CNMV adopts ESMA’s guidelines on the MiFID II’s product governance requirements to reinforce Investor protection

The CNMV has informed ESMA of the adoption of the Guidelines on MiFID II product governance requirements (eventid=22543). These guidelines are designed to enhance investor protection by ensuring that financial products are manufactured and distributed in the best interests of clients. The guidelines, which were originally published in 2017, have been updated to incorporate recent supervisory experience and new regulatory developments:
Manufacturers of financial products are required to take into account scenario analyses and cost structures when identifying their target market. They must also specify if their products align with sustainability-related objectives. Furthermore, criteria for grouping products with similar characteristics and risks have been introduced, with the understanding that grouping certain complex products may not be appropriate.
Distributors are expected to assess the suitability of gamification practices in digital product distribution and avoid techniques that induce detrimental behavior. When distributing complex products, they should consider the results of scenario and cost structure analyses conducted by the manufacturer and ensure that the distribution strategy aligns with the target market.
Both manufacturers and distributors are obligated to determine the information necessary to ensure products are distributed within the identified target market. They may need to collect additional client information and reevaluate their strategy for complex products.
The guidelines make it clear that products with sustainability factors do not require a negative target market. Such products are compatible with clients who do not have sustainability preferences, as long as they align with the other characteristics defining the target market.
These updated guidelines are applicable from 3 October 2023.