ESMA offers recommendations on digitalisation of retail investment services

ESMA has recently released a discussion paper that addresses the digitalization of retail investment services and its implications for investor protection. The paper explores the changing landscape of retail investments, specifically examining the increased adoption of digital tools and social media by both firms and investors in the aftermath of the COVID-19 pandemic. ESMA aims to collect feedback from stakeholders until 14 March 2024, focusing on recommendations related to online disclosures, digital tools, and marketing practices.
The recommendations put forth by ESMA cover several key aspects. Firstly, ESMA suggests the use of „layering techniques“ to manage information overload, advocating for the organization of content into easily understandable layers. The objective is to present crucial information clearly in the initial layer while allowing for more in-depth exploration if desired.
Regarding digital marketing communications and practices, ESMA emphasizes the importance of fair, clear, and non-misleading communication. The authority encourages firms to provide vital information prominently without relying excessively on hyperlinks or QR codes.
ESMA also addresses the use of influencers in financial services, stressing the need for transparent communication. The paper discourages the use of influencers to obscure or hide information, emphasizing the importance of clear and honest engagement.
The discussion paper further covers various digital engagement practices such as gamification, nudging techniques, and dark patterns. ESMA aims to utilize stakeholder feedback to shape its position on the use of these practices and potential regulatory responses.