ESMA is consulting on guidelines for investment firms under the Markets in Financial Instruments Directive (MiFID). The guidelines aim to address the risks that investment firm staff have a financial incentive to promote, recommend and sell unsuitable investments. The guidelines will, among other things, require firms to:
- ensure the way in which they remunerate is not aimed at circumventing MiFID or the ESMA guidelines;
- design, monitor and control procedures to take account of their specific business and to ensure they deliver the intended outcome; and
- apply the guidelines to all staff involved in the provision of investment or ancillary services, and in relation to all forms of payments or benefits the firm provides to them.
ESMA asks for comment by 7 December.(Source: ESMA Consults on Investment Firm Remuneration Guidance)