ESMA Review Finds Supervision of Suitability Requirements Has Improved
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.
Related Links
Keywords: Europe, EU, Securities, Suitability Requirements, MiFID, Investor Protection, ESMA
Related Articles
EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10
EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.
FASB Proposes to Delay Implementation of Insurance Contracts Standard
FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).
APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis
APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.
BCBS and FSB Set Out Recommendations for Benchmark Transition
BCBS and FSB published a report on supervisory issues associated with benchmark transition.
IAIS Sets Out Recommendations for Benchmark Transition for Insurers
IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.
ESMA Updates Reporting Manual on European Single Electronic Format
ESMA updated the reporting manual on the European Single Electronic Format (ESEF).
EBA Calls on Resolution Authorities to Consider Impact of COVID Crisis
EBA published a statement on resolution planning in light of the COVID-19 pandemic.
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
ECB Guideline on Materiality Threshold for Credit Obligations Past Due
ECB published a guideline (2020/97), in the Official Journal of European Union, on the definition of materiality threshold for credit obligations past due for less significant institutions.
FED Temporarily Revises FR Y-14 With Respect to PPP and CARES Act
FED temporarily revised the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes in response to the COVID-19 pandemic.
