On November 13, the European Securities and Markets Authority (ESMA) published an updated version of its supervisory briefing on the suitability requirements of the revised Markets in Financial Instruments Directive (MiFID II).
This briefing introduces European supervisors to MiFID II suitability rules, which require investment firms providing investment advice or portfolio management services to provide suitable personal recommendations to their clients or make suitable investment decisions on behalf of their clients. ESMA states that the briefing also is a useful starting point when deciding on areas of supervisory focus. The briefing summarizes the key elements of the rules and explains the associated objectives, outcomes and indicative questions that supervisors could ask a firm when assessing their approach applying MiFID II rules.
This briefing covers topics such as determining situations where the suitability assessment is required, providing information to clients about the purpose of the suitability assessment, obtaining information from clients and suitability reports.
The briefing takes into account ESMA’s guidelines on certain aspects of the MiFID II suitability requirements, which were published in May 2018 (for further information, please see the June 1 edition of Corporate & Financial Weekly Digest).
The guidelines go into effect on March 7, 2019. As of this date, ESMA’s previous 2012 supervisory briefing relating to suitability will be retired.
The briefing is available here.