ESMA issued a follow-up report regarding oversight by national competent authorities of the Markets in Financial Instruments Directive (MiFID) suitability requirements. The report assesses the actions ten national competent authorities have undertaken since the earlier peer review conducted in 2016. The report identifies enhancements in supervising the requirements and greater deployment of enforcement action by some national competent authorities. These improvements should lead to an increased level of EU-wide supervisory convergence of the suitability requirements.
MiFID II, which came into effect on January 03, 2018, expands the MiFID suitability provisions by adding additional requirements. ESMA stresses the importance of continued and meaningful supervisory and enforcement efforts by the national competent authorities to ensure a high level of compliance with the suitability requirements, as only these actions can ensure the proper application of Union Law and high level of investor protection. MiFID requires investment firms to assess the suitability of investment services and financial instruments, taking into account clients’ profiles, when providing investment advice or portfolio management. The requirements form a key element of the MiFID investor protection requirements and apply to both retail and professional clients. Investment firms’ compliance with the MiFID suitability requirements is paramount to the overall protection of investors. Therefore, it is important that national competent authorities are effectively overseeing and enforcing the conduct of firms.
Keywords: Europe, EU, Securities, Suitability Requirements, MiFID, Investor Protection, ESMA
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