Information to the industry on firms providing investment services through tied agents

The National Securities Market Commission (CNMV) has expressed concern over the provision of services by banks and investment firms through tied agents. The CNMV believes that such operations pose a source of risk for these entities when they do not have adequate control procedures. Therefore, the CNMV has conducted supervisory actions on entities to review their control procedures on agents‘ activities, training, and remuneration, in accordance with the changes introduced in the regulations applicable by MiFID II.
The CNMV’s supervisory experience shows that the relationship between agents and their clients often goes beyond mere marketing and often includes information and advice. However, the CNMV has observed cases in which agents do not have the necessary training to provide information and advice without supervision, or in which the number of agents acting under the supervision of a single person is too high. Inadequate investment advice services may result in significant harm to clients, such as financial losses, and damage to the reputation of the firm.
Furthermore, the CNMV has detected weaknesses in the control procedures of entities over their network of agents. The CNMV has highlighted the importance of independent control functions to ensure appropriate and sufficiently thorough control procedures. The CNMV has also observed cases in which agents of credit institutions are not registered with the Bank of Spain, or agents who fail to consistently state in their relations with clients that they are agents of the represented entity.
The CNMV has also highlighted the role of client prescribers or introducers. The CNMV has observed cases in which individuals who collaborate with the entity receive remuneration but are not registered as agents; this is a reserved activity that can only be carried out by entities authorised to provide investment services or their agents.