ESMA has published its final guidelines on two aspects of compliance under the current MiFID. The guidelines cover:
- suitability: ESMA found many firms fail to ask the right questions and gather the right information. Many fail to interpret information correctly and, even where they have the right information, do not recommend a suitable investment. Its guidelines focus on the need for firms to put in place processes to ensure they meet the suitability requirement, regardless of the distribution channel used; and
the compliance function: these guidelines look at how the compliance function should:
- monitor, report and advise;
- be organised to meet standards of effectiveness, permanence and independence; and
- interact with other functions, and the way in which it can outsource tasks.
These guidelines also set out approaches for authorities to take when reviewing compliance function requirements.
ESMA is translating these guidelines, and regulators will then have two months within which to tell ESMA whether they intend to comply with them. (Source:ESMA Publishes MiFID Guidelines)