EBF advisor: Simon Pettinger
Publication date: 13 October 2017
The EBF welcomes ESMA’s Consultation Paper (CP). The rules on assessment of suitability form an important part of the investor protection rules in MiFID II. The EBF generally supports ESMA’s aim to update the existing guidelines. Suitability requirements in the context of MiFID II are a key element to correctly adjust investment firms’ advice to clients and make suitable decisions based on clients desires as well as information on their situation.
We welcome that ESMA in the Consultation Paper emphasizes the need for proportionality, taking into account the nature and complexity of the financial instruments as well as firm’s different business models and their clients’ needs. In fact, the EBF believes that well calibrated and proportionate rules are essential for the proper functioning of the suitability requirements, in particular in the light of new technological developments such as robo-advice etc.
As a general remark, the EBF finds that the supporting guidelines are very detailed and in some cases includes unnecessary repetition of what is already stated under Level 2. There are also examples where the guidelines appear to introduce new requirements on firms. In addition, we note that there are cases where the guidelines go beyond the issue of suitability, involving other parts of MiFID II (e.g. knowledge & competence and record-keeping) and how firms should perform the investment service per se (e.g. portfolio management). Based on the above, the EBF would welcome if ESMA in its forthcoming work did a general overview of the draft guidelines in order to make them more stringent and focused on the issue at hand – the suitability requirements under MiFID II.
We disagree on the suggested approach for firms’ assessment of equivalent products for client profiles.
When talking about new technological developments of the advisory market, the level playing field becomes more important than ever. Possibilities for gold plating by national competent authorities should be extremely limited as they could create un-level playing field for new technological developments that are by definition not limited to Members States’ boundaries.
Find the EBF response in this consultation by clicking the ‘full document’ link below:
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