On 6 July 2023, the European Securities and Markets Authority (ESMA) announced the results of the 2022 Common Supervisory Action (CSA) and mystery shopper exercise on MiFID II requirements on information on costs and charges.

The statement sets forth that, overall, firms comply with most of the elements of the ex-post cost and charges requirements under MiFID II. This level of compliance varies across Member States. The CSA exercise revealed certain shortcomings in information provided to retail clients and suggests areas for improvement regarding both disclosure and format content.

The significant shortcomings concern:

  • Significant differences across firms and Member States in the format and content of ex-post disclosures.
  • Differing practices and sometimes no disclosure information on inducements.
  • Lack of disclosure of implicit costs to clients.
  • Lack of consistency in the ways firms illustrate the cumulative impact of the costs and charges on the return of the investment.
  • Disclosing cost figures only in nominal amounts and not also the corresponding percentages.

Furthermore, ESMA also ran its first mystery shopping exercise on the ex-ante cost and charges information provided to retail clients. In most cases, mystery shoppers received information about costs and charges before the investment service was provided, however the quality and the timing of the information provided differed between firms.

Based on the insights from the CSA and the mystery shopping exercise, ESMA will focus its convergence effort on the review and development of new Q&As as well as working on a possible standardised EU format for the provision of information about costs and charges to clients. In addition, where required, Member State competent authorities will undertake follow-up actions on individual cases that involve regulatory breaches as well as other shortcomings.