Financial Services Regulation and Compliance - Investment Firms June 2023
Domestic
CBI echoes ESMA concerns on the provision of unregulated products and / or services by investment firms
As noted in our May tracker, ESMA has issued a public statement warning of the significant risk where investors may misunderstand the protections they are afforded when investing in unregulated products and/or services offered by a firm that also provides regulated products. The June issue of the CBI’s ‘Intermediary Times’ (available here) has echoed these concerns, which it feels apply to all retail intermediaries (RIs). The CBI expects that firms will read the ESMA statement in conjunction with its June 2020 Dear CEO letter and to review their arrangements, processes and disclosures and ensure that they meet the expectations set out.
More specifically, the CBI expects that firms will clearly and effectively distinguish unregulated products or services from their regulated business to mitigate the risk to consumers. In addition, the RIs should disclose to consumers whether their professional indemnity insurance (PII) cover applies in respect of unregulated activities prior to offering that unregulated product or service.
European
ESMA launches call for evidence on sustainability in suitability and product governance
On 16 June 2023, ESMA launched a call for evidence (CfE) on integrating sustainability preferences and product governance arrangements under MiFID II (available here). It is hoped that this CfE will enable ESMA to develop a better understanding of:
- how MiFID II requirements are being implemented and applied by firms across the Union and the challenges firms face in their application
- gain a better understanding of investor experience and reactions to the inclusion of sustainability factors in investment advice and portfolio management services
- collect information, views and data on main trends on aspects related to the provision of sustainable investment products and services to retail clients
ESMA will consider all comments received by 15 September 2023.
European Commission launches new sustainable finance package
On 13 June 2023, the European Commission launched a sustainable finance package (available here). This includes a proposal for a regulation on the transparency and integrity of ESG rating activities to enable investors to make better informed decisions regarding their sustainable investments. The Commission has also amended the EU Taxonomy Client Delegated Act to include additional taxonomy criteria for economic activities making a sustainable contribution to non-climate environmental objectives, such as pollution prevention and control. An Environmental Delegated Act will introduce the technical screening criteria by which an activity’s contribution to EU Taxonomy Regulation objectives can be assessed. For more of our coverage, click here and here).
For more information on these topics please contact any member of A&L Goodbody's Asset Management & Investment Funds team.
Date published: 11 July 2023