtain the necessary information from clients.  Under MiFID II, the obligations have been strengthened and further specified.

The ESMA Consultation proposes updated and amended draft guidelines on certain aspects of the MiFID II suitability requirements to account for the developments from MiFID I to MiFID II.  In particular the draft guidelines:

  • consider recent technological developments of the advisory market, including the increasing use of robo-advice, i.e. automated or semi-automated systems for the provision of investment advice or portfolio management;
  • account for the results of recent supervisory activities conducted by national competent authorities on the suitability requirements;
  • incorporate some insights from the field of behavioural finance; and
  • provide additional details on some aspects that were already covered under ESMA’s 2012 guidelines.

The Consultation deadline is 13 October 2017. ESMA will consider the feedback it receives to the consultation in Q4 2017/Q1 2018 and expects to publish a final report in Q1/Q2 2018. If members have any questions or comments, or wish to contribute to an AIMA response, please contact Adam Jacobs-Dean, Oliver Robinson or Adele Rentsch.