May 28, 2018

ESMA published a report on the final guidelines for certain aspects of the Markets in Financial Instruments Directive (MiFID) II suitability requirements. The guidelines in the final report confirm and broaden the existing MiFID I guidelines on suitability, which were issued in 2012.

This final report summarizes and analyzes the responses to the consultation paper on suitability requirements, which ran from July 13, 2017 to October 13, 2017. For finalization of the guidelines, ESMA considered responses received to the consultation, along with the advice of the Securities and Markets Stakeholder Group (SMSG). Along with the guidelines, the report provides the cost-benefit analysis, summarizes the opinion of the SMSG, and contains the feedback statement. The guidelines will be translated in the official EU languages and published on ESMA website. Within two months of the publication of translations, the national competent authorities must notify ESMA whether they comply or intend to comply with the guidelines.

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 portfolio management. Investment firms providing investment advice or portfolio management must provide suitable personal recommendations to their clients or have to make suitable investment decisions on behalf of their clients. The guidelines, by supporting a consistent and harmonized application of the requirements in the area of suitability, will ensure that MiFID II’s objectives are achieved.  When preparing the final report, ESMA has carefully considered the content of the EC's action plan on sustainable finance. ESMA will also keep monitoring the legislative proposals stemming from the action plan and will consider making focused amendments to the guidelines to reflect changes to the MIFID II delegated acts on the topic of sustainability.

 

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Keywords: Europe, EU, Securities, MiFID II, Suitability Requirements, Guidelines, Investor Protection, Sustainable Finance, EC, ESMA

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