In our latest monthly wrap up we highlight some of the key regulatory papers published by the Autorité Des Marchés Financiers (AMF) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR) during the period 3 November to 10 January 2023.
AMF publishes action and supervisory priorities for 2023
On 9 January 2023, the AMF published its action and supervisory priorities for 2023.
In a context of high uncertainty, facing new challenges and after a period of unprecedented health crisis that had marked previous years, AMF action for 2023 will focus primarily on four areas: promoting finance that meets the new expectations of investors, take up of European and international challenges, developing the regulatory framework for sustainable finance and combatting greenwashing and ensuring a robust and efficient supervision.
The supervisory priorities relate to:
- Asset management
- Investment management delegation
- Application of the Sustainable Finance Disclosure Regulation
- Quality of reporting data
- Environmental, Social and Governance (ESG) reporting of benchmark administrators
- Intermediation and market infrastructures
- Quality of post-trade transparency data on fixed-income instruments (MiFIR reporting) and trading data based on EMIR and SFTR reporting
- Provision of market data by the trading platforms
- Cross-border activities
- Monitoring of outsourced services
- Distribution of financial instruments as well as in the financial instruments’ distribution and investment advice.
- Commercialisation in distributor banking networks
- Marketing materials
- Investor protection: claims handling
- Supervision of financial investment advisers
The priorities reflect the growth of EU-level supervisory work. The topics that will be the subject of SPOT inspections and the priority supervision themes are also covered.
AMF warns the public against certain platforms proposing investments in real estate as “royalties”
On 29 December 2022, the AMF issued a warning concerning the risks that retail investors may be exposed to when investing in real estate platforms.
The AMF notes that some platforms do not comply with the regulations in force, which aim to protect investors through the quality of the information provided, the handling of complaints, or access to the AMF Ombudsman.
AMF renews its consultative commissions and the Climate and Sustainable Finance Commission
On 22 December 2022, the AMF announced the new composition of its consultative commissions on Markets and Exchanges, Disclosures and Corporate Finance, Clearing, Custody and Securities Settlement, Asset Management and Institutional Investors and Retail Investors. The composition of the Climate and Sustainable Finance Commission was also renewed.
AMF strengthens its policy on DASPs in relation to good repute and skills and promotional communications
On 21 December 2022, the AMF made a number of changes to its policy on digital asset service providers in relation to good repute and skills and promotional communications.
In particular, the AMF:
- Clarifies the possibility for a financial investment adviser to provide an advisory service to subscribers of digital assets (service 5°c listed in Article L. 54-10-2 of the French Monetary and Financial Code).
- Presents the analysis grid which is used to verify the good repute and skills of the senior managers and holders of the control of the DASPs.
- Explains its chosen approach when analysing the suitability and integrity of the senior managers and holders of the control of the DASPs.
- Specifies the conduct to be adopted by DASPs in the event of a change in situation and clarifies the cases in which these changes must be reported to the AMF and those in which a new registration file must be submitted to the AMF to provide new services.
- Provides further information concerning promotional communications and relations with clients of digital asset services. In addition, it issues recommendations to encourage DASPs to include warnings for clients or potential clients as well as to communicate specific information on risks, adapted to the nature and complexity of the digital assets and services in question.
- Reminds that the licensed DASP must establish, implement and maintain a complaints management policy and that Instruction AMF DOC-2012-07 “Complaints handling” applies to licensed DASPs. The AMF recommends that registered DASPs set up such a complaints handling system.
To incorporate the above, the AMF has made changes to:
- Position-Recommendation AMF DOC-2020-07 and Instruction AMF DOC-2019-23 have been revised in order to clarify expectations in terms of good repute and skills of the senior managers and holders of the control of the DASPs.
- Position-Recommendation DOC-2006-23 (Questions and answers on the rules that apply to financial investment advisers) has been amended to take into account the above changes. The AMF provides details with regard to promotional communications and client relations, which are also applicable to registered DASPs.
- AMF Instruction 2019-23 “Regime applicable to digital asset service providers” is amended to reflect the documents requested by the AMF concerning the good repute and skills of applicants for DASP registration.
AMF and the ACPR publish their third report on the monitoring and evaluation of the climate commitments of Paris financial market participants
On 21 December 2022, the AMF and ACPR issued their third report on the monitoring and evaluation of the climate commitments of Paris financial market participants.
For the last three years, the AMF and ACPR have issued a joint annual report focussing on the commitments of French financial institutions to combating climate change and achieving carbon neutrality by 2050.
In their latest report, the AMF and ACPR continue their assessment by providing an overview of banks and insurers’ commitments using the inventory compiled by the Sustainable Finance Observatory. The AMF and ACPR supplement this overview by a review of the governance of all market players’ commitments. As with previous editions, the report examines the fossil fuel policies of the main financial institutions, and provided new estimates of their exposure. It also assesses the implementation of recommendations that the AMF and ACPR made in previous reports, and makes a number of new recommendations.
The report states that further progress is still needed:
- While the successive reports confirm a strong mobilisation of financial sector participants, with advances noted over the first two years, especially regarding exit dates and exclusion criteria, approaches nonetheless remain heterogeneous.
- Overall, institutions haven’t sufficiently addressed the recommendations made in previous reports.
- Moreover, the operational implementation of institutions’ commitments remains insufficient.
- The changes in the European regulatory framework and strengthening of requirements for non-financial reporting are liable to lead to changes in the format and scope of the AMF and ACPR’s next joint reports. In light of this, the current report is also an appeal to financial institutions to quickly close the gap between the level of transparency currently observed on their voluntary commitments and the current and forthcoming regulatory requirements.
AMF publishes its proposals for an open finance framework
On 20 December 2022, the AMF presented proposals for opening up financial data on investors. In the position paper Open finance: what framework for European investors?, the AMF sets out the points it believes are crucial to ensuring that financial data is opened up in a secure framework that upholds the fundamental principles and rights of data protection laid down by law.
Key points in the position paper include:
- Investor data should be opened up only if a financial service is being provided. Players whose corporate purpose is not related to the provision of financial services, such as social media platforms or other marketplaces, should not be able to access European investors’ data to market services unrelated to their financial needs.
- Consumers should have given their explicit consent, for a clearly identified provider and service, prior to any data sharing. This consent should be withdrawable at any time, or explicitly renewed if the consumer wishes to continue to benefit from the services offered by the provider.
- Consumers should be informed of the location of their data before it is shared. Any changes to this information should be updated during the course of the relationship.
- The AMF proposes a reflection on the creation of a regulatory status for “providers of ancillary services” based on open data, subject to registration in the European Union. This status would make it possible to regulate and control the provision of such services, including by new entrants or players based outside the European Union.