The consultative guidelines seek to enhance clarity and converge aspects of appropriateness and execution only requirements and the suitability provisions under MiFID II.
MiFID II appropriateness and execution-only framework is an important element of investor protection for the provision of services other than investment advice or portfolio management (‘non-advised services’).
Advised services require the investment firm to ask the client about their knowledge and experience to assess whether the investment service or product is appropriate and to issue a warning in case the investment service or product is deemed not to be appropriate.
The consultation also addressed the issue of Sustainable Finance and the integration of sustainability factors, risks and preferences into the product governance and suitability requirements. ESMA is seeking specific comment from the industry as to whether sustainability factors should be considered as part of the appropriateness assessment and the manner in which sustainability factors and risks could be taken into account in the appropriateness assessment.
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