ESMA publishes final Guidelines on MiFID II suitability requirements

On 28th May 2018, the European Securities and Markets Authority (ESMA) published its Final Report on Guidelines on certain aspects of the MiFID II suitability requirements.
The assessment of suitability is one of the most important requirements for investor protection in the MiFID framework. It applies to the provision of any type of investment advice, whether independent or not, and portfolio management. Investment firms providing investment advice or portfolio management must, under Article 25(2) of MiFID II and Articles 54 and 55 of the MiFID II Delegated Regulation, to provide suitable personal recommendations to their clients or have to make suitable investment decisions on behalf of their clients.

The Guidelines in the Final Report build on the text of ESMA’s 2012 MiFID I guidelines on suitability, which have been largely confirmed and broadened in order to:

• consider technological developments of the advisory market notably the increasing use of automated or semi-automated systems for the provision of investment advice or portfolio management (robo-advice);

• build on NCAs’ supervisory experience on the application of suitability requirements (including the 2012 guidelines);

• take into account the outcome of studies in the area of behavioural finance; and

• provide additional details on some aspects that were already covered under the  2012 guidelines.