[ESMA35-43-3172 ] Guidelines on certain aspects of the MiFID II suitability requirements

Following the publication of the Final Report on revisions to its Guidelines on certain aspects of the MiFID II suitability requirements (please see EventID=17348), the ESMA has published its final updated guidelines (ESMA35-43-3172_E) that are applicable with respect to Article 25(2) of MiFID II and Articles 54 and 55 of MiFID II Delegated Regulation and apply to the provision of investment advice and portfolio management listed in Section A of Annex I of MiFID II.
To recall, ESMA proposed to incorporate the requirements set out in Commission Delegated Regulation (EU) 2021/1253, a delegated regulation under the Markets in Financial Instruments Directive (MiFID II), which requires the integration of „sustainability factors, risk and preferences into certain organisational requirements and operating conditions for investment firms“. Specifically, firms providing investment and portfolio management services are now obliged to
– inform clients of the concept of „sustainability preference“, thereby explaining the difference between products with and without sustainability features in a language that is clear, concise, and non-technical;
– assess clients’ sustainability preferences including a determination of whether or not they wish to invest in such products and – if so – in which products specifically;
– provide the clients with detailed information on products that meet their preferences;
– keep record of the assessment of sustainability preferences as part of the suitability assessment; and
– train their staff on the concept of sustainability and on adequate preference assessments.
ESMA also sought to add good and poor practices** to the guidelines when it comes to determining suitability of a client based upon the findings of its Common Supervisory Action (CSA) that was conducted in 2020.
Details on the final updated guidelines may be viewed in the enclosed document.