Euro regulator uncovers Mifid shortcomings
The European Securities and Markets Authority (Esma) has published two sets of guidelines aimed at both market participants and national authorities, to promote more convergence in the interpretation and supervisory approaches to the Markets in Financial Instruments Directive (Mifid) suitability and compliance requirements.
Esma said it found a number of shortcomings in the implementation of Mifid suitability requirements including failure to ask clients the right question, failure to collect the necessary and relevant information and failure to interpret correctly the information provided by the client.
The organisation said the first set of guidelines focus on the need for firms to have in place appropriate arrangements to enable them to meet the suitability requirements on an on-going and consistent basis for any client, and irrespective of the distribution channel used.
Meanwhile the second set of guidelines addresses the responsibilities of the compliance function and aim to help investment firms to increase the effectiveness, and importance, of the compliance function.
Steven Maijoor, chair of Esma, explained: “The implementation of these guidelines will contribute to a system of pan-European safeguards which will allow investors to benefit from the same levels of protection regardless of where they are investing.”