Wed, Feb 5, 2020

ESMA Launches a Common Supervisory Action with NCAs on MiFID II Suitability Rules

The European Securities and Markets Authority (ESMA) is launching a common supervisory action (“CSA”) with national competent authorities (“NCA”) during 2020, regarding the application of MiFID II suitability rules across the EU. 

The focus of the CSA will be on the application of the MiFID II requirements in assessing suitability, allowing ESMA and the NCAs, including the FCA, to assess the progress made by intermediaries in their application of this key requirement. It will also provide assistance in analysing whether, and how, the costs of investment products are considered by firms when recommending an investment product to a client. 

As part of the CSA, ESMA will consider its:

  • updated guidelines on the topic produced in 2018 (which included having regard to ESG issues in the determination of suitability) ; and
  • its recently published a supervisory briefing on suitability.

ESMA believes this initiative will help to ensure consistent implementation and application of EU suitability rules, as well as enhancing the protection provided to investors. ESMA also expects that it will ensure that the NCA’s understanding of supervisory approaches are in line with ESMA objectives.


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