On 13 November 2018, the European Securities and Markets Authority (ESMA) published an updated MiFID II supervisory briefing on suitability requirements. The purpose of the briefing is to promote common supervisory approaches and practices. It summarises the key elements of the rules and explains the associated objectives and outcomes. It also includes indicative questions that supervisors could ask themselves, or a firm, when assessing firms’ approaches to the application of the MiFID II rules.
The briefing takes into account the new version of ESMA’s guidelines on suitability published on 28 May 2018 and is structured around the following elements:
- determining situations where the suitability assessment is required;
- information to clients about the purpose of the suitability assessment;
- obtaining information from clients;
- arrangements necessary to understand investment products;
- arrangements necessary to understand the suitability of an investment;
- suitability report;
- qualifications of firm staff; and
- record keeping.
The content of briefing is not subject to any ‘comply or explain’ mechanism for Member State competent authorities and is non-binding.